Who were the travel sector winners and losers in 2009?

It is fair to say that this last year has presented some 'interesting' challenges for certain sectors of the travel industry. As in any economic downturn some companies are able to adapt and prosper whilst others struggle to compete.

Earlier this year, an IPK International survey suggested that 40% of Europeans were likely to change their travel plans because of the economic climate and that this would result in more domestic travel, shorter trips, and a preference for cheaper destinations.

Sadly some companies have found it difficult to cope with these changing travel trends as evidenced by some PricewaterhouseCoopers research which indicates that the rate of travel company insolvencies was 13% higher in the first nine months of this year than the same period in 2008. The current forecast for ski holiday bookings and early Summer 2010 bookings is also less than favourable so the travel industry continues to face very real challenges.

So, as we approach the end of 2009, who are the obvious winners and losers from the UK travel market for this year?

The winners

Non-Eurozone countries: With anti Eurozone sentiment still strong, countries such as Turkey, Egypt, Thailand and the USA have emerged as some of the most popular countries for UK travellers.

Gap year/adventure holiday suppliers: There has been a notable increase in gap year/adventure travel type holidays this year, primarily because there are fewer places available at universities and also fewer graduate opportunities due to the downturn. A greater number of potential graduates have therefore taken the opportunity to take a year out.

UK staycations: UK based holiday resorts, such as Butlins, have registered a significant increase in profits as a greater proportion of British holidaymakers holidayed in the UK to save money.

The losers

The Eurozone countries – fewer British tourists are travelling to these destinations because of the strength of the euro against the pound.

Flyglobespan - the Scottish airline went into administration on 16 December 2009, throwing Christmas holiday plans for thousands of holidaymakers into chaos.

British Airways – the airline is set to lose £600 million in the current year after posting a record loss of £400 million in the 12 months to March 2009. One of the main reasons for its current difficulties is the reduction of company-sponsored business travel. According to one analyst, the proposed 12 day strike may cost the airline a further £300 million.

Ski companies – there was a 6% drop in the snow sports market last season despite the excellent snow conditions. It is envisaged that these numbers will fall again this year as holidaymakers stay away because of the cost implications, particularly in the Eurozone Alps. This situation is likely to be further exacerbated by the unfortunate timing of the BA strikes.

To find out more, please contact Mark Lee

Package travel legislation in need of an update

The consultation on Directive 90/314/EEC (package travel, package holidays and package tours) continues to make progress with the Commission intending to introduce legislation in autumn 2010.

Changes in the current legislation are well overdue in view of the way we, as consumers, now go about booking our holidays and travel.  The internet and the increase in the use of different companies to provide different elements of the holiday, as opposed to the high street travel agent's standard package holiday, means changes are needed sooner rather than later.

Dynamic packages are the main focus.  These are when the consumer buys and puts together different elements to create a travel package.   The current legislation fails to make clear the applicability of the Package Travel Directive to dynamic packages and often the consumer is left without protection.

Current statistics show that an estimated 23% of EU citizens have used dynamic travel packages within the last two years.  I suspect the majority of these consumers are unaware that they may not have the financial protection or otherwise that the Package Travel Regulations provide.  The Commission also cited that in 1997, 98% of people leaving the UK on a leisure flight were protected.  That figure has now fallen to below 50%.

More and more complex travel arrangements are being employed and currently to the potential detriment of the consumer.

Hopefully, the current legislation will be adapted to take into account the changes to the market and the way we go about booking our holidays since 1992 when the Package Travel Regulations first came into effect.

To find out more, please contact Keith Dean

Update on applicable law issues arising from accidents abroad

The past 24 months have seen a number of changes which have had a significant impact on the way in which cross-border litigation is carried out.  Those changes have been documented in previous newsletters (which can be accessed on our website) so I will not go into detail here.  However, the changes have had an impact on a claimant's options both in terms of jurisdiction and choice of law, and satellite litigation seeking to clarify those issues continues.

The case of Maher & Maher v Groupama Grand Est {2009] EWCA Civ 1191 is one of the most recent examples of a foreign insurer adopting inventive arguments in its efforts to avoid payment of English damages and costs.

This arose out of a road traffic accident in France in which the claimants were injured.  It was established that there was a direct right of action against Groupama, a French insurance company, and proceedings were consequently brought in England and Wales.  The accident pre-dated the application of Rome II, so the defendant was unable to rely upon it in its attempt to have damages assessed by French law.  Instead, at first instance, they argued that, as the claim was directly against the insurer, whose liability was pursuant to its contract of insurance with their policyholder, the claim was to be properly characterised as contractual and therefore French law should apply, it being the proper law of the contract.  In response, the claimant argued that the insurer was simply a surrogate for their policyholder and, as such, the claim was brought in tort, meaning that English law should apply, as per the leading English case on the issue, Harding v Wealands.  Judgment was given in favour of the claimant on the issue and the defendant appealed.  However, the appeal was dismissed.  The court found that the claim should be characterised as if it were against the individual personally, effectively affirming the claimant's submissions.

To find out more, please contact Kieran Mitchell

Skiing accidents - can a claimant pursue a claim against his ski instructor?

In the recent case of Anderson v Lyotier the court found that a ski instructor was primarily liable for an injury suffered by one of his students during a class. 

The claimant was a relatively experienced skier.  During a ski lesson on the last day of his holiday he skied into a tree.  He suffered from tetraplegia as result of the injuries.

He was skiing off piste at the time of the accident.  Earlier in the week the class had gone off piste with the instructor and the claimant had found this difficult. The off piste skiing on the day of the incident was at a more difficult level than anything undertaken in lessons previously.  It was also acknowledged that the claimant was one of the weaker members of the group. 

It was held that the ski instructor had a duty to take account of the needs of the weakest member of the class and the slope was beyond the capabilities of the claimant.

However, an adult skier also has an obligation to raise any concerns he may have with the instructor. The judge acknowledged that it can be difficult to say something in the lesson because the skier may be reluctant to let the rest of the group down or to appear frightened. However, if the skier has serious concerns about his ability to perform the task required, then he has a duty to voice this apprehension. 

Therefore as the claimant had not said anything about his unease during the descent, there was a finding of contributory negligence so the damages were reduced by 30%.

The judge also added that the court would need to be persuaded that the incident must be something that would not happen without the negligence of a ski instructor, for a claim to succeed.

To find out more, please contact Joanna Wylie

Tour operators urged to notify insurers without delay

Tour operators must notify their insurers as soon as possible of any holiday accidents to ensure they are covered for the resulting compensation claim 

This necessity was recently illustrated in the case of Kosmar Holidays plc v Trustees of Syndicate, which involved a guest who was rendered a tetraplegic after diving into the shallow end of the hotel pool.

The claimant successfully sued Kosmar under the Package Travel Regulations for its failure to place adequate signs around the swimming pool.

Kosmar notified its insurers of the incident a year after the event, even though it was informed about the accident at the outset. After the claim was settled the insurers refused to pay because of the time which elapsed before they were advised about the accident.

Kosmar argued that they did not receive details of the claim until approximately a year after the event. The insurers rejected that point and instead relied on a clause in the policy which obliged the tour operator to notify the insurer immediately after the incident.

It was therefore necessary for Kosmar to issue proceedings against the insurers for reimbursement of the monies paid to the claimant. Their claim was successful at first instance, on the grounds that the insurers had accepted the claim by entering into subsequent communications with Kosmar about the incident. However, the insurers turned the tables on appeal, when it was held that the acknowledgement of the claim by the insurer did not amount to a waiver of their right to enforce the notification clause in the insurance policy.

The judge stressed that each case must be considered on its own merits with reference to the facts and the contractual terms. It was also acknowledged that claims are not always notified immediately to the insurers because of the high volume of claims. All the same, it should always be reported to the insurers as soon as possible after the event, particularly when it is a serious incident.

Tour operators should therefore ensure they implement an effective system for reporting incidents to their insurer(s) in order to ensure they are able to rely on their insurance cover. 

To find out more, please contact Sophie Genge