The Package Travel and Linked Travel Arrangements (Amendment) Regulations 2026
These regulations are due to come into force on 6th April 2027 and will introduce a number of changes to the existing regulations and some significant financial risk reduction improvements for UK tour operators.
As experienced by many tour operators during the Covid-19 global pandemic and more recently following events in the Middle East, the stringent requirements of the 2018 regulations to refund customers for holiday cancellations arising from such events, irrespective of refunds being received from end suppliers, placed a severe financial burden on businesses, impacted upon cash flow and in some instances created an existential perfect storm.
New Supplier Refund Rights Under Regulation 29A
One of the new provisions, Regulations 29(A) creates a statutory right for organisers, and in certain cases retailers, to obtain refunds from suppliers when the travel services forming part of a package are cancelled or not performed. This represents a notable shift in the balance of commercial risk within the supply chain, potentially helping to mitigate a strain on cash flow, working capital and ultimately of insolvency.
What Does Regulation 29A Require?
Under Regulation 29A(1), where a third-party supplier has agreed to provide a travel service that forms part of a package and the supplier fails to perform or cancels all or part of the service, the supplier must refund payments received from the organiser within 14 days of the cancellation or from the date when the service was due to be performed.
Why This Matters for Tour Operators
This will provide a clear and tangible benefit for tour operators during periods of disruption and help to right a commercial imbalance where previously, when refunds to customers were made, lengthy and expensive disputes with suppliers including airlines, accommodation providers, transport companies would often follow.
When contracting with suppliers, either on their terms or those presented to them by a tour operator, the statutory obligation imposed on a supplier to refund the operator within 14 days will create stronger negotiating leverage for the operator. It can make it more difficult for that supplier to impose restrictive contractual terms, in an effort to delay or avoid repayments, where the obligation to refund will be enshrined in law.
Potential Benefits for Insurance and Risk Management
By presenting a clear legal basis for the right to be refunded by a supplier, this should help to present a tour operators insurer with a cleaner risk profile potentially improving the availability of insurance and corresponding premiums, particularly when accompanied robust supplier agreements.
Legislation Alone Is Not Enough
Although Regulation 29 creates a statutory right to supplier refunds, tour operators should not rely on legislation alone. Existing supplier agreements should be reviewed and updated before the Regulations come into effect. Having the right to a refund and receiving a supplier refund can be two different things!
Key Changes to Consider in Supplier Contracts
Supplier contracts are an important feature of a tour operator’s commercial, business to business trading relationship. However, with the introduction of the amended Package Travel Regulations, some key amendments to consider include:
- Express acknowledgement by the supplier of Regulation 29A obligations
Include a clause requiring suppliers to comply with the statutory 14-day refund requirement mirroring your obligations to customers. - Clear repayment mechanisms
Define refund procedures, payment methods, notification requirements and authorised contacts to avoid disputes. - Audit and record-keeping provisions
Require suppliers to maintain records supporting cancellations and refund calculations. - Dispute resolution clauses
Introduce expedited dispute procedures to ensure disagreements do not delay repayment. - Indemnity protections
Consider including indemnities covering losses incurred where supplier failures result in customer compensation liabilities or regulatory claims. - Review force majeure provisions
Ensure force majeure clauses do not conflict with the supplier’s statutory refund obligations. - Supply chain due diligence
Assess the financial strength of key suppliers, as a statutory right is only valuable if the supplier remains able to pay.
Preparing Your Business for the Package Travel Regulations 2026
In summary, Regulation 29A(1) is a welcome development for operators. Creating a clear statutory entitlement to prompt supplier refunds will help improve cash flow certainty and reduce financial exposure. It will also help to strengthen an operators’ ability to recover refunds when travel services fail, and potentially strengthens its position with tour operator insurers.
Being aware of these pending changes and aligning both supplier relationships and supplier contracts with the new requirements will place tour operators in the best position to maximise the benefits when the Regulations come into force.
For further assistance and for details of Travel Risk Professionals Advice and Support Services, please contact Alan Pattison at alan.pattison@jensten.co.uk or Lee Hills at lee.hills@jensten.co.uk