Association of British Travel Agents Ltd v Civil Aviation Authority

For travel services to be a package, the services must be sold or offered as components of a pre-arranged combination at an inclusive price. An inclusive price is the price of that combination. It may equal the aggregate of prices that would have been charged for separate services.

The decisive factual question is whether the services were sold as a combination or as separate services at the same time. The customer’s choice, the agent’s involvement, advertising, billing and common documentation may be evidential pointers, but none is a conclusive legal test. Regulatory guidance which presents those matters as determinative, and thereby overstates when an ATOL is required, is misleading.

The Civil Aviation Authority issued Guidance Note 26 to explain when travel agents selling air-travel arrangements required an ATOL. The Association of British Travel Agents sought judicial review, contending that parts of the guidance misdescribed the statutory definition of a package and the effect of the ATOL regime.

In the Administrative Court, Goldring J declared the guidance unlawful and quashed it: [2006] EWHC 13 (Admin). The Civil Aviation Authority appealed. The central issue was whether services sold together at a total price, or selected by a customer without the agent influencing the choice, necessarily formed a package for the purposes of the ATOL Regulations.

Chadwick LJ, with whom Arden LJ and the President of the Family Division agreed, dismissed the appeal save as to the form of relief. The declaration that the guidance was misleading was upheld. Quashing was unnecessary because the guidance did not itself affect existing or future rights. The appropriate order was that it be withdrawn.

1. The definition of a package in the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995 must be read consistently with the Package Travel, Package Holidays and Package Tours Regulations 1992 and Council Directive 90/314/EEC. Two or more qualifying services form a package only if sold or offered as a pre-arranged combination at an inclusive price. The price is the price of the combination. It remains inclusive even if arithmetically equal to the separate prices of its components.

2. Where services are offered as a combination, the price covers all that combination. Where they are offered separately, although simultaneously, there is no combination and therefore no inclusive price in the statutory sense. The distinction is one of fact in each transaction.

3. Following Club-Tour, Viagrens e Turismo SA v Alberto Carlos Lobo Gonçalves Garrido, Case C-400/00, a combination can be pre-arranged although the customer specifies the components up to conclusion of the contract. The agent’s lack of influence over the customer’s choice does not prevent a package arising. Separate billing cannot alter an arrangement which is otherwise a package, but billing and documentation are not conclusive of whether a package exists.

4. The guidance was misleading in material respects. It risked equating an inclusive price with a total price; treated an agent’s lack of input as decisive; suggested that a choice of facilities, provision of information, tailor-made arrangements, or common documentation necessarily produced a package. Those matters may be evidence, but the statutory question remains whether flight accommodation is a component of a pre-arranged combination.

5. A preliminary reference to the Court of Justice was inappropriate. The proposed questions assumed that services were offered as a combination and would not resolve whether the guidance, read as a whole, misstated or misleadingly described the domestic regulatory requirements.

• Court of Appeal (Civil Division): In [2006] EWCA Civ 1356, the appeal was dismissed save that an order to withdraw the guidance was substituted for quashing.
• Administrative Court: Goldring J, in [2006] EWHC 13 (Admin), declared Guidance Note 26 unlawful and quashed it.