Association of British Travel Agents Ltd (ABTA), R (on the application of) v Civil Aviation Authority (CAA) & Anor

Judicial review may determine a pure question of statutory construction arising from regulatory guidance where the guidance is intended to be followed and non-compliance may expose persons to significant cost or criminal sanction.

For the purposes of the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995, a package requires a pre-arranged combination of qualifying components sold or offered for sale at an inclusive price. An inclusive price means more than the arithmetical total of separate and discrete components. The components must be connected or dependent so that the consumer buys and pays for them as a whole. Separate accounts do not prevent a package where the substance of the transaction satisfies that test. Consumer perception and the travel agent’s influence are not themselves decisive.

ABTA sought judicial review of guidance issued by the CAA concerning when travel agents selling air travel with accommodation or other services required an Air Travel Organiser’s Licence. The CAA’s Guidance stated, among other things, that various advertised, tailor-made or agent-selected combinations would generally constitute packages.

ABTA contended that the Guidance adopted an excessively wide construction of “package”, particularly by treating separate component prices as an inclusive price and by making the agent’s influence or the consumer’s perception relevant. The CAA argued that the Guidance was non-binding, fact-specific and unsuitable for judicial review. The central issues were whether judicial review was appropriate and whether the Guidance accorded with the statutory definition.

1. Judicial review was appropriate. The CAA was a statutory regulator and prosecuting authority. The Guidance was intended to influence compliance and exposed travel agents to substantial costs and possible criminal sanctions. The court could determine whether statutory language was incapable of bearing the meaning given to it, without awaiting a test case or deciding hypothetical facts. The case was analogous in principle to Gillick v West Norfolk and Wisbech AHA and Another [1986] AC 112. The issue was statutory legality, not whether the Guidance satisfied the Wednesbury test.
2. Meaning of package and inclusive price. The component parts of a holiday may be sold at the same time without automatically constituting a package. The components must be sold or offered for sale at an inclusive price. That expression means more than an arithmetical total of separate and discrete purchases. The components must be connected or dependent so that the consumer buys and pays for them as a whole. Separate accounts do not prevent a package where the substance of the arrangement otherwise satisfies the definition.
3. The Package Travel, Package Holidays and Package Tours Regulations 1992 and the Directive did not require a wider meaning of “inclusive price”. The ordinary English law of contract, including agency principles, remained relevant. A single contract would usually characterise a package, but it was unnecessary to decide that every package invariably involved one contract. What mattered was the inclusive nature of the price.
4. Pre-arranged. A combination could be put together at any time up to the sale, and the consumer could dictate its component parts. Advice or information from the travel agent was not necessary. The court accepted the approach in Club-Tour, Viagens e Turismo SA v Garrido [2002] ECR 1-4051.
5. The Guidance was materially wrong or misleading. It omitted the essential inclusive-price requirement, treated consumer perception and agent influence as decisive or relevant tests, and stated too broadly that choices, advertisements, agent-selected alternatives, ticket-provider arrangements, tailor-made holidays or supplier commitments necessarily required an ATOL. The Guidance was therefore quashed.
6. The court noted that the existing legislative concept of a package might be outdated and that fresh legislation might be needed, but that policy issue could not enlarge the statutory language.

First-instance judicial review in the Administrative Court. The court quashed the CAA’s Guidance to the extent identified in the judgment.