What Brexit means for package holidays

Lorna Cowan / 30 August 2016 ( 30 March 2019 )

Now Britain has started the process of leaving the EU, many travellers are left with questions about how it will affect their rights, especially on package holidays.

On 23 June 2016, as you’ll know, the UK voted to leave the EU. And while the exact implications of the country’s exit from the rest of Europe are uncertain as negotiations are underway, there is much speculation about what Brexit could mean for UK holidaymakers.

Here we consider what may happen to the cost of package holidays and independent travel, and what changes could be on the horizon for passenger rights.

Related: What will Brexit mean for UK holidaymakers?


Will the cost of package holidays go up?

If you’ve already booked a package holiday for this year, you shouldn’t have to fork out any more on the price of your trip, though with currency rates not so favourable since the EU referendum, your spending money won’t go quite so far. As most travel companies will also have advance agreements in place with regards paying airlines and hoteliers, there is a good chance that the price you see for a holiday will be the price you pay.

However, be aware that the current Package Travel Regulations allow tour operators and holiday companies to impose surcharges onto holidaymakers when the cost of a package holiday goes up after booking because of fluctuations in currency or rising fuel costs – this can affect cruises as well as flights. 

The travel company must absorb the first 2% of any increase, but you’ll be required to pay the rest. Only if the surcharge is more than 10% of the cost of your holiday, do you have the right to cancel. It’s unlikely that you’ll need to pay a surcharge if you’ve already paid your package holiday in full.

Related: 5 reasons to book early with Saga


Why all all-inclusive holidays might be a wise choice

Off on an all-inclusive holiday? Then pat yourself on the back. You won’t feel the pinch caused by the weakness of the pound quite so much. If you’ve paid upfront and know your meals, drinks and entertainment are included in the holiday price – and you make the most of the all-inclusive package and not spend elsewhere – then this year’s holiday will be good value for money.

If you’re still hoping to head off to the sun for a break this summer, then it’s worth considering booking an all-inclusive holiday. The holiday price would have been set long before exchange rates started to plummet, and as you know the total and know everything is included, it’s easier to stick to your original holiday budget.  The cost of a week away can easily soar when you’re eating out in cafés and restaurants every day, especially when exchange rates keep changing.

Discover Saga’s all-inclusive holidays


The cost of travelling independently is rising, thanks to exchange rates

The price of independent travel, where you book your own flight direct with an airline and choose your own accommodation, is now more expensive than it was before the EU referendum. UK holidaymakers are getting less euros and dollars to the pound, so everything from buying a coffee in Corfu to hiring a car in Hamburg is costing more. 

Exchange rates may change and settle over the coming months, but since the end of June sterling has weakened against other popular currencies.


Flight price changes and the EU ‘open skies’ agreement

Regardless of the type of holiday you take, whether it’s a package or you book independently, all UK holidaymakers who fly overseas may suffer in the future if flight prices increase. And this may well happen as a result of Brexit.

The UK will need to renegotiate the ‘open skies’ agreement with the EU, which has allowed all EU airlines to fly between any two points in Europe. This freedom has enabled no-frills airlines, such as EasyJet and Ryanair, to flourish, and this has forced other airlines including British Airways to cut the cost of their fares. As a result, flights around Europe are significantly lower than they were in the early 1990s.

In two years’ time though, having access to cheap fares may be a distant memory. It will all depend on whether the UK government decide to introduce their own aviation laws and negotiate their own deals. 

New agreements will also have to be made with the US. Currently, as a EU member state, carriers from the UK can freely fly to and from the States under the EU-US open skies agreement. This is all subject to change.


Package holiday rights and EU law

UK holidaymakers who buy package holidays are protected by the Package Travel, Package Holidays and Package Tour Regulations of 1992, so you don’t lose money if a holiday company collapses before you set off, and you don’t get stranded overseas in the event of a holiday company going bust while you’re away. 

If you book any holiday that includes a flight, then your money must be protected under the Air Travel Organisers’ Licensing (ATOL) scheme, which is operated by the Civil Aviation Authority (CAA).

It’s unlikely that the UK government will water down current rules but, as a result of Brexit, they are free to do so. It’ll all depend on ongoing discussions between the UK government and the EU.

There is also no certainty that the extended consumer protection benefits – due to be implemented on 1 July 2018 under a new EU Package Travel Directive – will go ahead as planned. This new Directive gives protection to all consumers who buy travel services for the same holiday or trip, whether that’s a traditional ready-made package holiday or two elements of the holiday, for example, a flight and a hotel booked online from a single business. 

The new Directive also gives travellers the right to terminate their holiday if additional surcharges exceed 8%.

Related: Package holidays vs direct bookings


Air passenger rights and EU law

UK travellers, under the Denied Boarding Regulation 261/2004, are given compensation and care in the event of a delayed or cancelled flight, and, to a limited extent, if there are problems with international rail travel and ferries. The right to claim compensation, however, derives from an EU regulation, not from UK law, so these automatic rights may end as a result of Brexit.

Currently if your flight is delayed or cancelled, the Denied Boarding Regulation allows passengers to claim compensation. This is up to €250 (around £215) if a short-haul flight (under 932 miles) is cancelled or up to €600 (£515) if it’s a long-haul flight (over 2175 miles).

Compensation is reduced, though, if the airline gives you the option of re-routing your flight and you end up at your final destination within two hours of your original arrival time for short-haul flights and within four hours for long-haul.

Whether consumers will still be able to claim for this compensation in two years’ time after the country has left the EU, we don’t really know. But if airlines no longer have to fork out a significant amount of money to compensate a full flight of delayed passengers, then they may not feel the pressure so much to avoid these situations.


Will Brexit affect care and assistance at airports?

UK holidaymakers will also perhaps lose the right to care and assistance at airports, again an air passenger right under Regulation 261/2004. At present, if there is a problem with a flight, passengers are entitled, depending on the length of the delay, to food, refreshments, hotel accommodation and the right to make a phone call or send an email.

If this was no longer the case, travellers unable to fly could end up paying over the odds for airport meals and sleeping for the night on airport floors.

There is the possibility that the UK government will still opt in to this regulation, despite not being in the EU – Iceland, Norway and Switzerland already do this, and Norwegian Airlines is going from strength to strength. But there is also the chance the UK will decide to adapt the regulation, resulting in confusion for airlines and passengers alike.

If the government ignores the regulation altogether, there could be a scenario in the future when, say, extreme weather hits the UK and flights are cancelled, and EU airlines, such as Air France and KLM, will be offering their passengers meals, refreshments and overnight accommodation, and those passengers travelling on Jet2.com or Thomas Cook will get nothing. It all remains to be seen.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.