Can you pursue a claim for a reduction of the cost of a package holiday that has been interrupted?

This is an interesting question that was recently considered by the Court of Justice of the European Union in its recent judgement of FTI Touristik GmbH (Case C-396/21). Whilst English courts are no longer bound by the Court of Justice’s decisions, they are expected to follow this particular decision given that it is highly relatable to potential package travel claims in the UK.

Facts of the case and procedure

On 30^th December 2019, two German travellers purchased a package holiday to Gran Canaria in Spain from FTI Touristik GmbH (a German tour operator), inclusive of return flights and a two-week stay in Gran Canaria, Spain. The holiday started just two days after the formal declaration of Covid-19 as a pandemic, following which the Spanish Government ordered a national lockdown. The Claimants were therefore unable to have access to beaches, swimming pools or to enjoy any of the activities organised by the hotel.

The Claimants sought to obtain a 70% reduction of the cost of their package holiday alleging that they were entitled to a price reduction under the German equivalent of the Package Travel and Linked Arrangement Regulations 2018.

The Defendant rejected the claim on the basis that:

• The lockdown restrictions in Spain were “normal circumstances”, also affecting Germany where both Claimants were domiciled
• The restrictions were raised as a result of a “general life risk” which is a specific concept under German law.

The Claimants’ claim was dismissed by the first instance judge on the basis that the preventive measures taken to fight Covid-19 were to protect the health of the Claimants and could not be considered as a “defect” in the package holiday.

The Claimants appealed the first instance decision, and the appeal was eventually successful.

The appeal judge considered that the travel organisers were liable for failing to provide the agreed travel services on the basis that a strict liability regime was applicable under the German Civil Code.

However, the appeal judge considered the need to make a request for preliminary ruling to the Court of Justice regarding the interpretation of art 14(1) of the Package Travel Directive, essentially asking if it must be interpreted as meaning that a traveller is entitled to a price reduction of their package holiday in cases where the travel services were not properly provided due to restrictions imposed at the travel destination (and other countries).

The Court of Justice concluded that travellers are entitled to a price reduction in those circumstances on the basis that:

• The interpretation of Article 14 (1) is that failure to perform the travel services entitles the traveller to a price reduction in all circumstances, except where the failure is due to the traveller’s fault.
• Article 14 (1) is part of the “harmonised system of contractual liability for package travel organisers” characterised by a strict liability regime.
• A performance of a package contract must be judged on the basis of its purpose, which in this case was to have an enjoyable holiday.
• There is a distinction between paying compensation and giving a price reduction. In extraordinary circumstances, a travel organiser may be excluded from paying compensation but not from having to give a pay reduction if the travel services were not provided.

How should the price reduction be calculated?

The ECJ provided the following guidance:

– It should be assessed in relation to the travel services included in the package travel contract which have not been performed or which have been improperly performed.

– The price reduction must be appropriate for the entire period in which there was an improper  service.

– A traveller is required to inform the travel organiser without “undue delay” where they perceive any lack of conformity during the performance of travel services included in the travel package contract.

However, as helpful as this guidance may be, the truth is that it does not provide certainty about how to calculate these claims and it will ultimately be down to regional courts to assess taking into account the particular circumstances of the case, including for example how the package holiday was marketed.

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If you feel that the travel services included in your package holiday contract have been affected as a result of Covid-19 restrictions or any other similar circumstances, do not hesitate to contact us to explore if you can be entitled to a price reduction. Our dedicated team of Solicitors will be more than happy to assist.