I am planning on taking a holiday to Portugal soon. I think I know what a packaged holiday is, but I'm confused by these new dynamically packaged holidays. I've heard of a few airlines and such collapsing recently and people being stranded. How do dynamically packaged holidays work and are they safe from operator collapse? Barry Allen from Monmouth, Wales
Essential Travel.co.uk replies:
We agree with you entirely. There is no reason to sink your hard earned money into something you don't quite understand. The definition of a dynamically packaged holiday is contested with travel providers keen to avoid the 'packaged' label that carries with it legal obligations.
What Is A Package Holiday?
A packaged holiday is a holiday made up of separate travel components sold as one complete package. For example your packaged holiday may include flights, transfers, accommodation, rental car and activities - all in one convenient package. Packages that include flights are protected by Air Travel Organisers License (ATOL), which reimburses or repatriates travellers should a travel operator collapse. For packages that do not include flights (like cruises) the alternative scheme is most often the Association of British Travel Agents (ABTA) protection scheme, but there are other smaller protection schemes.
Hotel + flights + airport transfer = holiday package
Each component in the bundle is fixed and is not sold separately.
What Is A Dynamically Packaged Holiday?
A dynamically packaged holiday is much like a packaged holiday except that there is more choice in individual travel components and the combination of components is fluid.
Choice of hotel + choice of flights + choice of airport transfer = dynamic holiday package
So you could get any combination of arrangements (Hotel A or Hotel B + Flight A or Flight B + Rental A or Rental B) for your unique package. Each travel component is sourced in real time so that you get the cheapest possible package based on the latest prices available.
Is My Holiday Protected?
The recent collapse of travel providers like Sun4U, Goldtrail, XL, Holidays 4 UK, Kiss Flights and a few others (at least 46 travel operators have collapsed since 2009) has rightly left consumers suspicious of travel instruments like dynamically packaged holidays. The loose definition of a 'holiday package' also means that many travel operators and agents are themselves confused about what constitutes a packaged holiday. Legislation is being drawn up to provide clarity for all, but in the meantime keep yourself safe by following these tips:
Ask your travel agent if your holiday is protected. Just because your travel agent is ATOL or ABTA bonded does not mean your holiday package is protected. Travel agents can sell unprotected holidays even though they are themselves protected. Always ask if your holiday is protected. Specifically ask if your holiday is ATOL, ABTA or AITO protected. If you get an evasive answer then you know not to trust that travel provider. Better yet, get a response in writing so that you have proof of assurance.
Use a credit card to pay for your holiday. Credit card companies are legally required to reimburse you for services not rendered. The Credit Card Act of 1974 covers purchases of between £100 and £30 000. If your travel provider collapses your credit card company is required to reimburse you but if you are already on holiday you will have to make your own arrangements to get back home (if your holiday is not protected by the aforementioned schemes).
Check that each travel component is protected. The stitched together nature of dynamic packaging means the onus is on the consumer to check that their entire package is protected. Remember that foreign travel providers are under no obligation to protect your money so it is imperative that you do your research. Especially be wary of online portals that claim to 'help you build your holiday'. In effect these sites are acting as intermediaries and the fine print will tell you that they are not responsible for delivery of services - only for arranging the holiday. Also be wary of sites that link you to other sites to buy additional travel components (e.g airline booking sites that link to separate hotel sites or car rental sites). These 'packages' fall into a legal grey area that legislation is struggling to catch up with.
Keep all receipts and documents. Each travel component should come with its own receipt once you've paid for the package. Do not accept copies, because original documents will be required should the unfortunate happen and you need to be reimbursed.
Do not book flights directly with an airline. Even if all you are interested in getting is flights rather go through a travel agent. Booking scheduled or chartered flights directly with an airline is not protected. If you can't avoid booking directly then at least take out insurance. EssentialTravel.co.uk is the first travel insurance company in the UK to offer FREE scheduled airline failure cover to all Superior Policy Holders as standard. For more information click here.
Still confused about ATOL? See our Q&A on What is ATOL?
For more information on protecting your holiday see our How To Protect Your Holiday page.
We hope that helps!
Last Updated: November 2011