The Association of Travel Agents has called on the CAA to act to address the “gaping hole” the Lowcost Travel Group has blown in the UK regulatory regime by moving its OTA to Spain.
Steve Endacott (pictured), a founding member of the group and chief executive of On Holiday Group, has warned other UK online agents will abandon the UK if nothing is done.
He said it is his hope that the CAA will continue to take the “highly commercial” approach it adopted when negotiating the Flight-Plus Atol reform.
The CAA was outspoken about Lowcost Holiday’s announcement of its move to Spain saying it was given no notice and it could not be sure about the level of protection it now offers customers.
Lowcost chief executive Paul Evans hit back saying the online agent was now headquartered in Palma, Majorca, he has a Spanish wife and the firm is acting as a principal and paying Tour Operators Margin Scheme (Toms) VAT.
However, Lowcost Holidays is under now operating under Spain’s more lax regulatory regime, which Endacott claimed would save it millions of pounds in regulatory and tax costs.
As a result of the move to Spain Lowcost has left the ATA and will play no further part in lobbying the CAA and the government on the future of UK and European regulation.
Endacott said: “This is a big hole in the regulatory regime and the CAA has got to do something about it. They have to be more commercial.
“Their approach to Flight-Plus has been highly commercial over the last few years. I know they are sympathetic to the points being made by the ATA.
“They recognise if we do not come up with a solution together more people will end up moving offshore like Paul. We need the right regulatory system in the UK rather than a situation in which firms will just desert the UK.”
Endacott said what Evans has done with Lowcost Holidays was “highly legal” and there was nothing stopping other UK OTAs doing exactly the same.
He insists that the proposed reform of the European Package Travel Directive will make agents principals selling packages and so liable for Toms VAT.
In his latest blog post Endacott said: “Why would the major UK tour operators stomach a position where they have to pay Toms, but other principals selling dynamic packages do not?
“I can guarantee they will be lobbying hard for (Her Majesty’s Revenue and Customs) HMRC to impose Toms VAT on dynamically packaging agents, and in an environment where the UK government is desperately seeking increased tax revenues, why would this not occur?
“The Toms VAT charge has been estimated as £20 per passenger and therefore in Low Cost’s case alone would equate to £20 million extra cost.”