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Consequently, it is much more common for consumers to construct holidays for themselves, purchasing flights, transfers and accommodation from various different suppliers. So what is the significance of this gradual change?

With package holidays, it is the high street tour operator that carries contractual responsibilities to the consumer, but there is a marked difference where consumers put holidays together themselves. In situations where consumers construct “packages” themselves, even if they use an intermediary for any particular element of a holiday, the consumer’s remedy lies against the ultimate supplier for each particular element and there is little or no remedy against the intermediary. The situation with package holidays is considerably different, with consumers having substantial rights against the tour operators and indeed the travel agents through which a package is sold. There is also a much tighter regime of financial protection requirements for packages.

One of the main areas of difficulty with the holiday industry is that it is predominantly voluntarily regulated (with the exception of the Civil Aviation Authority [CAA] regulating the sale of flights and the Office of Fair Trading [OFT] having a general duty to scrutinise the fairness of contractual terms in any consumer contract).

The Air Travel Organisers Licence scheme (ATOL) protects you from losing your money or being stranded abroad when you book through a tour operator. It does this by carrying out checks on the tour operators and travel organisers it licenses, and requiring a financial guarantee called a bond, which is lodged with ATOL.

Self-packaged holidays are not covered by the ATOL arrangement. If the airline fails or your accommodation is double booked, you will not receive compensation from the CAA, neither will you receive compensation for any other element of your holiday that you may no longer be able to use but still have to pay for. Suppose, for example, you booked a flight from a no-frills airline on the internet and then also booked accommodation and car hire elsewhere. If the airline cancels your flight, you will most likely still have to pay for the accommodation and car hire, even if you can no longer use them. Your travel insurance will not cover these costs as they are regarded as contingent liabilities, which are almost certainly excluded under the normal terms of a policy.

It is therefore important to bear all these factors in mind when considering foreign travel, weighing up the benefits of low-cost holidays against the protection offered by the more expensive package tour operators and their associated agencies. Ultimately, if you suffer genuine loss associated with your holiday, whether it be a personal injury while abroad, or through your travel arrangements, it may well be possible to claim compensation, although you may experience varying degrees of difficulty depending on the composition of your package.

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