Who: European Parliament
When: Winter 2013/2014
Law as stated at: 31 January 2014
The Internal Market and Transport Committees of the European Parliament are rushing to finalise the amendments to the revised Package Travel Directive before the European elections in May. If the amendments are not agreed before the elections, it is unlikely that agreement will be reached before the end of the year.
The 1990 Package Travel Directive guarantees protection to consumer booking pre-arranged package holidays, which involve combinations of flights, hotel and car rentals. Protection includes the right to receive all necessary information before signing the contract, making sure that there is a liable party for the performance of all the package services, and repatriation if the tour operator goes bust.
With more and more consumers (120 million, according to the European Commission) tailoring their holidays online to combine travel arrangements rather than choosing ready-made packages out of a brochure, however, the 1990 Directive would appear to no longer be fit for purpose. The importance of change has been highlighted over the last couple of years with several operators and airlines suffering financial difficulties, and the level of consumer protection differing depending on how consumers booked what would appear to be very similar holiday arrangements.
To bring the Package Travel Directive into the digital age, the European Commission has proposed amendments which provide additional protection in relation to traditional customised packages, and bring in clearer protection in situations where consumers buy packages that are put together by one or more commercially linked traders and tailored to the consumer – e.g. where transport and hotel are booked from the same operator, or car rental is booked via the same website as a flight booking.
In relation to traditional and customised packages, the amendments would bring:
- stricter controls on price surcharges (with a 10% cap on price increases) and a requirement to pass on price reductions to consumers in equivalent circumstances
- improved cancellation rights – consumers will be able to terminate the contract before travelling by paying the organiser reasonable compensation, and with no liability in the event of natural disasters, civil unrest or similar situations at the destination that would affect their holiday
- clearer information to the consumer that the organiser is responsible for the proper performance of all included services (currently, there are diverging national rules on liability and whether this rests with the organiser, retailer or both, leading to situations where neither take responsibility)
- ability of consumers to claim compensation for “immaterial damage” suffered, in particular for a spoiled holiday
- a single point of contact (the retailer) for consumers for complaints and claims
In relation to other customised travel arrangements, the amendments would bring:
- the right of consumers to refund and repatriation where the seller, the carrier, or any other relevant service provider goes bankrupt while they are on holiday
- better information on the party liable for the performance of each service
The European Commission is keen to highlight that businesses will also save money from the changes as certain outdated requirements (such as the requirement to reprint brochures, at an annual cost of 390 million Euros a year) will be abolished. Managed business travel will also be excluded from the Directive, expected to lead to savings of up to 76 million Euros per year.
Note that independent travel arrangements booked by the consumer (which account for 54% of the arrangements booked) are not covered by the Directive.
Why this matters:
The internet has brought about a huge change in the way combined travel arrangements are booked by consumers. The 1990 Package Travel Directive is therefore long overdue an update. However, the new rules will mean that more businesses will need to comply with the requirements of the Directive, as retailers and organisers that only offer certain elements of package travel will now be caught.
BIS made the decision that the new protections under the Consumer Contracts (Information, Cancellation and Additional Payments) Regulations 2013, due to come into force on 13 June 2014, would not apply to package travel, given that the EC was proposing new rules for the sector. If the amendments to the Package Travel Directive are not passed by May, however, it may be some time before we see these changes in practice.