Who: European Commission
When: 9 July 2013
Law stated as at: 1 August 2013
The European Commission has published proposals for a revised Directive on package travel and assisted travel arrangement which could replace the existing Package Travel Directive (90/314/EEC) (the “PTD”) and require the UK to make changes to the Package Travel, Package Holiday and Package Tours Regulations 1998 (SI 1992/3288) (the “PTRs”). The PTD and PTRs introduced protection for consumers booking package holidays. This protection includes the right to receive all necessary information before signing the package contract, and financial protection and repatriation in the event that a tour operator goes bust.
The reasons behind the revised Directive proposals
Following extensive consultations the European Commission is now looking to update the PTD to respond to a fundamental transformation in the travel market since the PTD came into effect in 1990: customers are increasingly opting out of package holidays chosen from brochures in favor of customised holidays purchased in component parts, often from several different providers selling directly to consumers via the internet. These customised holidays do not fall within the traditional definition of a “package” so the PTD is difficult to apply in this context. This has left consumers on customised holidays unclear on their legal protection and holiday providers unclear of their obligations. The Commission’s proposals therefore aim to update the PTD to better reflect the modern holiday market.
The changes proposed
For consumers purchasing both package and customised holidays the reforms proposed by the Commission include:
• Introducing a 10% cap on price increases and a requirement to pass on price reductions to consumers.
• Improving cancellation rights by enabling customers to cancel holiday contracts before leaving home in exchange for paying the travel provider reasonable compensation, and to cancel holiday contracts free of charge before departure if natural disasters or civil unrest would affect the holiday.
• Clarifying in plain language that the holiday provider will be responsible for all services included in the holiday (the Commission believes that the current myriad of national laws concerning one party taking responsibility has meant that holiday organizers and retailers often refer consumers to each other, neither taking responsibility).
• Providing customers with better redress including price reductions and compensation for damage suffered (e.g. for a spoilt holiday) in the case of a travel service not being performed as it should have been.
• Ensuring holiday retailers give consumers a single point of contact to which complaints or claims can be directed to should something go wrong.
Specific rights for consumers purchasing customised holidays will include providing a right to refund and the cost of repatriation should the holiday retailer, travel carrier or any other relevant service provider go bankrupt during the holiday, and the right to better information about who is liable for the performance of each service.
Holiday providers will welcome several benefits proposed by the Commission including the abolishment of outdated requirements to reprint brochures and the facilitation of cross-border trade by introducing EU-wide rules on information, liability and mutual recognition of national insolvency protection schemes.
Why this matters:
The Commission claims that implementing these proposals will mean estimated additional 120million consumers who opt for customised holidays will also be protected by the PTD. For holiday providers, the Commission’s proposals aim to cut red tape and compliance costs.
The Commission estimates that abolishing outdated brochure requirements alone could save tour operations and travel agents an estimated €390million per year. More generally, the Commission hopes that its proposals will make the EU holiday market (in particular the online market) more transparent so as to increase consumer trust and boost demand. Holiday providers will no doubt welcome these measures if they improve consumer confident and boost growth in this key sector of the EU economy as the Commission suggests.