Brussels, 26 November 2009
Consumers: EU set to extend holiday travel protection
Millions of travellers who book holiday ‘packages’ with combinations of flights, hotels, car rentals etc on the internet or in the high-street look set to receive tougher financial protection if things go wrong, under plans put out for consultation by the European Commission today. The Commission is consulting on extending the basic cover provided by EU’s 1990 Package Travel Directive – on information, liability for sub-standard services and protection for insolvency - to the next generation of ‘dynamic packages’ where consumers make up their own packages, often online, through one website or different partner websites. 23% of EU consumers, and over 40% in countries like Ireland, Sweden are now booking "dynamic packages", many of which currently fall outside EU protection rules (67% mistakenly think they are protected). Following the recent spate of airlines going bust, the paper also considers extending basic insolvency protection for consumers beyond package and dynamic packages across the board, including for stand alone airline tickets.
EU Consumer Commissioner Meglena Kuneva said: "We need tough protection that gives all consumers booking a package holiday the peace of mind they deserve, and we need a level playing field so businesses compete on equal terms. I am particularly concerned about the issue of insolvency. Anyone who saw the TV pictures of thousands of holidaymakers stranded at airports after bankruptcies from Sky Europe to XL, Futura and Zoom, knows that now is the right time to ask tough questions about extending basic insolvency protection to consumers across the board."
The current rules
The EU Package Travel Directive (PTD), dates back to 1990 when the most common type of holiday was a two week package booked through a travel agent using a brochure. The PTD covers pre-defined package holidays combining at least two of the following: (1) transport, (2) accommodation (3) other tourists services such as sightseeing tours (sold at an inclusive price).
The Directive provides protection covering: information in brochures, rights to cancel without penalty, liability for services (eg sub-standard hotels) and protection in the case of a tour operator or airline going bust.
6 priority areas for review
The 1990 PTD is no longer suited for today’s travel market. The internet and low cost airlines have transformed business models and changed consumer behaviour. Increasingly large volumes of bookings are made by consumers putting together their own packages, often online.
6 priority areas have been identified for review:
1. The scope of the Package Travel Directive: The paper considers which types of new package holidays should be covered by the PTD. These could include:
(1) Packages put together by the consumer on the internet from the same website in one go.
(2) Packages put together by websites linked through partnership agreements. For instance, a consumer may book a flight online and then be redirected to a partner website offering hotel stays or car rental.
2. Information: The paper consults on the information to be provided to consumers, when and in what format. The current PTD focuses on brochures and does not mention other media, such as websites.
3. Liability for substandard services and assistance for consumers: The paper consults on who should be liable for the performance of services and for assisting the consumer with problems during the holiday. Today, the old distinctions between carriers, tour operators and travel agents are often blurred. It can be unclear who is responsible when things go wrong.
4. Contract Changes: The PTD allows consumers to cancel a contract without penalty if "essential elements" eg overall price, change in carrier, are changed. The paper considers if there is a need to exchange existing rules on price revision.
5. Insolvency: The PTD requires the tour operator or travel agent to provide security for the refund of all money paid by the consumer and for the repatriation of the consumer in the event of bankruptcy. The risk of insolvency has increased recently. Following a recent spate of airlines going bust, the paper considers whether basic insolvency protection should be extended to cover buying standalone airline tickets (i.e independent travel arrangements not part of any package) so that passengers would be reimbursed for money paid over or repatriated if the airline went bankrupt.
6. Travel Protection Label: The paper considers a “Travel Protection Label” at EU level to indicate which travel products and/or combination of products were protected under the legislation.
What happens next?
The Commission intends to bring forward concrete proposals to review the Package Travel Directive in Autumn 2010. The Commission is also in the process of preparing a review on air passenger rights which will deal with a wide range of consumer issues, including the insolvency of airlines.
Key developments in the package travel sector:
- Europe is the world's largest regional travel market with sales of €246 billion in 2008. Traditional packages (pre-packaged deals containing several elements such as travel and accommodation) account for 40% (€ 98.4 billion) of the total travel market, while dynamic packages for 33% and other travel arrangements for 25% of the market.
The period of consultation is from 26.11.2009 to 07.02.2010
The online consultation: