New Rules on Package Holidays

Package holiday deals are the subject of a new proposal from the European Commission, which says the legislation will provide much-needed protection to consumers purchasing such packages.

Different forms of online packages and assisted travel arrangements will now be brought under the same legislation. At the same time, the proposal aims to minimise obstacles to cross-border commerce in such packages and reduce costs for operators wishing to operate cross-border, says the Commission.

The EU established certain rights for travellers purchasing package holidays in 1990. Today’s travel market however is more complex, and a 1999 Commission report found that Member States had implemented the rules contained in the 1990 Directive unevenly. Furthermore, the development of online sales and the liberalisation of the airline sector have radically changed the way in which consumers organise their holidays.

The proposal is essentially about “bringing the 1990 Package Travel Directive into the digital age”. It will go further than existing legislation by introducing stricter controls on surcharges and requiring operators to pass on price reductions. It will also make sure that information on liability is available in plain language. Member States or traders will not be able to derogate from mandatory rules designed to better protect travellers.

Scope and Definitions

The Directive will apply to packages offered for sale or sold by traders to travellers, and to assisted travel arrangements.

‘Assisted travel arrangement' means a combination of at least two different types of travel services for the purpose of the same trip or holiday. Retailers who are in the business of facilitating the purchase of 'assisted travel arrangements' must explain clearly to travellers that only the individual service providers are liable for the performance of the travel services concerned.

The Directive will not apply to packages and assisted travel arrangements covering a period of less than 24 hours unless overnight accommodation is included.

Information Obligations

The proposed Directive specifies specific pre-contractual information which organisers and, where applicable, retailers must provide to travellers wishing to buy a package. This information includes the travel destination, the means, characteristics and categories of transport, whether meals are provided and the whether access for persons with reduced mobility is guaranteed.

Member States must ensure that package travel contracts are in plain and intelligible language and, in so far as they are in writing, legible.

These requirements apply in addition to information requirements under other applicable Directives or Regulations.

Changes to the Contract

The proposal also lays down the conditions under which the traveller's right to transfer the package to another person may be exercised. Member States must ensure that a traveller may, after giving the organiser reasonable notice on a durable medium before the start of the package, transfer the contract to a person who satisfies all the conditions applicable to that contract.

Member States must also ensure that prices are not subject to revision, unless the contract expressly reserves the possibility of an increase and obliges the organiser to reduce prices to the same extent as a direct consequence of changes in the cost of fuel, the level of taxes or fees or exchange rates relevant to the package. The proposal also contains additional termination rights for travellers before the start of the package.

Performance of the Package

The proposal contains rules on the organiser's liability for the performance of the package and the obligation to provide assistance to the traveller. In contrast to the 1990 Directive, only the organiser is liable for the performance of the package. This aims to avoid a doubling of costs and litigation.

At the same time, uniform rules on liability will facilitate cross-border transactions by organisers and retailers. The proposal aims to help travellers in the event of disappointment, including the lack of performance and the improper performance of the services. Obligations to remedy any lack of conformity, and to make suitable alternative travel arrangements, are also specified.

Insolvency Protection

The 1990 Directive created a general obligation for 'the organiser and/or retailer' to provide insolvency protection so as to ensure the repatriation of passengers and the refund of advance payments in the event of insolvency. Due to different legal solutions chosen by the Member States, this often led to duplication of costs for organisers and retailers.

Under this proposal, only package organisers and retailers who facilitate the purchase of 'assisted travel arrangements' are subject to this obligation. At the same time, the proposal lays down more specific criteria on the effectiveness and the scope of the required protection.

To facilitate cross-border operations, the proposal explicitly provides for the mutual recognition of insolvency protection.

Assisted Travel Arrangements

To ensure legal certainty and transparency for all parties, retailers offering assisted travel arrangements must explain to travellers in a clear and prominent manner that only the relevant service providers are liable for performance of the services and that travellers will not benefit from any EU rights granted to package travellers, except the right to a refund of pre-payments and, where relevant, to repatriation in case the retailer itself or any of the service providers becomes insolvent.

Next Steps

This proposal for a Directive will now go to the European Parliament and Council. Member States will be obliged to comply with the regulations and administrative provisions contained in the Directive within 18 months of its entry into force.

Within five years of its entry into force, the Commission will submit a report on the application of the Directive to the European Parliament and the Council. The report will be accompanied, where necessary, by legislative proposals to adapt this Directive to developments in the field of traveller rights.