On 27 October, the European Parliament adopted a new Package Travel Directive to replace the existing legislation, which will shortly be published in the Official Journal. Member States will have 2 years to implement the Directive, and a further 6 months for it to be in force. The current notional deadline is April 2018.
The new laws are a further modernisation of consumer protection law and a much-needed step to bring the legislation into line with the way in which travel packages are now booked online. The existing Directive has not kept pace with modern practice, leading to significant gaps and grey areas, where travellers had no rights to assistance or compensation if something went wrong. However, a necessary corollary of heightened protection is a greater burden on businesses. There are a number of areas where businesses who sell travel services will need to review their practices to ensure accurate risk management under the new regime.
One example of where the current regime comes up short against current consumer practices is in regard to “click-through” travel packages. A traveller who books a flight online can be offered the opportunity to book accommodation from the airline’s webpage with just a few clicks. Details are frequently transferred from one service provider to the next without the need to enter them again.
Under the current regime, such a procedure would not be considered a “package”. If, once at the destination, the accommodation fell through for any reason, the airline would have no obligations to compensate or assist the traveller, who would be left without a remedy.
The new Directive adopts a broader definition of “package”, which captures “click-through” packages and thus affords the same protection to travellers who have booked under this procedure as those who have booked more traditional package holidays through a travel agent. Under the example above, the airline, as the first service provider in the process, will be considered to be the “organiser” for the purposes of the Directive. Later provisions place a number of responsibilities on the organiser if a significant proportion of the travel services under the contract cannot be performed. These include repatriating the traveller at no extra cost, providing accommodation for up to three nights, to make alternative arrangements for the continuation of the package at an equivalent or higher quality, and to compensate the traveller if such alternative arrangements cannot be made.
“Linked travel arrangements” are offered lesser protection under the Directive, albeit more than currently, chiefly through compensation in the event of the insolvency of one of the service providers. The line between a “linked travel arrangement”, which is not a package, and a “click-through” arrangement, which is a package, is a narrow one.
There are heightened information requirements which all travel service providers must comply with, including stating clearly whether or not their product is considered a “package” and thus afforded the full range of protections under the Directive. There is a new right of cancellation for the consumer which did not feature in the old legislation, and it is harder for service providers to alter the price or terms of the contract.
Implications for business
The new Directive is good news for consumers, but may be worrying to businesses. Whilst the European Commission is keen to stress that businesses will find it easier to expand their operations into other member states as a result of the comprehensive standard information requirements and the obligation for member states to mutually recognise insolvency protection schemes, there is no doubt that businesses will need to carefully review their selling practices and insurance policies to ascertain where they may be facing increased exposure under the new rules.
In particular, travel service providers who are not currently selling package holidays will need to examine their processes to see if they might be classed as an “organiser” of a package under the new definitions. It may be desirable to alter practices to ensure that services will be classed as part of a “linked travel arrangement” rather than a “package”. Where businesses are already, or cannot avoid, being classed as an organiser, they will need to ensure their insurance covers them for liability for all services contained in the package, even those offered by other providers. This may be particularly relevant for airlines who routinely advertise hotel bookings on a “click-through” basis.
Finally, businesses should set up procedures for supplying to consumers the enhanced information required, and should check that their cancellation policy and cancellation fees are in accordance with the new Directive.