Explanatory Memorandum to COM(2013)512 - Package travel and assisted travel arrangements - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)512 - Package travel and assisted travel arrangements. |
|---|---|
| source | COM(2013)512  |
| date | 09-07-2013 |
Tourism plays a central role in Europe’s economy today. With some 1.8 million businesses, mostly SMEs, employing 5.2% of the total workforce, the European tourism industry is an engine for growth in the EU. The total contribution of European travel & tourism, including related sectors, accounts for around 10% of EU GDP .
The adoption of Directive 90/314/EEC on package travel in 1990 created important rights for European travellers purchasing package holidays, typically consisting of passenger transport and accommodation. A 2002 ruling by the European Court of Justice i clarified that the notion of 'pre-arranged combination' covers also travel services combined by a travel agent at the customer's express request just before the conclusion of a contract between the two.
Directive 90/314/EEC ensures that consumers receive essential information before and after signing a package travel contract. It provides that organisers and/or retailers are responsible for the proper performance of the package, even if the services are provided by sub-contractors, and regulates what happens if there are changes to the package travel contract. It also ensures that travellers receive a refund of pre-payments and are repatriated in the event of the organiser's and/or retailer's insolvency.
However, in 1990 the structure of the travel market was much simpler than today and the Internet did not exist. Despite the abovementioned CJEU ruling, it remains unclear to what extent modern ways of combining travel services are covered by the Directive.
As highlighted in the 1999 Commission's report i on the implementation of the Directive, significant differences remain in the laws transposing the Directive, due to its minimum harmonisation approach, the broad discretion given to Member States, e.g. with regard to the liable party or parties, and ambiguities in the text.
The modernisation of Directive 90/314/EEC responds to requests from the co-legislators, the European Economic and Social Committee, as well as the European Consumer Consultative Group. A large part of the industry and consumer organisations have also asked for a revision. A revision of the Directive is explicitly mentioned in the European Citizens' Reports, the European Consumer Agenda and in the Single Market Act II i.
73% of EU households had access to the Internet in 2011 i. Almost two-thirds of EU citizens use the Internet at least once a week, more than half of them every day or almost every day. Travel services are among the most popular products purchased on-line.
The development of online sales and the liberalisation in the airline sector have changed the way in which consumers organise their holidays, having led to different ways in which traders assist consumers in customising combinations of travel services, in particular online. The relevant traders include travel agents, tour operators, airlines, cruise lines, etc. There is ambiguity in many Member States as to whether such combinations fall under the scope of the Directive and whether traders involved in putting together such combinations are liable for the performance of the relevant services, especially in the online environment.
This is causing uncertainty for traders and consumers.
It also implies that market players which are today explicitly covered by the Directive are subject to different rules and different costs compared to those businesses which are not covered or do not consider themselves to be covered by the Directive, although they are competing for the same customers.
Some of the provisions of the Directive have become outdated or otherwise create unnecessary burden for companies, such as information requirements for brochures and the inclusion of managed business trips.
Legal fragmentation through numerous discrepancies in the laws of the Member States generates additional costs for businesses wishing to trade cross-border.
The 'Consumer Detriment Study in the area of Dynamic Packages'[10] estimated the yearly personal consumer detriment[11] in relation to combined travel arrangements where the applicability of the Directive is uncertain. The study showed that problems with such travel arrangements are more frequent and more detrimental to consumers than problems related to traditional packages which are clearly covered by the Directive.
To a certain extent also consumers who buy traditional pre-arranged packages suffer detriment, because some provisions of the Directive are outdated, unclear or leave gaps, e.g. the absence of a right for consumers to cancel the package before the departure.
In accordance with Article 114 of the Treaty, the overall objective of the revised proposal is to enhance the functioning of the Internal Market and achieve a high level of consumer protection through the approximation of rules on packages and other combinations of travel services.
The proposal seeks to establish a level playing field between operators, remove legal obstacles to cross-border trade and reduce compliance costs for businesses.
At the same time, it aims to achieve a high level of consumer protection and reduce consumer detriment by clarifying which combinations of travel services are protected under EU package travel rules and replacing unclear and outdated provisions. It contains mandatory rules for the protection of travellers, which Member States or traders may not derogate from to the detriment of consumers.
During the last decade the Commission undertook a comprehensive review of the consumer acquis leading to the adoption of Directive 2008/122/EC on timeshare and Directive 2011/83/EU on consumer rights. The revision of Directive 90/314/EEC is part of this exercise.
The proposal is complementary to existing EU law, in particular the Unfair Contract Terms Directive (93/13/EEC), the Unfair Commercial Practices Directive (2005/29/EC), the Consumer Rights Directive (2011/83/EU), the Regulations in the area of passenger rights (Regulations (EC) No. 2004/261, (EC) No. 1371/2007, (EC) No. 1177/2010 and (EC) No. 181/2011) as well as Directives 2000/31/EC on electronic commerce and 2006/123/EC on services in the internal market.
Furthermore, the proposal is complementary to Regulation (EC) No 593/2008 (Rome I) on the law applicable to contractual obligations, and to Regulation 44/2001 (Brussels I) on the law on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters.
Contents
- RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
- LEGAL ELEMENTS OF THE PROPOSAL
- BUDGETARY IMPLICATIONS
- 1.1. General context
- 1.2. Grounds for the proposal
- 1.2.1. Development of Internet distribution and liberalisation in the airline sector
- 1.2.2. Unnecessary compliance costs and obstacles to cross-border trade
- 1.2.3. Consumer detriment - unclear and outdated rules
- 1.3. Objectives of the proposal
- 1.4. Consistency with other policies and objectives of the Union
- 2.1. Consultation of interested parties
- 2.2. Impact Assessment
- Option 1 - Maintaining the status quo, i.e. maintaining the Directive in its present form
- Option 3 - Package Travel Label and/ or requirement on traders selling assisted travel arrangements to state that the services in question do not constitute a package (add-on options)
- Sub-option B - introduction of an obligation, for traders offering combined travel arrangements which are not packages, to clarify that they are not selling a package
- 3.1. Summary of the proposed action
- 3.2. Legal basis
- 3.3. Subsidiarity principle
- 3.4. Proportionality principle
- 3.5. Impact on Fundamental Rights
- 3.6. Review clause
- 3.7. European Economic Area
- 3.8. Explanatory documents
- 4. Explanation of the proposal
- 4.1. Subject-matter, scope and definitions (Articles 1-3)
- 4.2. Information obligations, conclusion and content of the package travel contract (Articles 4 -6)
- 4.3. Changes to the contract before the start of the package (Articles 7-10)
- 4.4. Performance of the package (Articles 11-14)
- 4.5. Insolvency protection (Articles 15 and 16)
- 4.6. Information requirements for assisted travel arrangements (Article 17)
- 4.8. Final provisions (Articles 27 - 29)
In 2008, in a public consultation on its 2007 working document, the Commission received more than 80 contributions from business stakeholders, consumer organisations, lawyers, academics and 14 Member States. In January 2009, the Commission launched the Consumer Detriment Study, which covered 17 EU countries and was based on interviews with a sample of 500 consumers.
In a second public consultation of October 2009, consisting of five on-line questionnaires targeted at consumers, consumer organisations, businesses, industry associations and Member States/public authorities, 89% of public authorities, 70% of business associations, 64% of businesses and 96% of consumer organisations supported a revision of the Directive.
In a workshop for Member States of 27 October 2009 particular problems and policy options were discussed. A subgroup of the European Consumer Consultative Group (ECCG) adopted its opinion on 21 April 2010.
On 22 April 2010 a stakeholder workshop discussed the impacts of the identified policy options. From September 2009 to October 2010 more than 15 interviews with key industry representatives were conducted.
In March 2012 the Commission commissioned a study to test a Package Travel Label and consumer behaviour when purchasing so-called dynamic packages. In June 2012 the Commission organised a workshop for Member States and a stakeholder conference to further discuss the revision process. On 8 February 2013 the ECCG again requested a revision of the Directive.
The Impact Assessment (IA) analysed eight policy options plus certain sub-options.
Option 2 – Guidelines, i.e. maintaining the Directive in its current form and preparing guidelines, including CJEU rulings and clarification on the scope and liability
Option 3 - Package Travel Label and/ or requirement on traders selling assisted travel arrangements to state that the services in question do not constitute a package (add-on options)
Sub-option A - introduction of a 'Package Travel Label' – an obligatory logotype to be presented to consumers when purchasing a package
Sub-option B - introduction of an obligation, for traders offering combined travel arrangements which are not packages, to clarify that they are not selling a package
Option 4 - Repeal of the Directive and self-regulation by industry
Option 5 - Modernisation of the Directive and coverage of 'one-trader packages'
Option 5 involves a legislative revision which would keep the main structure of the existing Directive, while clarifying its scope through the explicit inclusion of 'one-trader packages' and revising several provisions. The revised Directive would apply to travel services which are combined for the same trip or holiday on one website or at one high street agent.
Option 6 – Graduated approach - modernisation of the Directive and coverage of both 'one-trader' and 'multi-trader' packages while applying a lighter regime to 'multi-trader' assisted travel arrangements
This option corresponds to Option 5 supplemented with a graduated extension of the scope of the Directive aimed to cover:
- 'multi-trader' packages, i.e. combinations of travel services through different traders showing certain features associated with packages, which would be subject to the same regime as other packages (including full liability for the proper contractual performance and the obligation to procure insolvency protection),
-"multi-trader" assisted travel arrangements, i.e. those combinations of travel services which do not display the typical features of packages and are hence less likely to mislead consumers. They would be subject to a lighter regime consisting of insolvency protection and an obligation to state in a clear and prominent manner that each individual service provider is responsible for the correct performance of the services.
Option 7 – Modernisation of the Directive covering both 'one-trader' packages and 'multi-trader' travel arrangements
This option includes Option 5 and 6, whilst subjecting all 'multi-trader' assisted travel arrangements to the same obligations as packages.
Option 8 – “Travel Directive”
This option includes Option 7 plus an extension of the scope to stand-alone travel services, e.g. car rental, accommodation or flights, containing in principle the same rules for all travel services irrespective of whether they are part of a package or not.
The IA comes to the conclusion that the identified problems will be resolved most appropriately by Option 6, which this proposal is based upon.
The proposed Directive will clarify and modernise the scope of travellers' protection when purchasing combinations of travel services for the same trip or holiday by bringing within its scope different forms of on-line packages and assisted travel arrangements.
The proposal will ensure that travellers are better informed about the services they are buying and grant them clearer remedies if something goes wrong.
At the same time, by reducing legal fragmentation and strengthening mutual recognition of insolvency protection, the proposal will minimise obstacles to cross-border trade and reduce compliance costs for traders wishing to operate cross-border, and ensure a level playing-field in the travel market.
This proposal is based on Article 114 Treaty on the Functioning of the European Union (TFEU).
It lays down largely uniform rules in the area of packages and assisted travel arrangements in the Union, giving traders and travellers certainty about the content of their rights and obligations irrespective of the national law applicable to the contract, thereby removing unnecessary costs for cross-border transactions and giving more choice to consumers.
In accordance with Article 114 i TFEU, the proposal guarantees a high level of consumer protection by maintaining or improving the level of consumer protection compared with Directive 90/314/EEC.
The proposal complies with the subsidiarity principle as set out in Article 5 of the Treaty on European Union (TEU).
The objective of improving the functioning of the internal market, through removing differences between the laws of the Member States, and improving consumers' access to services from other Member States, cannot be sufficiently achieved by the Member States acting in an un-coordinated manner.
Therefore, the Union is best placed to address the identified problems by a legislative measure which approximates the national rules.
The proposal complies with the principle of proportionality as set out in Article 5 TEU.
Like Directive 90/314/EEC, it does not cover all aspects of travel law, but only certain aspects of packages and other combinations of travel services, where coordinated action by the Union is deemed necessary. For instance, it does not interfere with general national contract law and authorisation and licensing regimes.
According to the IA, non-binding measures such as recommendations, guidelines or self-regulation cannot achieve the abovementioned objectives.
A directive ensures a coherent set of rights and obligations, whilst allowing Member States to integrate these rules into their national contract law.
Furthermore, it will enable the Member States to implement the most appropriate means of enforcement and the necessary sanctions for breaches of its rules. In certain areas the proposal gives Member States the possibility to impose stricter rules.
In accordance with the Strategy for the effective implementation of the Charter of Fundamental Rights by the European Union[12], the Commission has ensured that the proposal complies with the rights set out in the Charter and further promotes their application. In particular, the proposal respects the freedom to conduct a business laid down in Article 16 of the Charter, while ensuring a high level of consumer protection, in accordance with Article 38 of the Charter.
The proposal obliges the Commission to present a report on the application of the Directive at the latest five years after its entry into force and to submit it to the European Parliament and the Council, where necessary accompanied by legislative proposals.
The proposed Directive concerns an EEA matter and should therefore extend to the European Economic Area.
In view of the complexity of the proposal and the different ways in which the Member States have transposed Directive 90/314/EEC, the Commission considers the transmission of documents explaining the relationship between the components of this Directive and the corresponding parts of national transposition instruments to be justified.
The proposal consists of 29 articles and two annexes (a table relating articles of Directive 90/314/EEC to articles of this proposal and the Legislative financial statement).
Article 1 sets out the subject-matter of the Directive. In conjunction with the definitions of package and assisted travel arrangement contained in Article 3, Article 2 determines its scope, taking into account the different ways in which travel services can be combined.
Based on the way in which travel services are presented to the traveller, combinations which meet any of the alternative criteria laid down in Article 3 will be considered as packages with the associated legal consequences for information requirements, liability and insolvency protection.
Combinations where retailers, through linked booking processes, facilitate the procurement of additional travel services in a targeted manner or where the traveller concludes contracts with the individual service providers and where the defining features of a package, e.g. an inclusive or total price, are not present, are defined as assisted travel arrangements. Retailers who are in the business of facilitating the purchase of assisted travel arrangements are subject to the requirement to explain clearly to travellers that only the individual service providers are liable for the performance of the travel services concerned. Furthermore, with a view to ensuring a certain layer of additional, Union-wide protection compared to the one stemming from rules on passenger rights or general consumer acquis also for travellers buying more than one travel service through them, it is appropriate to provide that such retailers have to ensure that, in case of their own insolvency or the insolvency of any of the service providers, travellers will receive a refund of their pre-payments and, where relevant, will be repatriated.
Since it is not appropriate to grant the same level of protection to business travellers whose travel arrangements are made on the basis of a framework contract concluded between their employers and specialised operators often offering, on a business-to-business basis, a level of protection similar to the one stemming from this Directive (so-called managed business travel), such travel arrangements are excluded from the scope.
Other limitations of the scope are maintained, including for so-called occasionally organised packages.
Apart from packages and assisted travel arrangements Article 3 defines other key terms of the Directive, including traveller, organiser, retailer and unavoidable and extraordinary circumstances. The organiser is defined as a trader who combines and sells/ offers for sale packages, either directly or through/together with another trader. Organisers are liable for the performance of the package (Articles 11 and 12), for providing assistance to the traveller (Article 14) and procuring insolvency protection (Article 15). Retailers and organisers are both liable for providing pre-contractual information (Article 4). Retailers are liable for booking errors (Article 19). Retailers facilitating the procurement of assisted travel arrangements are obliged to procure insolvency protection (Article 15).
4.2. Information obligations, conclusion and content of the package travel contract (Articles 4 -6)
Article 4 lists specific pre-contractual information which organisers and, where applicable, retailers have to provide to travellers wishing to buy a package. These requirements apply in addition to information requirements under other applicable directives or regulations.
Article 5 regulates the conclusion of the package travel contract.
Article 6 contains provisions on the content and the presentation of the contract or its confirmation as well as on documents and information to be provided before the start of the package.
Similarly to Article 4 i of Directive 90/314/EEC, Article 7 lays down the conditions under which the traveller's right to transfer the package to another person may be exercised.
Starting from the principle that agreed prices are binding, Article 8 lays down rules on the possibility and consequences of price changes, given that package travel contracts are often concluded a long time in advance. These rules are based on the same principles as Article 4 i – of Directive 90/314/EEC.
Article 8 maintains the right to impose price increases related to cost of fuel, taxes and exchange rate fluctuations, but clarifies the conditions compared with Directive 90/314/EEC. If an organiser reserves the right to price increases, it is now also obliged to grant travellers price reductions. Prices may not be increased by more than 10% of the price of the package.
With regard to changes other than price changes, distinct rules are set out for insignificant (Article 9(1)) and significant changes (Article 9 and (3)).
Compared with Directive 90/314/EEC, Article 10 contains additional termination rights for travellers before the start of the package. The right for travellers to terminate the contract against an appropriate compensation (Article 10 (1)) corresponds to rules and practices found in the Member States. Article 10 grants travellers the right to terminate the contract without compensation in the event of unavoidable and extraordinary circumstances.
These articles contain rules on the organiser's liability for the performance of the package (Articles 11-13) and the obligation to provide assistance to the traveller (Article 14).
In contrast to Directive 90/314/EEC, 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.
Articles 11 and 12 provide for the remedies available to the traveller in the event of lack of conformity, including the lack of performance and the improper performance of the services. These rules are based on the same principles as Articles 5 and 6 of Directive 90/314/EEC, but are presented in a more systematic fashion, providing certain clarifications and closing certain gaps.
Article 11 lays down the obligations to remedy the lack of conformity and to make suitable alternative arrangements for the continuation of the package where a significant proportion of the services cannot be provided as agreed in the contract. It is clarified that the latter obligation applies also where the traveller's return to the place of departure is not provided as agreed. However, where it is impossible to ensure the traveller's timely return because of unavoidable and extraordinary circumstances, the organiser's obligation to bear the cost for the continued stay is limited to EUR 100 per night and three nights per traveller in line with the proposed amendment to Regulation (EC) No 261/2004.
Article 12 contains provisions on price reductions related to lack of conformity and to alternative arrangements resulting in a package of lower quality, as well as on damages. In accordance with the Court's ruling in Case C-168/00 Simone Leitner, paragraph 2 clarifies that also non-material damage has to be compensated. Paragraph 4 regulates the relationship with compensation based on other legal grounds.
Since for many travellers the first point of contact is the retailer through which they booked the package, Article 13 provides that travellers may address messages, complaints or claims also to the retailer, the receipt of such notifications being decisive for compliance with any time-limits or prescription periods.
Under Article 14, organisers are obliged to provide assistance to travellers who are in difficulty.
Directive 90/314/EEC 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. According to Article 15 of this proposal, only package organisers and retailers who facilitate the purchase of assisted travel arrangements are subject to this obligation. At the same time, it lays down more specific criteria on the effectiveness and the scope of the required protection.
To facilitate cross-border operations, Article 16 explicitly provides for the mutual recognition of insolvency protection procured under the law of the organiser's/relevant retailer's Member State of establishment. To ensure administrative cooperation, Article 16 obliges Member States to designate central contact points.
To ensure legal certainty and transparency for the parties, retailers offering assisted travel arrangements have to 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 of the Union 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.
4.7. General provisions (Articles 18 – 26)
Article 18 contains particular rules for packages where the organiser it established outside the EEA.
Under Article 19, retailers involved in the booking of packages and assisted travel arrangements are liable for booking errors.
Article 20 clarifies that this Directive does not affect the organiser's right to seek redress from third parties.
Article 21 confirms the imperative nature of the Directive.
Article 22 on enforcement is a standard provision in the consumer acquis.
Article 23 is a standard provision on penalties for infringements of the national provisions transposing this Directive. Similar provisions can be found in the Consumer Rights Directive (2011/83/EU) and in the Unfair Commercial Practices Directive (2005/29/EC).
Article 24 obliges the Commission to submit a report on the application of this Directive to the European Parliament and the Council.
Article 25 amends Directive 2011/83 on consumer rights to ensure that that Directive applies fully to assisted travel arrangements and that certain general consumer rights apply also to packages.
Article 26 repeals Directive 90/314/EEC. Article 27 is a standard provision on transposition and fixes a transposition time-limit of 18 months. Articles 28 and 29 are standard provisions.
The proposal has very limited budgetary implications. The only operational costs relate to the preparation of the report on the application of this Directive, covering the preparatory work of an external contractor, i.e. operational appropriation of €0.2 million under the Rights and Citizenship programme, as well as administrative expenditure of around €0,184 million during seven years after the adoption of the Directive. This expenditure will be borne by internal redeployment and not entail an increase in the funds.