“Today, the 13th of May 2020, the European Commission issued an official recommendation on vouchers offered to passengers and travellers as an alternative to reimbursement for cancelled package travel and transport services in the context of the COVID-19 pandemic.
The European Consumer Centre Ireland welcomes the European Commission’s recommendations that came out this morning from Brussels. Overall, the Commission’s communication confirms that EU passenger and package travel rights remain unchanged for all European consumers, including Irish consumers. In brief, what the communication conveys is that consumers retain the cash refund as a primary means of reimbursement, and, while they can be offered vouchers, it is entirely their decision to accept these or not.
The EU Commission today offers advice to member States and travel providers on how best to manage the provision of vouchers for cancelled services. The Commission suggests that vouchers could be an attractive option for consumers where there are State guarantees in place along with other incentives. However, it is important to point out that the option to request a refund remains’. – Dr Cyril Sullivan, ECC Ireland
At a very practical level, the Commission, in the same communication:
Sets out a unified approach to be used by European states and by travel/transport businesses across the EU with respect to both consumer refunds and voucher offers.
Specifies in clear detail the financial means with which European states and European businesses can bolster their liquidities (EU emergency funds, state aid, business reliefs) that will subsequently allow them to operate refunds, when asked by consumers.
Recommends clear and achievable ways for both EU states and businesses to make vouchers more attractive to consumers.
Having prepared the ground for both countries and businesses to revive the travel and transport industries across the European Union, the Commission appeals to individual consumers, as well as to representative consumer rights organisations and enforcement authorities to help foster reasonable cooperation between the trade and the consumer on the matter of refunds and vouchers.
We refer to the main points of the Commission’s recommendations below.
PASSENGER RIGHTS: AIR, BUS, RAIL, SEA AND INLAND WATERWAYS
Regulations (EC) No 261/20046 , (EC) No 1371/20077 , (EU) No 1177/20108 and (EU) No 181/20119 set out passenger rights in the event of cancellations, namely re-routing or reimbursement. As re-routing is not possible in most cases under the present circumstances, the de factochoice is between several reimbursement options, of which the most important are: a full cash refund, a voucher and a credit note.
Refunding the full cost of the ticket is due within 7 days following the passenger’s request for all air, sea and inland waterways transport, 14 days for bus and coach transport and 30 days for rail. Under the currently applicable European Union legislation, the reimbursement can be made in either cash (including electronically) or in the form of a voucher. Nevertheless, reimbursement by means of a voucher is only possible if the passenger agrees.
PACKAGE TRAVEL RIGHTS
Directive (EU) 2015/2302 provides that, if a package trip is cancelled due to “unavoidable and extraordinary circumstances” (including COVID-19), travellers have the right to a full refund of any payments made for the package, within 14 days after termination of the contract. In this context, the organiser may offer the traveller reimbursement in the form of a voucher, but travellers can still request a cash refund.
Similarly, where changes to a package travel contract, such as a postponement, substitution or termination occur, a voucher may also be offered by the organiser, provided that travellers are not deprived of their right to cash reimbursement.
The European Commission acknowledges that “the numerous cancellations entailed by the COVID-19 pandemic have led to an unsustainable cash-flow and revenue situation for the transport and travel sectors. The liquidity problems of organisers are exacerbated by the fact that they have to reimburse the full price of the package to the traveller while they do not themselves always receive reimbursement of prepaid services that form part of the package in due time.” Which is why, “if organisers or carriers become insolvent, there is a risk that many travellers and passengers would not receive any refund at all.”
In order to remedy the situation above, the European Commission recommends that:
traders “[make] vouchers more attractive”, which “would increase their acceptance by passengers and travellers. This would help to ease the liquidity problems of carriers and organisers and could ultimately lead to better protection of the interests of passengers and travellers.”
“vouchers should be protected against insolvency of the carrier or of the organiser. Such protection could be set up by the private or the public sector”.
“[EU] Member States might consider the adoption of schemes to support operators in the travel and transport sectors in line with Union State aid rules”, including by availing of the EU’s “Temporary Framework for State aid measures to support the economy in the current COVID-19 crisis”, last amended on 8 May 2020, which “aims to remedy the liquidity shortages faced by companies by allowing […] direct grants, tax advantages, State guarantees for loans and subsidised public loans.”
“Member States may decide, following the bankruptcy of a carrier or organiser, to cover reimbursement claims of passengers or travellers. Such coverage of reimbursement claims would only benefit passengers or travellers and not undertakings” and can “be implemented by Member States without prior approval of the Commission.”
The European Commission recommends further flexibility when it comes to vouchers which:
– carriers or organisers propose to passengers or travellers, as an alternative to reimbursement in money
– are subject to the passenger’s or traveller’s voluntary acceptance
– involve cancellation by the carrier or organiser made as from 1 March 2020 for reasons linked to the COVID-19 pandemic
The Commission recommends these vouchers should:
> be covered by protection against insolvency of the carrier or of the organiser
> have a minimum validity period of 12 months
> be automatically reimbursed in full within 14 days after the end of its validity period, if not redeemed
> be able to be used for any payments in respect of new bookings made before their expiry date even the service takes place after that date, towards any other transport services or package travel offered by the carrier or organiser, provided the services are of equivalent type and quality
> be transferable to another passenger without any additional cost both in the case of transport or of package travel.
To the EU Members States, the European Commission recommends that they:
“ensure that reimbursement claims caused by the COVID-19 pandemic are satisfied” and “that they benefit all passengers or travellers regardless of their service provider”
“[set] up guarantee schemes for vouchers to ensure that, in the event of insolvency of the issuer of the voucher, passengers or travellers are reimbursed.”
“following the bankruptcy of a carrier or organiser, [they] cover reimbursement claims of passengers or travellers”.
ECC Ireland notes that a number of EU Member States have already introduced such schemes as well as temporary emergency legislation aiming to support their travel package operators and transport industries, in both the tourism / travel package sector, as well as transport,accommodation and culture. On Friday 8th May 2020 here, the Irish Government agreed to provide a state guarantee for refund credit notes issued by Irish-licensed travel agents and tour operators “in the event that the travel agent or tour operator becomes insolvent.” Therefore, vouchers issued in Ireland might become a more attractive alternative to a cash refund, which it is difficult to secure at present.
Finally, for the successful implementation of these recommendations, the European Commission advises that:
“Consumer and passenger organisations at Union and national level should encourage travellers and passengers to accept, instead of reimbursement in money, vouchers” guaranteed against insolvency
“Business, consumer and passenger organisations at Union and national level, and Member States authorities, including their national enforcement bodies”, should contribute to informing and fostering cooperation between all parties involved in implementing these recommendations.”
Read the full text of the European Commission’s communication here.
Read the full text of the European Commission’s FAQ on cancellations of individually booked accommodations, car rental and events due to COVID-19 here.