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Inaugural Irish Travel Industry Summit: EU Package Travel Directive

Inaugural Irish Travel Industry Summit: EU Package Travel Directive

“Transposition of the new EU Package Travel Directive is running a little bit late and I expect maybe 50% of the 28 Member States will meet the 1st January 2018 deadline,” said Veronica Manfredi, Head of Unit 2, Consumer and Marketing Law, European Commission, when addressing the inaugural Irish Travel Industry Summit organised by Irish Travel Trade News at the Clayton Hotel Burlington Road, Dublin 4, on Friday 24th November 2017.

The Summit was chaired by Martin Skelly, Travalue.ie, and the second session considered the EU Package Travel Directive and Brexit.

European Commission

Veronica Manfredi, European Commission, presented a comprehensive overview of the provisions of the new Directive.

Veronica Manfredi, European Commission

Veronica Manfredi, Head of Unit 2, Consumer and Marketing Law, European Commission

Aims of EU Directive

  • Digital Single Market
    • New online practices, variety of business models – rules were no longer fit for purpose
    • Consumers were getting different levels of protection vis-à-vis identical offers, depending on the business model chosen by the trader
  • Common goals
    • Increase consumer trust (e.g. Monarch Airlines, Air Berlin)
    • Ensure a level playing field

What is New About Packages

  • New broader definition of packages (Art. 3(2))
  • combination of two or more different types of travel services for the purpose of the same trip/holiday:
    • pre-arranged and customised packages sold by one trader

OR

  • in case of separate contracts, when one of the following is met:
  • Single point of sale and the travel services have been selected before the traveller agrees to pay
  • Inclusive or total price
  • Advertised/sold as a ‘package’
  • Combined after the conclusion of a contract which entitled the traveller to choose among a selection of travel services
  • Single booking process
  • Exclusion of packages purchased under a framework agreement arranging a business travel (Art. 2(2)c)

Information for Travellers

  • New information requirements for travellers (Art. 5-8)
    • no longer based on travel brochures, saving traders €390 million per year
  • More predictable prices (Art. 10)
    • 8% cap for possible price increases by the trader, beyond which travellers have the right to cancel free of charge
  • Stronger cancellation rights (Art. 12)
    • free cancellation before departure in case of natural disasters, war, or other serious situations at the destination
  • Clear identification of the liable party (Art. 13)
    • liability of the organiser of the package for all travel services
    • MS may decide that the retailer (often a travel agent) is jointly liable
    • if organiser established outside of EEA (Art. 20) – EU retailer subject to the obligations laid down for organisers

Linked Travel Arrangements

A new concept of a Linked Travel Arrangement (Art. 3(5)):

  • Does not meet the criteria for a package
  • Separate contracts with the individual travel service providers
  • A trader facilitates the booking of two or more travel services for the purpose of the same trip or holiday
    • on the occasion of a single visit or contact with his point of sale through a single point of sale (online or off-line), separate selection and payment (please reformulate more accurately); or
    • targeted facilitation of the conclusion of contracts for additional travel services within 24 hours from the booking of the first travel service
  • Exclusion of packages purchased under a framework agreement arranging a business travel (Art. 2(2)c)

Insolvency Protection and Booking Errors

  • Insolvency protection requirement for package organisers and LTA facilitators (Art. 17, 19)
    • even if not established in the EU but directing activities to a MS
    • LTA facilitators not obliged if they do not receive any payments or if they pass them immediately on to the relevant travel service provider(s)
  • Mutual recognition of insolvency protection (Art. 18)
    • effective, should cover reasonably foreseeable costs
  • Should cover repatriation costs when package organiser/ LTA facilitator responsible for the carriage of passengers
  • Liability for booking errors (Art. 21)
    • all traders will be liable for errors due to technical defects in the booking system as such which are attributable to them
    • traders could also be held liable for errors made during the booking process, if they have agreed, vis-à-vis the traveller, to arrange the booking

Enforcement

In parallel, the Commission is working on better enforcement:

  • Revised Consumer Protection Cooperation (CPC) Regulation
    • Tools to better tackle Union-wide problematic practices
  • New Deal for Consumers – proposal in spring 2018
    • Targeted amendments to substantive consumer law acquis (e.g. Consumer Rights Directive, Unfair Commercial Practices Directive)
    • Revision of the procedural Injunctions Directive 2009/22/EC: improved private enforcement entailing redress possibilities in mass-harm situations

Awareness-raising Campaign

  • In co-operation with relevant business representatives
  • Targeted at travellers
  • Close to the date of application (01/07/2018)

Evaluation

  • Report on provisions applying to online bookings made at different points of sale (‘click-through bookings’) and the qualification of such bookings as packages, LTAs or stand-alone services by 01/01/2019
  • General report on application by 01/01/2021

International Level

  • UNWTO draft Convention on the protection of tourists and the rights and obligations of tourism providers
    • Includes annexes on package travel and accommodation services
  • EU participates in the WG elaborating the text of the Convention
    • Commission negotiation mandate from 03/2017
    • EU reply to the UNWTO survey on the draft text sent in 10/2017
  • UNWTO Secretariat might call a Treaty conference before 09/2019

Commission for Aviation Regulation

David Hodnett, Commision for Aviation Regulation, outlined the options for transposition of the EU Directive into Irish law – his understanding is that the Department favours the use of Regulations – and, when discussing Linked Travel Arrangements, said: “Air carriers may now also be regarded as traders facilitating linked travel arrangements. This is a new concept that is not part of the existing Irish legislative framework. This raises the requirement that such air carriers need to put in place additional insolvency protection.”

David Holden, Commission for Aviation Regulation

David Hodnett, General Counsel, Commission for Aviation Regulation

He then reviewed insolvency arrangements, and said: “Article 19 requires that traders facilitating linked travel arrangements shall provide security for the refund of all payments they receive from travellers insofar as a travel service which is part of a linked travel arrangement is not performed as a consequence of their insolvency. If such traders are the party responsible for the carriage of passengers, the security shall also cover the traveller’s repatriation.”

In addition, “Article 12(5) of the Directive indicates that Member States have an option to require travel contracts to provide the traveller with the right to cancel the contract within 14 days for no reason with respect to off-premises contracts.

“The Directive allocates liability for the performance of the package to the organiser. Article 13(1) permits Member States to provide for the concurrent liability of the retailer of a package, in addition to the liability of the organiser. Section 20 of the Package Holidays and Travel Trade Act, 1995 allocates responsibility for the performance of such contracts to the organiser and not to the retailer. The Commission recommends no change to this.”

Brexit: Opportunity or Challenge?

“More ink has been spilled on the matter of the pros and cons of Brexit to Ireland, the UK, Europe and the global economy than any other global macroeconomic topic since the announcement of the Gutenberg Printing Press,” asserted Cormac Meehan, ITAA President. “Much and most of this is purely speculative. Uncertainty is the third of the ugliest of sisters, otherwise, RISK! In the absence of information and options it is impossible to assess risk.

Cormac Meehan, President, Irish Travel Agents Association

Cormac Meehan, President, Irish Travel Agents Association

“Over 12 months ago, the Association of British Travel Agents (ABTA) published an analysis of what Brexit might mean for the UK travel sector in association with the consultancy firm Deloitte. Some of the Deloitte insights are reflected in a confidential EU Brexit Negotiations Position Paper leaked to the media on the 8th/9th November last. Whatever happens to the macro economy of Europe, post Brexit, will affect us all, whether in tourism, trade or manufacturing.

“Our own Department of Transport, Tourism and Sport, despite being much maligned, produced a Brexit impact report in June 2017. This study highlighted the key connections with the UK. Increased border controls will stifle the movement of over 50 million people annually between our two islands. Symbiotic would appear to be a word that Whitehall does not understand. At a minimum spend of €500 per head, a figure of over €5 billion emerges – economists of my academic generation will understand the freefall implications when the multiplier effect is considered. Jean Claude Trichet and Christine Legarde have a lot to answer for by espousing monetary and interest rate mechanisms as tools of macroeconomic management.

“A respected colleague in Northern Ireland shared with me his views that the sooner that the EU implodes the better. With the hamstrung, ham-fisted and gammon-sized regulation, directives and prescriptions we can quote the philosopher Nietzsche: “What does not kill us makes us stronger!”

“The challenges from a Northern Ireland perspective are:

  • A weak Pound means that cost of sales will rise, margins will drop – remember the margin!
  • How do we price future trips? Exchange rates, fuel prices and charter costs.
  • Lower customer numbers – higher prices.
  • The rise of the discount mentality, aggregating websites with little or no consumer protection.
  • Inbound tourism to the UK rises, great news but what about the balance?
  • Staff mobility.

“A solution – join EFTA like Norway, Iceland, Switzerland and Liechtenstein.

“A big problem is lurking on the horizon: EUPD II – Implementation and application, jurisdiction and remember Irish consumers also buy travel products and services from the UK! Caution is the watchword here.

“Decisions can be reactive rather than proactive, the positive side is that we have lower interest rates, low cost debt financing but as an industry our margins are so low that the current environment of low cost finance is almost irrelevant, it’s about fiscal tolerance.

“The European Policy Centre as economists are equally ambiguous. On the one hand and then on the other hand…how many fingers do you need on each hand to be an economist? I suspect five and six!

“The traditional travel professional must get ready for a very different world. The single sky treaty will have to be renegotiated. November 2017 – 2019 can’t work. Low cost carriers will move their bases from the UK sooner rather than later.

“Uncertainty and risk are never good for growth.

“ABTA, what are our colleagues in the UK saying? 50% will experience a negative impact, what about ATOL and the company compensation fund in the UK and the knock-on effects?

“From a tourism perspective, the key outcome of the EU/UK negotiations will centre primarily on the UK‘s demand over the control of the movement of people. The major threat of a disruption to the Common Travel Area is a major concern.

“Brexit throws up a number of questions for the airlines and the issue of Ireland/UK connectivity. The biggest is whether or not the UK can remain in the EU’s open skies policy, which allows free access to all EU airspace.

“IATA, what are our colleagues in Madrid and Geneva saying? It’s not often that I agree with IATA but I have discovered that disagreeing with that body is like a turkey voting for Christmas. At a recent global travel agents summit, I concluded that IATA is just as much a global quango as the UN, FIFA and the IOC. Our US colleagues are not bowing or buying into the IATA paradigm of regulation.

“Nevertheless, the head of IATA, Alexandre de Juniac, recently said, quite simply, that when the UK leaves the European Single Market, it will also leave the European Common Aviation Area and when it breaks from the EU, all traffic rights to the rest of the world associated with Europe will be…thrown into question.

“I echo M Juniac’s exhortation to the UK:

Get ready, get started;

Don’t step backwards;

Don’t underestimate the damage limitations that you have to do to reclaim global credibility.

“An Taoiseach Leo Varadkar is following the lead of mandarins who have little understanding of the global aviation business and the movement of international capital. It would appear that our government are unable to convince their UK counterparts of the gravity and urgency of this situation.

“We need to embrace a new political philosophy, this will involve eschewing confederate solutions and adopting federal interstate alliances. We need to embrace relationships with sub-federal groups such as the Scots, the Welsh, the Basques, the Catalans and any other like-minded nations, we must do so and prepare our political and legislative mechanisms to cope with and facilitate these very important bilateral relationships in tandem with preserving our existing confederate relationships. The USA is a casebook example: different states, different laws, varying treaties and yet, harmonisation in a monopolistic and homogeneous market of over 300 million consumers, of whom less than 40% hold passports!

“As a travel professional, living and working within 10km of a frontier with Northern Ireland, I understand conflict, trade barriers, smuggling, the vagaries of exchange rates, terrorism and socio/political prejudice. Our profession is resilient and we are ready, willing and able to work with our European business partners, our politicians and the relevant organs of state to work towards certainty and the elimination of our exposure to risk.”

Q&A

A lively Q&A session highlighted Irish travel agents’ concerns about some of the new provisions, particularly Linked Travel Arrangements, and enforcement, while airlines’ concerns were also highlighted.

These Q&As will be covered in a subsequent eBulletin report.

A Summary

As rapporteur for the Industry Summit, Neil Steedman, Irish Travel Trade News, provided a brief summary of the afternoon’s proceedings, which can be viewed at: https://youtu.be/q2Bpla_AoS8

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NEIL STEEDMAN has been a trade journalist, copywriter, editor and proofreader for 50 years, and News & Features Editor for ‘Irish Travel Trade News’ for the past 40 years.

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