REVISION OF THE PACKAGE TRAVEL DIRECTIVE by forrests

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									REVISION OF THE PACKAGE TRAVEL DIRECTIVE
BEUC comments on the Commission’s working document

Contact: Nuria Rodriguez - legal@beuc.eu Ref.: X/057/2007 – 10/10/07
BEUC, the European Consumers’ Organisation 36 avenue de Tervueren, 1040 Bruxelles - +32 2 743 15 90 Want to know more about BEUC? Visit www.beuc.eu

Summary
Package travel is becoming outdated. Since the adoption of the directive in 1990, the tourism and travel market have significantly changed and consumer behaviour and preferences towards travel have also developed within this market. In the light of these developments, we recommend the directive to be brought up to date and amended accordingly. As regards the scope of application, we believe it should cover all sort of travel services. In particular, not only pre-arranged packages but also tailor-made packages have to be expressly included in the scope of a new directive. The 24hour limit currently needed to create a package has to be removed. Equally the new directive should cover services consisting of a single component or element i.e. only flight or only accommodation or only other services. Whether persons travelling for professional reasons should be protected or not when buying a package needs to be considered carefully. By no means must protection for consumers be lowered because of a broader definition of “consumer" in package travel. The “brochure” should include adequate information on the means of redress (ADR), and regarding insurance coverage. More information requirement are needed on accessibility for disabled people. The information on the price should indicate the final price (all-in price) of the package including all non-avoidable taxes, fees and charges. The new directive should state that no increases in the price are allowed within 30 days before departure or after the payment of the full amount of the travel costs. The consumer should be able to withdraw from the contract in case of force majeure. The consumer should be compensated when the organizer cancels the contract due to an insufficient number of participants in the package. Certain unilateral alterations of the contract by the organizer/retailer, besides changes in the price (article 4.5), should grant a right to compensation or withdrawal to the consumer. A regime of joint liability of the organizer and retailer vis-à-vis the consumer should be defined. The new directive should clarify that moral damages (loss on enjoyment) also qualify for the right of compensation. The development of a harmonised EU system of hotel categories should be envisaged. A harmonized guarantee scheme –guarantee fund or mandatory insurance- must be established at EU level. Overall, there is a need to bring about more coherence in consumer protection legislation in the field of transport. A comprehensive instrument in the field of passenger rights could be the way forward.

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Scope of the Directive and definitions (Articles 1 and 2)
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1.1. Scope of the Directive ("Package") Question 1: Is the current scope of the Directive adequate to ensure protection for consumers and a level playing field in today's holiday market? “Package travel” is becoming outdated. Since the adoption of the directive in 1990, the tourism and travel market has seen significant changes and consumer preferences and attitudes have also evolved within this market. The widespread availability of direct bookings set off by low-cost airlines and followed by classical airlines, together with the development of internet platforms and gateways which offer a range of (separated) travel components, have transformed the market. The described developments create growing uncertainties as to which situations and transactions benefit from the protective rules and which are excluded1. Consumers often find themselves ignorant of the sort of protection they can expect in a given situation. It is now obvious that the legislation has to be updated in order to cover selling patterns which did not exist when the current directive was adopted, by providing protection to consumers confronted with new business models. The 24-hour limit currently needed to “create” a package has to be removed2. There is no reason in terms of consumer protection to provide for a specific treatment of small packages as consumers may be confronted with as many problems as with any other package3. Tailor-made packages have to be expressly included in the scope of a new directive. This necessary inclusion results from the case-law of the European Court of Justice4 in the Club Tour case where the court stated that nothing in the definition of the term “package” used in the directive suggests that holidays organised at the request of and in accordance with the specifications of a consumer or a defined group of consumers cannot be regarded as package holidays within the meaning of the Directive and that the term pre-arranged combination used in Article 2(1)… must be interpreted so as include combinations of tourist services put together at the time when the contract is concluded between the travel agency and the consumer.

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In the UK, the 2006 ABTA v. CAA (Civil Aviation Authority) High Court ruling made a decision as to what should be considered to be a “package”. The rule concluded that a package was made only when travel components should be offered at an “inclusive price”. This decision prompted tour operators to unbundle their packages charging separate prices for flights, accommodation and/or other services and this in order to avoid complying with the obligations of the package travel regulations. In Hungary and Austria for instance journeys of less than 24 hours are covered. Already in some countries (ex. Spain) it is increasingly frequent to offer packages consisting of transport + dinner + tickets to attend a show or a sporting event, the whole service being performed in less than 24 hours. ECJ, Case 400/00, Club-Tour.

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So-called “Dynamic packaging” must also be included in the scope of the directive. In contrast with the time where the directive was enacted, Consumers are now more willing to buy holidays in component forms rather than buying ready-made packages. Internet gateways and platforms have flourished which allow consumers to acquire separate different services from the same provider or from other providers outsourced from that provider. More and more often consumers seek out individual travel services (a hotel room, a house for the summer, a flight, a tour) in contrast with services composed of different elements (hotel room + flight + excursions ). Therefore the scope of the new directive should not be limited to services that combine various components but should cover services which sell a single component or element i.e. only flight or only accommodation or only other services5. Just packages individually sought by the consumer without intermediaries may be excluded (see also below under question 19). Question 2: Do any of the definitions or notions used in the Directive cause problems? If so please describe them. The current directive contains several terms that are not properly defined, that are vague or that should be deleted following to market developments. - “Pre-arranged” (article 1): This term should be deleted from the directive in accordance with the Club Tour judgment (see above)6. - “Inclusive price”: This term should be removed or otherwise it should be made clearer that the sale of separate travel facilities with a price attributable to each of them (flight, hotel and other services) does not deprive the consumer of the protection of a traditional package. - “Reasonable notice” (article 4.3): this term is not defined in the directive which generates a lot of uncertainties in case a passenger is obliged or wishes to transfer his/her package. A more detailed regulation of the procedural aspects in case of transfer is needed. Consumers should be able to transfer their packages easily. - “Essential terms”: under article 4.5 of the directive, the consumer has the right to cancel the package if the organiser, before the conclusion of the contract, is constrained to alter significantly any of the essential terms, such as the price, of the package. In our experience there are other elements apart from the price that would be considered essential for the consumer and which can significantly change the contract such as the accommodation offered, the travel time or duration and the tourist services available at the destination (indoor and outdoor activities…). It is at least uncertain which terms are considered to be essential. In this respect the directive should offer better guidance (non-exhaustive list of examples) for the

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In a resolution of 2002 the European Parliament claimed that there is no reason why a travelling consumer booking either transport or accommodation or tourist services should benefit from any less protection than a holiday maker booking an entire package. Se also recommendation in the “Consumer Law Compendium” page 210: http://ec.europa.eu/consumers/cons_int/safe_shop/acquis/index_en.htm

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sake of better consumer protection and more legal certainty (see also below under question 11). - “In writing” or “any other appropriate form” (art. 4(1)(a)): an alignment of these terms with the definition of “another durable medium” in the directive 2002/65 and the e-commerce directive should be considered. - « Force majeure »: some guidelines or a list of examples of cases when force majeure can be invoked would be needed. Companies tend to interpret the notion of force majeure or extraordinary circumstances too widely to their advantage. The problems that arise from the lack of clarity of the term “extraordinary circumstances” in Regulation 261/2004 should serve as an example not to reproduce. Moreover, we suggest including in the directive a definition of “journey” or “days” clarifying that it refers to real time spent at the place of destination7. 1.2. "Organiser" and "Retailer" Question 3: Have you encountered problems with the definition of organiser or retailer and their respective obligations under the Directive, for instance concerning organisers who occasionally put together packages? If so, please describe them. Article 5 of the directive leaves discretion to the member states to decide who the organizer or the retailer is liable to the consumer for the proper performance of the obligations arising under the contract. The law of the majority of member states provides for a different and separate liability of the organizer and the retailer, each of them being responsible for their respective spheres. In other countries only the organizer is liable vis-à-vis the consumer, the retailer being considered as a mere intermediary selling the packages. Yet, in practice things get extremely complicated for consumers. Very often the different actors involved in a package engage in a dispute as to which should be responsible for what. Tour operators, travel agencies and air companies try to pass responsibility to one another (sometimes by hiding evidence) and this generates many consumer complaints as reported by our members8.
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Advertisements in the travel sector are often misleading as the number of days advertised do not correspond to real time at the destination because it includes the travel there and back, specially where departure is scheduled late in the evening and return is very early in the morning. Which? (UK) reported a case which illustrates the muddle for the consumer: a consumer went on holiday overseas and on the coach home he was approached by a representative of the tour operator who offered him a reunion weekend back in the UK which included transport, accommodation and entrance to reunion events which he purchased. The coach company which was used to provide transport to the reunion event lost the consumer’s luggage. The consumer approached the original organizer who claimed that he had not booked a package because the book form signed provided a breakdown of the components with a price attributable to each component. He was advised to address the coach company but the latter declined its responsibility claiming

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The developments that occurred in the market these recent years have created even more uncertainties about whom of those actors should be liable vis-à-vis the consumer for the proper compliance with the contract obligations (see also below under question 14). The jurisprudence of the ECJ has shed some light onto the definition of organizer and its responsibilities. In fact, the term “organiser” should be read in combination with the interpretation of the term “package” held by the Court of Justice in the case Club Tour. Following this judgment, the term “organiser” does not only cover the typical tour organisers, which sell pre-arranged packages via travel agencies and other retailers, but also travel agencies or Internet platforms which spontaneously combine, at the specific request of the consumer, several tourist services such as flights and hotel accommodation (offered by other service providers). In particular in the case of Internet platforms, it is of utmost importance to define the legal nature of those sites by identifying which actor is ultimately responsible vis-à-vis the consumer for the provision of the services contracted. Regarding the exclusion of persons who occasionally organise packages9, we recommend deleting this exclusion completely or eventually only including persons who organise occasional packages in the course of a business. 1.3. "Consumer"

Question 4: Do you think that persons travelling exclusively for professional reasons should be excluded from the scope of the Directive? The definition of consumer in the directive at stake deviates from that in other consumer protection directives. Unlike most directives10, the package travel directive offers protection to any person taking a package, thus including persons travelling within the sphere of their profession. The package travel directive therefore follows other passengers´ rights which have a broader scope than protecting merely consumers. In general it is desirable to seek coherence across the consumer acquis, as regards definitions and other commonalities in consumer protection legislation. The Green Paper on the revision of the consumer acquis puts forward the proposal to harmonise the notion of consumer throughout the consumer acquis in a so-called horizontal instrument. This is supported by consumer organizations. Whether package travellers should be protected only if they fall under this definition or whether this should be a broader target group needs to be considered carefully (see below question 8). By no means must protection for consumers be lowered because of a broader definition of package travellers.

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that the service that been provided by a smaller local company. The consumer was left totally confused about who his claim should be addressed to. See also footnote 22. According to the Consumer Law Compendium, about two thirds of the member states have omitted to demand that the person has to act “other than occasionally”. The consumer is usually depicted as a “natural person acting for purposes outside his/her professional activity”.

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2.

Pre-contractual information requirements (Article 3)

Question 5: Have you encountered problems with the pre-contractual information requirements? If yes, please give a short description. Question 6: Is the list of information to include in travel brochures at Article 3.2 up to date? The list is not up to date. The new directive should add the obligation to include in the brochure adequate information on the way and time of redress in case of nonproper compliance of services, as well as information regarding the insurance and the way to address it in case of insolvency. In general, more information is needed on the availability of facilities and accessibility for disabled people. We welcome that the information on the brochure is binding. However, a rule should be added stating that if changes come up, the organizer should update the brochure. Subsequent changes to a printed brochure should only be allowed if they result from circumstances outside of the sphere of influence of the organiser. In order to reduce the costs of reprinting brochures when changes to prices arise, the proposal to allow for separate price lists (with references to the correspondent pages in the brochure) is welcome. Several of our members have reported situations in which the descriptions in the brochures do not correspond with the quality of services at the place of destination (misleading information)11. The brochures must give accurate descriptions of the services available at the place of destination as well as information of any circumstance that could complicate the good accomplishment of the purchased services (e.g. works outside or nearby the hotel, an air conditioning plant in from of the balcony, facilities in bad condition or out of service…12). Should those circumstances come up after the brochure had been printed, the information should be given to the consumer in writing before the contract is concluded. We agree with the Commission when stating that the protection given by the UCP13 Directive cannot solely be relied upon in case of package contracts since it does not
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Which? (UK) conducted a research in 2006 about brochure accuracy which concluded that tour operators’ brochures can be “disingenuously economical with the truth”. ABTA’s (Association of British travel agents) standards on brochures document, which sets out standards in the information that tour operators should apply in their brochures was not being met. Which? reported the case of a couple that had booked a ski holiday with “highly trained chalet hosts” as well a number of service enhancements “to make the chalet holiday very special”. In reality the lift at the chalet was out of order, instead of the en-suite bathroom they had booked there was a separate bathroom with broken fittings; the swimming pool and sauna were unusable and they did not get clean towels until their departure day. Another case was that of a family who arrived at their holiday apartments to find the communal areas littered with rubbish, broken glass and vomit; the view from the balcony was far from “stunning” as promised but rather I overlooked 10 noisy airconditioning units; there were broken tiles and bare wires around the pool, which contained excrement. Directive 2005/29 of the European Parliament and of the Council of 11 May 2005, concerning unfair business-to-consumer commercial practices in the Internal Market.

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provide for contractual protection. Besides, the package sector has certain specificities that should be dealt with by specific legislation. Finally, the term “brochure” is not defined in the directive. Given the advent of the new technologies of communication and information, it should be ensured that this term refers to information given through all means of communication (not only through traditional brochures). Question 7: How should the information requirements be adapted to the increasing use of the internet? Should it be possible to provide less information, e.g. on the price, in the brochures, if that information is made available on the web? We do not oppose any measure allowing operators to reduce compliance costs such as a by making greater use of the Internet. Internet can be an alternative to keep the client up to date on the particularities of his/her package (further information about the service providers at the place of destination, photos of the accommodation and of the facilities available nearby…). This should not however engender the situation of essential information (prices, accommodation, facilities…) being provided only through Internet or spread out in different web sites which could result in a lack of transparency. In addition, the fact that yet a high percentage of the EU population14 does not have access to Internet has to be taken into account when deciding the extent to which Internet can be an alternative to traditional methods of providing information. Question 8: What information requirements, such as classification of the hotel or the passport or visa requirements, need to be separately regulated to respect the specifics of package travel? The fact that a harmonized EU system of hotel classification does not exist, often leads to consumers being mislead about the quality of the services they can expect. The brochure should indicate the category of the accommodation according (also) to the standards in the place of purchase of the package. In any case the development of a harmonised EU system of hotel categories should be envisaged. It is particularly important for consumers who travel to potentially unsafe destinations to be given general information about the health risks and the necessary precautions or measures to be taken before departure (vaccines etc), with reference to official government recommendations.

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For instance, around one third of the UK population currently does not have access to Internet.

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3.

Information requirements and variation in price (Article 4.14.4)

Question 9: Are the information requirements in article 4.1-2 and in the annex up to date? The legislation should take into account the different behaviour patterns and consumer attitudes towards travel. There is a group of consumers who care to book their travel well in advance while others rely on last minute reservations. As reported to us by Which? (UK) the number of people booking holidays at the last minute is increasing. As a result, any attempt to make exemptions of essential information in last minute bookings, is bound to affect more and more consumers. With regard to the price, the information on the price should indicate the final price (all-in price) of the package including all non-avoidable taxes, fees and charges15, following legislation in the pipeline16. Optional price supplements shall be communicated in a clear, transparent and unambiguous way at the start of any booking process and their acceptance by the passenger should be on an "opt-in" basis. In line with the new regulation on air transport information17, the organizer must provide the name of the air company that will operate the flight as well as the “black list” of air companies. The list of information requirements should include information about cancellations terms on which the consumer is entitled to cancel the package and cancellation charges must also be clearly stated. Question 10: Have you encountered problems with the provisions on price variations? Problems with add-on in prices (water, extra costs for meals…) The most frequent problems that consumers encounter in relation to price variations refer to the ex-post addition of (extra) payments that were not included in the price mentioned in the brochure or in the contract. Fuel charges, airport taxes or price increases as a result of a fewer number of consumers purchasing the package, are among the most common “extras”.

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The Office of Fair Trading in the UK, has ruled that fixed, non-optional costs must be included in the headline prices offered by travel and transport providers. The UK Code of Practice for traders on price indications, which was approved after widespread consultation by the Secretary of State for Trade and Industry, states at paragraph 2.2.14 that when advertising holiday and travel prices, any optional non-extra charges should be included in the basic price and not shown as additions. Equally, in Denmark the consumer ombudsman has announced that all prices of services must be listed in total prices. Proposal for a Regulation of The European Parliament and of the Council on common rules for the operation of air transport services in the Community (recast), COM(2006) 396 final. Regulation (EC) 2111/2005 of the European Parliament and of the Council of 14 December 2005 on the establishment of a community list of air carriers subject to an operating ban within the Community and of informing air transport passengers of the identity of the operating air carrier.

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The new directive should state that no increases in the price are allowed within 30 days (instead of 20) before departure or after payment of the full amount of the travel costs. Once at the place of destination, the widespread practice to charge the consumer extra money is unacceptable when consumers expect – based on the information and the package they bought – and have the right to expect that a specific service is included in the price of the package bought18.

4. Withdrawal from the contract by the consumer and right to compensation, notably in case of cancellation (Article 4.5-4.6)
Question 11: Have you encountered problems with the provisions of articles 4.5 and 4.6, in particular the reference to “essential terms” and “substitute package”? According to article 4.5, the consumer can withdraw from the contract only if the organizer significantly alters any of the essential terms, such as the price. Qualifying or not a term as “essential” is a subjective appraisal. The decision to qualify a change as “essential” should not only be dependent on the assessment of the organizer but also on the expectations of the consumer. In other words, a consumer could have chosen a particular package because it contained a number of services that are decisive in his choice to buy that particular package. Even though there is an abundant case law on which terms are considered to be essential, for the sake of legal certainty, other terms besides the price, should be listed as “essential” (change of accommodation, change of contracted excursions or other services available…). With regard to the term “significantly” in relation to price increases, the new directive should set out some rules as to which percentage of increase is considered to be significant for the consumer to be able to cancel the contract19. Concerning “substitute packages” offered by the organizer in case of cancellation, very often tour operators focus on the costs of substituting a holiday and not on other aspects such as its comparability to what was originally booked, or the loss of enjoyment incurred. Question 12: Have you encountered problems with cancellation for the reason of an insufficient number of participants? Should the consumer be compensated in case of cancellation on the ground that there is an insufficient number of participants? Yes, the consumer should be compensated when the cancellation is due to the insufficient number of participants in the package20. This would constitute an

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In 2006 Which? received a complaint from a consumer who had bought a cruise. The full range of dinning choices had been advertised as included in the price while in reality he was expected to pay a cover charge of up to £11 per person per meal. According to ABTA (Association of British Travel Agents), a significant change would be an increase of over 10% of the price of the holiday. An increase from 3% to 10% can be, however, excessive for some consumers.

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important disincentive to avoid cancellation for the reason of an insufficient number of participants. Since packages are sold out very early before the holiday season begins, it is difficult for the consumer to find a suitable substitute package. The compensation should cover loss of enjoyment and the potential extra costs of rebooking a new holiday at an increased price. Question 13: Do you think there is a need for a generalised method of calculation of compensation? Yes. Establishing a harmonized system of calculating compensation would avoid a lot of endless controversies. The consumer should be allowed to withdraw from the contract for other reasons than the alteration by the organizer (article 4.5). It is not fair that the organizer can cancel the contract for reasons of force majeure while the consumer cannot do so. A specific provision allowing the consumer to cancel the contract in case of force majeure should then be added21. In particular, the consumer should have the right to cancel the contract in case disruptive events arise at the place of destination (natural disaster, warlike event, general strike or any event that could endanger the health of the consumer)22. In case of cancellation by the consumer, the sum charged to him as penalty should be a reflection of the actual cost of the holiday23. Very often the amount of the penalty is too high and not justified in relation to the potential costs arising for the organizer. Depending on the moment of his withdrawal, following the principle of sliding scales, the consumer should have the right to be reimbursed a percentage of the price paid24. Tour operators could alternatively use a system where cancellation charges are individually assessed. In such cases the method of calculation must be fair and reasonable. In all cases the operator must set out its cancellation terms in an unambiguous and transparent manner25. The distance selling directive26 expressly excludes transport contracts from its scope of application. This means in particular that the consumer cannot benefit from the right of withdrawal (cooling-off period) in case a package is bought
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The amount of compensation may depend on the information given to the consumer before hand and on the time frames between the dates of booking, cancellation and supposed travel. This is already the case for instance in Dutch law. See report of the package travel round table, conclusions of the expert group adopted on 13 February 2001: http://ec.europa.eu/consumers/cons_int/safe_shop/pack_trav/index_en.htm Which? recently received a complaint from a consumer who was asked to pay £160 in cancellation fees for a £140 holiday three weeks before the actual date of departure. For example it could be set out that if the consumer cancels the holiday 30 days before departure, he is entitled to a full refund of the price of the holiday; if he cancels 15 days before the date of departure he is entitled to 50% of the price. See report of the package travel round table, conclusions of the expert group adopted on 13 February 2001: http://ec.europa.eu/consumers/cons_int/safe_shop/pack_trav/index_en.htm Directive 97/7 EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts.

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through the Internet or other distance means. We acknowledge that in certain transport/leisure contracts service providers need to foresee the amount of customers they will have on a specific date. However, a large amount of those contracts (for instance accommodation, air transport or package travel) are concluded long before the actual service provision takes place. We therefore suggest that in the cases of long term bookings and provided that sufficient time is left to the professional to find another customer, those services should benefit from the right of withdrawal27. Only in last minute reservation a right of withdrawal is not appropriate.

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Liability of organisers (Article 5)

Question 14: Does the liability of the retailer respectively the organiser need to be clarified? The directive gives the choice to member states to decide who of the two (organizer or retailer) should be liable vis-à-vis the consumer. The law of nearly all member states provides for the liability only of the organizer and not the retailer, the latter being often considered as a mere intermediary of the organizer. However, following the ECJ case law mentioned above28 travel agencies which put together travel services by themselves (including Internet gateways and platforms) should be considered as organisers in the meaning of the directive. The new directive should make it clear. The developments that occurred in the travel market over the last decade underpin the need to extend the liability to travel agencies. The current directive was adopted at a time where the roles of each actor (organizer and retailer) were clearcut. The organizer was the one putting together the package and the retailer was charged with selling the package. However, the market has converged and currently retailers often act as organizers by putting together several travel services under the individual specifications of a customer. Equally, organizers often sell directly their packages to consumers without having recourse to (traditional) retailers. In practice there are many uncertainties as to whether a tour operator or travel agent is liable. Very often consumers find it very difficult to identify which of the actors they should address in case of disputes. In Luxemburg for instance the distribution of responsibilities between the organizer and the retailer has been the subject of a contentious case which has been before the courts in this country since 10 years29.
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See also BEUC’s comments on the distance selling consultation: Communication from the Commission on the implementation of directive 97/7: BEUC/X/085/2006: http://www.beuc.org See footnote 4. In the case Best Tours, a group of consumers from Luxemburg had booked a (expensive) package travel organised by the Belgian tour operator BEST TOURS, via a travel agency in Luxemburg. The travel agency in Luxemburg went bankrupt and the tour operator refused to compensate the consumers by rejecting its liability. BEST TOURS sent a message to the consumers stating that the travel agency had gone bankrupt and that BEST TOURS had not received the deposits that the travel agency should have paid. It

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In view of the above and in order to avoid conflicts in which the organizer, the retailer and the air company try to pass the responsibility to one another to the detriment of consumers, we argue in favour of defining a regime of joint liability of the organizer and the retailer vis-à-vis the consumer. The principle of joint liability of the organizer and the retailer is justifiable in economic terms as the retailer is a dealer of the organizers and it is common that a dealer is liable for the product it sells without prejudice of its right to have recourse to the organizer. This principle is also consequent with European legislation on liability namely the Directive on consumer sales30 and guarantees which gives the consumer a direct action against the seller, and the directive on product liability31 which allows the consumer to take action against the manufacturer32. There should be an express prohibition of clauses exempting the organiser/retailer from liability in case of poor performance or non-performance. Question 15: Do you think that the notion of “damages” should be clarified, for instance regarding moral damage? The new directive should reflect the case-law of the ECJ following which the notion of damages includes also moral damage33. In fact, in particular in travel law, damage can very often arise from the loss of enjoyment the consumer has suffered because of the improper performance of the travel contract.

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Consumer complaints (Article 6)

Question 16: Have you encountered problems with Article 6? Is there a need to clarify the meaning of the terms “prompt efforts” and “appropriate solutions”? The provisions of the directive as regards consumer complaints are insufficient. In general the new directive should elaborate on the procedure to be followed in case the consumer needs to introduce a complaint. Reference to ADR (alternative dispute resolution) should be included and be based on the Commission recommendations on ADR34 It should be expressly stated that any appropriate solutions would be at no extra cost for the consumer.
went on saying that BEST TOURS had not concluded any contract with the consumers and that the affected consumers should have recourse to the retailer (travel agency). Directive 1999/44/EC of the European Parliament and of the Council of 25 May 1999 on certain aspects of the sale of consumer goods and associated guarantees. Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products. Protecting the rights of passengers and holiday makers, ECLG 039/05, Report of the European Consumer Law Group: http://www.europeanconsumerlawgroup.org/Content/Default.asp?PageID=488 ECJ judgment, C- 168/00 of 12 March 2002 (Simone Leitner). COMMISSION RECOMMENDATION 98/257/EC of 30 March 1998 on the principles applicable to the bodies responsible for out-of-court settlement of consumer disputes;

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In general, more guidance as regards the terms “prompts efforts” and “appropriate solutions” would be welcome.

7.

Security for Insolvency (Article 7)

Question 17: What are your experiences of the guarantee scheme system in your Member State and, when applicable, of the interaction between different Member States' systems? How could in your view the system be improved?. A feature of the travel package market is that in terms of payment it differs from the practice in most consumer contracts that is that the payment is simultaneous with the reception of the good or the provision of the service. In the package travel industry in particular and in the travel industry in general, the provision of the services purchased only occurs after payment. The consumer pays in advance the services that he/she will enjoy at a later stage. This practice makes it necessary to foresee certain special arrangements for the protection of passengers. It is of utmost importance that the money consumers pay for their holidays is secure so that in case of problems consumers are able to recover the sums paid or eventually obtain due compensation for non-compliance. Article 7 of the directive requires tour operators to provide “sufficient insurance coverage to insure the refund of the money paid and the repatriation of consumers in case of insolvency”. The wording used in this article is too vague and leaves considerable leeway to member states to implement it. It is however clear from this provision that the implementation measures should be such as to ensure that the security provided by operators covers the total refund of money paid over and the full repatriation costs. However, a number of member states have not transposed this provision correctly35. Despite several judgments of the ECJ36 such as the Rechtberger judgment37 the amount that is insured is often not sufficient in case insolvency or bankruptcy occurs38.
COMMISSION RECOMMENDATION 2001/310/EC of 4 April 2001 on the principles for outof-court bodies involved in the consensual resolution of consumer disputes.
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36 37

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Protecting the rights of passengers and holiday makers, ECLG 039/05, Report of the European Consumer Law Group: http://www.europeanconsumerlawgroup.org/Content/Default.asp?PageID=488, page 18. Commission Report on the implementation of directive90/314: http://ec.europa.eu/consumers/cons_int/safe_shop/pack_trav/index_en.htm According to this judgment (ECJ, C-140-97, Rechberger and others, 15 June 1999) the consumer is entitled, under article 7 of the directive, to full compensation to cover his financial losses in case of insolvency of the tour operator. In Spain, only travel agencies are subject to the payment of a deposit or guarantee of approximately 90.000 Euros in order to obtain their license. In Germany the liability is limited in clear contravention of the directive. In Greece the amount of money that is required for a travel agency to issue a letter of guarantee in order to acquire its permit is

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The fact that the arrangements for insurance largely differ from member state to member state leads to the fragmentation of the insurance market and thereby of the package travel market. A travel insurance that is valid under the law of one member state cannot always be sold in another member state. Insurers from different member states cannot compete in the same market39 with the consequence of a restriction of competition which is detrimental to the interests of consumers40. In light of the above shortcomings, BEUC suggests the following: - A harmonized guarantee scheme –guarantee fund or mandatory insuranceshould be established at EU level. - Security must fully cover all costs in case of insolvency (full refund and full coverage of repatriation costs). If the consumer needs to be repatriated, he should not be obliged to pre-finance the transport nor to organize it himself. - The guarantor should take over unlimited liability. The guarantor must not be exposed to the risks of insolvency. - The security should be quickly available. - Consumers should be able to address the guarantee fund in other cases than insolvency or bankruptcy for instance in case of consumer complaints for nonproper compliance of the services offered. Question 18: Does, in your view, the fact that scheduled airline business does not have such a guarantee scheme impact on market conditions? Yes. The situation is such that tour operators which offer products falling under the protection provided for in the directive are at a disadvantage compared to scheduled and low-cost airlines. There is no reason why only consumers who travel on a package are protected while consumers who buy a seat-only ticket are deprived from any kind of protection. In the context of the current recast of the third air package41 the European institutions have now an opportunity to reverse this situation by supporting the

39

40

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6.000 Euros for agencies that operate at national level and 12.000 for agencies that operate at international level. ECJ, C-410/96, Ambry, 1 December 1998: “It is contrary to Article 59 of the EC Treaty and to Second Council Directive 89/646/EEC…for national rules to require, with a view to implementing Article 7 of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours, that, where financial security is provided by a credit institution or insurance company situated in another Member State, the guarantor must conclude an agreement with a credit institution or insurance company situated in France”. This fragmentation might run counter to the demands in article 23.2 of the Directive on Services in the Internal Market (Directive 2006/123/EC) which states that the provider of cross-border services shall not be requested to take another guarantee when he is already insured in a member state and the guarantee coverage is comparable to that required in the member state where the service is to be provided. Proposal for a regulation on common rules for the operation of air transport services in the Community…

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European Parliament’s resolution42 which requires air companies to provide evidence of sufficient insurance cover to be able to refund sums paid and to cover the costs of repatriating passengers in the event of insolvency.

8.

Other issues

Question 19: Is/are there any other issue(s) or area(s) that require(s) to be explored further or addressed at EU level in the context of consumer protection? Are there market trends that in particular should be taken into account when considering a revision of the Directive and, in that case, what facts and/or figures exist confirming such a market development? Consumer protection in the field of transport is a patchwork of different legislative and non-legislative instruments. The legislation is fragmented and lacks cohesion. As a result, a consumer confronted with a practical problem would have to look into various different instruments in order to draw a picture and find out his/her eventual rights. This is not an ideal situation, in particular as it concerns consumers. In the air sector for instance, the interaction between the package travel protection and the protection given by the regulation 261/2006 on denied boarding, cancellation and long delays of flights, has to be clarified. In the rail and coach sectors new instruments are also being prepared which will add to the range of measures to the benefit of EU passengers. It is important that all the measures adopted are coherent and that the protection given to passengers in different sectors is comparable. Given the fragmentation of the legislation in the field of passenger protection as well as the rapid development of the travel and tourism market always evolving ahead of legislation, we consider that the appropriate way forward would be to reflect about a comprehensive instrument in the field of passengers rights. An eventual “consumer travel directive” should comprehend a list of measures to protect the consumer when he/she becomes a traveller/passenger. This instrument would be all the more important since most of the consumer protection directives expressly exclude the transport sector from their scope of application. END

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Amendment 15: European Parliament legislative resolution of 11 July 2007 on the proposal for a regulation of the European Parliament and of the Council on common rules for the operation of air transport services in the Community (recast) (COM(2006)0396 – C6-0248/2006 – 2006/0130(COD)).

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