# EUR-Lex - 52013DC0513 - EN

*|*

# 52013DC0513

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS BRINGING THE EU PACKAGE TRAVEL RULES INTO THE DIGITAL AGE /* COM/2013/0513 final */**

			*

			*

COMMUNICATION FROM THE COMMISSION TO
THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL
COMMITTEE AND THE COMMITTEE OF THE REGIONS

BRINGING THE EU PACKAGE TRAVEL RULES INTO
THE DIGITAL AGE

1.           EU PACKAGE TRAVEL IN THE
21ST CENTURY

With some 1.8 million businesses, mostly
SMEs, employing about 5.2 % of the total workforce, tourism is an
important sector of the economy and a source of growth in the European Union.
Travel, tourism and related sectors account for around 10 % of EU GDP[1].

The EU is the world’s No 1 tourist
destination, with 400 million international arrivals in 2012[2]. Europeans made more than 1
billion holiday trips in 2011[3],
almost 80 % of them in the EU[4].
In spite of the recent economic crisis, international tourist arrivals in the
EU continued to grow (by more than 7 %) from 2010 to 2012, as did the
number of holiday trips taken by Europeans. This makes tourism one of the most
resilient sectors of the EU economy.

To ensure confidence in the high quality of
travel services sold anywhere in the EU market, EU law protects travellers’
rights, particularly in relation to package holidays.

But the travel market has been transformed,
notably by the internet, since the Package Travel Directive[5] was adopted over 20 years ago.
The Commission must respond to widespread calls from industry, consumers and
legislators to keep the Directive up to date and fit for the digital age.

Revising the Directive will, in line with
the EU strategy for tourism[6],
help in strengthening European tourism by adjusting the existing rules to
changed consumer behaviour, as announced by the European Consumer Agenda[7] and re-stated by the second EU
Citizenship Report[8]. Covering new combinations of travel services
will affect about 50 % of the market and should increase
travellers’ trust and satisfaction.

2.           THE WIDER FRAMEWORK OF EU
RIGHTS FOR HOLIDAY MAKERS

Consumers buying individual travel services
are protected by a wide range of EU and national rules, whether they book
through a local travel agent, online or by telephone.

The EU rules aim to ensure that, as the
most vulnerable party to the contract, especially when travelling, consumers
enjoy a general set of rights which limit problems and guarantee acceptable
service throughout the EU.

When buying package holidays, they benefit
from extra protection.

·
General consumer rights before, during and
after purchasing a trip

Travel and tourism services (such as
accommodation and car rental) are covered by general EU consumer law[9], so consumers making travel
arrangements are protected against unfair practices throughout the EU.

Traders must display the full price of the
product, e.g. including local fees, taxes and handling fees. Advertising must not
be misleading or trick consumers into buying a product they would not have
bought otherwise. For example, on websites displaying prices and customer
reviews, traders may not pose as consumers or pass on materially inaccurate
information[10].

When selling travel services online,
sellers must give detailed information, including their contact details and a
description of the product. They may not use pre-ticked boxes to induce
consumers to buy additional services[11].
Furthermore, contracts for travel services must not contain unfair terms. For
example, the seller may not impose terms which the consumer had no real
opportunity to read before signing the contract.

In general, if a trader based in another Member State attracts business (e.g. online) in the Member State where they live, EU consumers are
protected by their country’s consumer law, and they may sue the trader, and can
only be sued, in their own country[12].

Example: Jean booked a hotel in Mallorca via a popular travel
review website. He arrived at the hotel and found out that his room, facing a
backstreet, did not fit the webpage description, according to which all rooms
had a balcony with a sea view. Such misleading marketing is prohibited under
the Unfair Commercial Practices Directive.

·
Passenger rights

The EU is the
first region in the world to have comprehensive legislation on passenger rights
for all transport modes: air, rail, maritime, and bus and coach[13].

Passenger rights are based on three key principles:
non-discrimination; accurate and timely information; and immediate and
proportionate assistance. Passengers must be correctly informed about their
rights before departure, are entitled to a refund or rerouting if their journey
is disrupted, and must receive assistance and, under certain conditions,
compensation.

Example: Maria booked a flight in October to spend the
Christmas holidays with her family. One week before she was due to leave, she
learned that the airline had cancelled her flight due to poor ticket sales. As
the airline was unable able to offer her any alternative flight, it had to pay
compensation. That compensation enabled Maria to purchase new tickets with a
different airline.

·
Other rights
enshrined in travel and tourism legislation

Other, more specific legislation is
in place to protect travellers’ interests, such as Regulation 1008/2008[14], requiring airfares to be published inclusive
of all applicable taxes and charges, and the Timeshare Directive 2008/122/EC[15], laying down strict information requirements
and a 14-day right of withdrawal to protect consumers against unwanted
contracts.

·
Specific rights for
package travellers

Package
tours and holidays are complex combinations of travel services which typically
include transport and accommodation and may include other services, such as car
rental or excursions.

As
various service providers are often involved, a problem with one service may
affect the others. The traveller may find it difficult to deal with
subcontractors because of language barriers or cultural differences at the
holiday destination and, in such cases, will not even have a contract with the
various services providers.

These
conditions, and the cross-border dimension of many of these services, led the
EU to introduce the Package Travel Directive in 1990. The Directive offers
comprehensive protection which is not available to buyers of individual travel
services, by making the retailer and/or organiser liable for correct
performance of all the services included in the package, and requiring that
package travellers be reimbursed and repatriated if the service provider
responsible goes bankrupt.

THE 10 KEY
RIGHTS UNDER THE 1990 PACKAGE TRAVEL DIRECTIVE

1.           You receive all necessary
information about the holiday before you sign the contract.

2.           You always have one party
(either the retailer or the organiser: the name and address will always be specified
in the contract) that is liable for the correct performance of all the services
included in the contract.

3.           You are given an emergency
number or a contact point where you can get in touch with the organiser or the
travel agent.

4.           You can transfer your
booking to another person, if you cannot leave on holiday yourself.

5.           The price of your trip
cannot be changed later than 20 days before departure, and before that only in
very limited situations.

6.           You can cancel the
contract and get your money back if any of the essential elements of the travel
package has been changed.

7.           If, before departure, the
trader that is responsible for your holiday cancels the package, you can get a
refund and compensation, if appropriate.

8.           If, after departure,
important parts of the package cannot be provided, alternative arrangements
have to be made, at no extra cost, for you to continue your holiday.

9.           You have the right to be
given prompt assistance if you are in difficulty.

10.         If the trader responsible
goes bankrupt, your pre-payments will be refunded and, if your trip has begun,
you will be repatriated.

3.           REFORMING THE PACKAGE
TRAVEL DIRECTIVE

·
Why is reform
needed?

With more and more people connected to the
internet[16],
the travel market has increasingly moved online. In 2011, online travel sales
accounted for around 35 % of all travel bookings; in the sole month of
March 2013, nearly 183 million citizens visited an on-line travel website[17].

The travel market has also been transformed
by the liberalisation of the airline sector, leading to cheaper and more
accessible flight tickets.

The Package Travel Directive was adopted at
a time when people went to a travel agent to buy their holidays, typically as
‘ready-to-go’ solutions which covered all the details.

Now, although 23 % of EU travellers
still purchase traditional, prearranged packages, more and more either buy
different parts of their trips separately (54 % of Europeans who took a
holiday in 2011), or buy customised holidays which are put together by one or more
commercially linked traders to suit their needs and preferences[18]. Though typical of online sales,
this format is also available from high-street travel agents who put together
holidays for their customers.

Such ‘combined travel arrangements’ now
account for 23 % of the holiday market, roughly 118 million trips every
year.

They include travel arrangements which
display features which travellers typically associate with packages as well as
arrangements where a trader offering travel services merely facilitates the separate
booking of another travel service.

The advent of these new types of holidays
has created ambiguities, because both businesses and consumers may be unsure
whether they are covered by the legislation.

In the Club Tour
case[19], the EU Court of Justice stated that a combination of tourist
services supplied by a travel agency to meet the consumer’s specific requests
up to the moment of conclusion of the contract is covered by the Directive.
However, applying the Directive and this ruling, especially to online sales,
has raised complex legal issues and led to court cases
in the Member States[20].

In practice, legal
protection may differ, depending on how, where and by whom the arrangements are
offered for sale, even though the travel components may be identical.

Numerous Member States have responded to
the new market developments, in different ways. Some[21] have
laws that aim to protect consumers buying specific services that resemble
traditional package holidays. For instance, the UK recently reformed insolvency
protection to extend it to operators selling non-domestic flights plus at least
one other travel service (the so-called ‘Flight Plus’ reform)[22]. Similarly, Sweden requires insolvency protection for travel
arrangements consisting of separate transport and accommodation services that
together ‘bear a substantial resemblance to a package tour’. And German law
takes consumer perceptions into account in assessing whether a particular
combination of travel services is covered by the rules on packages.

In this new market environment, the current
EU rules no longer meet the needs of consumers and businesses. The different
legal requirements across the Member States, e.g. on pre-contractual
information, liability and insolvency protection, mean that businesses have
more difficulty expanding their operations across borders. So travel businesses
are no longer competing on an equal footing.

Different rules in different Member States
also make it difficult for smaller companies to sell their products across
borders, leading to a reduced level of choice for consumers. The Directive also generates unnecessary red
tape, e.g. because the rules relating to printed brochures are outdated.

The outdated scope
of the Directive also means consumers can lose money when they buy travel
products that are not covered while believing that they are protected.

KEY PROBLEMS WITH THE EXISTING DIRECTIVE

·
67 % of EU
citizens mistakenly thought that they were protected when buying these ‘new
packages’.

·
Users of ‘new packages’ are twice as likely to
have problems as users of traditional pre-arranged packages. Also, if there is
a problem, the average cost to the consumer is almost € 600, compared to
less than € 200 for traditional packages.

·
The overall loss to
buyers of ‘new packages’ in the EU is more than € 1 billion annually.

·
Unclear and fragmented
rules on legal liability are a burden both on consumers and on businesses.

·
Businesses across the
EU selling equivalent travel products are not competing on an equal footing.

The general consumer protection and
passenger rights rules that apply to individual travel services do not fit the
new, combined travel arrangements. Thus, there is a clear need for legislation
that addresses these. Modernising the Directive’s rules and adapting them to
the internet era would therefore bring tangible advantages.

·
How does the proposal modernise the existing
rules?

The proposal clarifies the existing
Directive and brings it up to date with legal and market developments.

Firstly, while still focusing on
‘packages’, it is wider in scope and clearly includes new, commonly used
combined travel arrangements. It also puts in place a flexible system for
business travel that avoids overregulation, by excluding business trips that
are bought under a framework contract from a trader specialising in the
arrangement of business travel.

Example: Thomas booked a flight to Thailand directly from the website of airline X. When booking, he was offered accommodation at a
hotel. He purchased both services and paid an inclusive price on the airline’s
website. His friend James had in the meantime bought accommodation at the same
hotel and a flight with the same airline via a pre-arranged travel package
offered by Leisure Group Y. While they were in Thailand, airline X went bankrupt
and their return flight was cancelled. Thomas had then to make his own travel arrangements
to get home, which cost him € 700 on top of the cost for his original ticket.
James, by contrast, was repatriated at no additional cost thanks to Y’s
bankruptcy protection. With this proposal, Thomas would be repatriated at no
additional cost — in exactly the same way as James.

Secondly, the proposal ensures greater
market transparency by enabling all travellers to clearly identify whether
they are being offered a package or not, thus avoiding confusion. It also
updates the information requirements, taking into account the development of EU
consumer law since 1990.

Thirdly, the proposal repeals special
rules on brochures: with the internet, there seems less need for specific
printed information. The current rules have led businesses to unnecessarily
reprint their advertising material, incurring undue costs of about € 390
million per year. However, the proposal ensures that the traveller will still
receive all the key information before signing a contract and that any
potentially important news after that, for instance a change to the itinerary,
is communicated in writing (including email).

Fourthly, the proposal gives travellers new
cancellation rights. While keeping their current right to transfer the
contract, consumers will have the right to cancel the contract before
departure, albeit by paying the organiser reasonable compensation for the costs
incurred. In the event of natural disasters, warfare or similar serious events
at destination, consumers will also have the right to cancel the contract
without paying compensation. Rules on prices will be fairer and more
predictable with the introduction of a 10 % cap on price increases.

Fifthly, the proposal provides clearer
remedies and a better system of redress if something goes wrong, by tying
in with the recently adopted EU legislation on alternative and online dispute
resolution, new rules making travel agents liable for booking mistakes and a
provision that gives travellers the option to address complaints or claims
directly through the retailer from which they bought their holiday. The
proposal also streamlines the rules on contractual liability. Travellers
will still have a single contact point if something goes wrong during the
holiday, but since organisers are made liable for the performance of the
services included, more traders will have incentives to be more diligent when
choosing subcontractors. If a package is sold through an EU retailer but the
organiser is based outside the EU, travellers will be able to seek redress
directly from the retailer.

Finally, it clarifies the insolvency
protection rule, and explicitly obliges Member States to ensure mutual
recognition of national insolvency protection schemes, within a structured
cooperation mechanism. This solution takes into account a recent evaluation of
the Services Directive[23],
which showed that some Member States still do not accept the insurance cover
required of tour operators in their Member State of establishment, thus forcing
them to duplicate costs across borders. Under some circumstances, also any
traveller having concluded separate contracts with different travel service providers
through an intermediary will benefit from insolvency protection.

SunFun Travels, a travel organiser based in
Luxembourg, uses airports in Belgium, France, the Netherlands and Germany for
its flights and would like to offer its packages to consumers living in these
countries. However, SunFun Travels faces problems getting its insolvency
protection scheme, contracted in Luxembourg, accepted by these other Member
States. SunFun Travels has therefore so far not managed to expand its
activities outside Luxembourg. With this proposal, it could eventually do so,
thanks to a reinforced cooperation mechanism across Member States.

IMPACT OF
THE PROPOSAL ON TRAVELLERS

·
Almost 120 million
travellers buying combined travel arrangements will be protected, which is
expected to reduce losses to consumers by about €450 million a year[24].

·
When buying a
combination of travel services, travellers will have to be told whether it is a
fully protected package or not.

·
Travellers will be able
to better understand what kind of product they are purchasing and the level of
protection received.

·
Package holidaymakers
will have better EU-wide protection, more flexibility and a clear set of
remedies if something goes wrong.

IMPACT OF
THE PROPOSAL ON BUSINESSES

·
It will make competition in the travel market fairer, while
keeping compliance costs reasonable for all (around €8 per package, which
represents a cost reduction for package providers subject to the current
Directive - and around €3 per person, for those selling other, assisted
combinations of travel services[25]).

·
For traders currently
subject to the Directive, administrative costs of about € 390 million per
year linked to outdated rules will be eliminated[26].

·
Excluding managed
business travel from the Directive will lead to savings of up to € 76
million per year[27]. This avoids overregulation while ensuring
that micro-entrepreneurs, in particular, can be protected if they so choose.

·
Cross-border trade will
be facilitated by common, EU-wide rules on information, liability and mutual
recognition of insolvency protection schemes.

·
A proportionate response to new market developments

Over the last 20 years, the travel market
has changed, as has the EU regulatory framework applying to it.

Today, a number of EU rules are in place
which did not exist when the Directive was adopted and which ensure a safety
net for all travellers. Nevertheless, these rules do not grant travellers the
specific protection they need when buying the new types of combinations of
travel services, which, because of their complexity, can have multiple
consequences if something goes wrong. By modernising and adapting the scope of
protection, it will be possible to tackle the current consumer detriment
suffered by buyers of these ‘combined travel arrangements’.

Although faced with increased competition,
traditional packages continue to attract millions of customers across the EU,
and beyond. The rationale for having specific rules for combined travel
products remains valid, while the changes in the ways people book them should
be reflected in the law. Overall, it is crucial that consumers fully understand
what they are offered and can confidently choose the travel arrangements that
best match their specific needs.

It is essential to preserve market
innovation and the diversity of new, especially online, business models, while
ensuring fair and transparent competition among all those selling substitutable
services. Therefore, the proposal tries to lay down a targeted and
proportionate solution to reduce the current problems while taking fully into
account the specific position of SMEs as suppliers and users of travel
services.

Indeed, considering that an overwhelming
majority (99 %) of EU tour operators and travel agents are SMEs (of which 92 %
are micro-enterprises), the proposal aims to reduce the average cost of
offering traditional packages, by modernising the rules and cutting red tape.
By making all operators offering substitutable travel services subject to the
same rules and compliance costs, the proposal will restore a level playing
field, from which SMEs will benefit even more than larger operators. Additionally,
removing obstacles to cross-border trade, by means of more uniform rules on
pre-contractual information and an ad hoc mechanism to facilitate the mutual
recognition of insolvency protection schemes, will open up more opportunities
for businesses, particularly SMEs, to expand their activities in different
Member States.

At the same time, the proposal leaves all off-
and on-line traders free to offer their services to facilitate the arrangement
of holidays involving the combination of separate travel services, without
becoming liable for the performance of the different services. However in the
interest of fair competition and in order to protect consumers, the obligation
to provide sufficient evidence of security for the refund of pre-payments and the
repatriation of travellers in the area of insolvency should also apply to
assisted travel arrangements.

The proposal also takes account of the
specific situation of SMEs as buyers of travel services, by entitling them to
the same level of protection afforded to individual consumers unless they have
chosen to have a specific framework contract with a specialised travel
management company.

4.           CONCLUSION

The 1990 Package Travel Directive has
enhanced the quality of package travel services but needs to be updated to
cover new market developments.

This proposal to amend the Directive
enhances consumer protection at a reasonable cost to the industry while leaving
businesses and consumers free to choose what they wish to sell and buy.

By reducing legal fragmentation and
strengthening mutual recognition, the proposal will remove obstacles to
cross-border trade, thus fostering competition among older and newer market
players selling substitutable travel products. It will make the market more
transparent, particularly the online market, so as to increase travellers’
trust and boost demand from within and outside the EU, while increasing
certainty, flexibility and choice.

In the current challenging times, this set
of measures will also contribute to improving consumer confidence and boosting
growth in this key sector of the EU economy.

[1]               Commission communication Europe, the world’s No 1
tourist destination — a new political framework for tourism in Europe, COM(2010) 352 final, 30.6.2010.

[2]               UNWTO, World Tourism Barometer, January 2013.

[3]               Statistics in focus 28/2012, Tourism in Europe, Results for 2011.

[4]                      Eurostat press
release, 139/2011.

[5]               Council Directive 90/314/EEC of 13 June 1990 on
package travel, package holidays and package tours.

[6]               COM(2010)
352 final, 30.6.2010.

[7]               A European Consumer Agenda – Boosting confidence
and growth, COM(2012) 225 final, 22.05.2012.

[8]               EU Citizenship Report 2013 — EU citizens: your
rights, your future, COM(2013) 269 final, 08.05.2013.

[9]                      In particular,
Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts,
Directive 2005/29/EC of the European Parliament and of the Council of 11 May
2005 on unfair commercial practices and Directive 2011/83/EU EC of the European
Parliament and of the Council of 25 October 2011 on consumer rights.

[10]                    See points 18 and
22 of Annex I to the Unfair Commercial Practices Directive.

[11]                    As from June 2014
when Directive 2011/83/EU will apply across the EU.

[12]                    See Article 6 of
Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17
June 2008 on the law applicable to contractual obligations (Rome I), as regards
the law that applies. On jurisdiction, see Articles 15–17 of Council Regulation
(EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and
enforcement of judgments in civil and commercial matters. There are certain
exemptions to these rules, e.g. for transport or carriage contracts if the
contracts are not part of a package. For further interpretation of Article
15(1)(c) and (3) of Regulation (EC) No 44/2001 in relation to a trader’s
internet site, see the EU Court of Justice ruling of 7 December 2010 in Case
C-585/08, Hotel Alpenhof.

[13]             See the regulations on passenger rights (Regulations
(EC) No 2004/261, (EC) No 1371/2007, (EC) No 1177/2010 and (EC) No 181/2011).

[14]             Regulation (EC) No 1008/2008 of the European Parliament
and of the Council of 24 September 2008 on common rules for the operation of air
services in the Community.

[15]             Directive 2008/122/EC on the protection of consumers in
respect of certain aspects of timeshare, long-term holiday product, resale and
exchange contracts.

[16]             65 % of EU citizens used internet
at least once a week in 2010 (Eurostat Data in Focus, 50/2010).

[17]             http://www.newmediatrendwatch.com/regional-overview/103-europe?start=2
, ‘Online Travel Market’.

[18]             Market evolution has been particularly striking in
certain Member States, such as the UK: according to data provided by a major UK tour operator, 98 % of passengers travelling on leisure flights from the UK were protected under the Directive in 1997, but now this number is less than 50 %.

[19]             Case C-400/00.

[20]             E.g. cases ECJ C-400/00 (Club-Tour), ECJ C-178/94,
C-179/94, C-188/94, C-189/94 C-190/94, CAA vs Travel Republic (UK), the German Bundesgerichtshof
judgment of 30 September 2010 in case Xa ZR 130/08, and the Dutch Eerste
Kamer Hoge Raad ruling of 11 June 2010 in case 08/04611, SGR vs ANVR.

[21]             E.g. AUT, BE, BG, CZ, DE, DK, EE, FR, HU, UK, LT, LU,
LV, PL, SE and NL — replies to a questionnaire issued in preparation for a workshop
on the review of the Directive held in Brussels on 5 June 2012.

[22]             http://www.caa.co.uk/default.aspx?pageid=12990.

[23]             Commission staff working document on the result of the
performance checks of the internal market for services (construction, business
services and tourism), SWD(2012) 147 final, 8.6.2012. See especially point
3.1.4 and Annex 1.

[24]             See Impact Assessment accompanying this proposal.

[25]             Ibidem.

[26]             Ibidem.

[27]             Ibidem.