COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on package travel and assisted travel arrangements, amending Regulation (EC) No 2006/2004 of the European Parliament and the Council and Directive 2011/83/EU and repealing Council Directive 90/314/EEC
Date: 2013-07-09
Institutions: European Commission
Subjects: carriage of passengers, consumer protection, contractual liability, electronic commerce, hotel industry, single market, travel agency













EUR-Lex - 52013SC0264 - EN











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52013SC0264

COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT PROPOSAL FOR A DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on package travel and assisted travel arrangements, amending Regulation (EC) No 2006/2004 of the European Parliament and the Council and Directive 2011/83/EU and repealing Council Directive 90/314/EEC /* SWD/2013/0264 final */









COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
PROPOSAL FOR A DIRECTIVE OF THE
EUROPEAN PARLIAMENT AND OF THE COUNCIL
on package travel and assisted
travel arrangements, amending Regulation (EC) No 2006/2004 of the European
Parliament and the Council and Directive 2011/83/EU and repealing Council
Directive 90/314/EEC
1.           INTRODUCTION
1.1.        Policy context
The travel market plays a central role in
the European economy of today. 
A key task for the European Union is to
create a regulatory framework that provides sufficient protection for consumers
so that they can confidently buy their holidays anywhere in the Union. At the same time, a level playing field for travel businesses must be ensured to
increase competition in the market. 
The adoption of the Package Travel
Directive (PTD) in 1990 made a significant contribution to the development of a
single market for an important part of the travel market, and created important
rights for European travellers. However, with the development of the internet
and the popularity of new ways in which consumers purchase their holiday, the
applicability of the Directive to all these new travel products has become
uncertain.
A modernisation of the PTD has repeatedly
been asked for by the industry as well as consumer organisations. The revision
of the PTD is also explicitly envisaged in the European Consumer Agenda and is
mentioned in Annex II to the Single Market Act II.
1.2.        Definitions
·       
Independent travel arrangements - a travel service, such as a flight, accommodation or car rental
that is purchased as a stand-alone product, i.e. purchased separately and not
offered in combination with other tourist services, even if the traveller uses
several travel services for the same trip or holiday. 
·       
Pre-arranged package -  a combination of travel services bundled in advance by an
organiser and consisting of at least two of the following services: (1)
carriage of passengers, (2) accommodation and (3) other tourist services not
ancillary to passenger transport or accommodation and accounting for a
significant proportion of the package (e.g. car rental). 
·       
Combined travel arrangements[1] - combinations of travel services where at least two of the above
mentioned services, such as flights, hotel stays or car rental, are purchased
for a single trip or holiday either from the same supplier or from suppliers
that use assisted booking processes and where the buyer can put together the
relevant travel services according to his preferences (tailor-made). Combined
travel arrangements are, contrary to pre-arranged travel packages, dynamic by
nature and can be divided into two main sub-categories:
–                        
"One-trader" packages: Consumers can customise the content of the trip or holiday
according to their needs on one website or at one high street travel agent
while being free throughout the booking process to choose separate travel
components. These travel arrangements are put together by one trader (including
at the request of the traveller) and are offered or sold in a manner that is
typical for packages, e.g.:
–              
offered, sold, or charged at an inclusive price,
–              
sold within the same booking process, 
–              
covered by one contract, or
–              
advertised or sold under the term
"package" or under a similar term,
–                        
Multi-trader travel arrangements:
·              
"Multi-trader" packages: the
difference between a "multi-trader package" and a "one-trader
package" is that a "multi-trader" package is put together by
several traders/ and the arrangement has at least one of the characteristics
that are typical for packages indicated above under "one-trader"
packages, including when the traveller's name or particulars needed to conclude
a booking transaction are transferred between the traders at the latest when
the booking of the first service is confirmed;
·              
"Multi-trader" assisted travel
arrangements are combinations of travel services where one trader facilitates
in a targeted manner the procurement of travel services from another trader
during a single visit of a point of sale or through linked online booking
processes. In such cases consumers conclude separate contracts with the
relevant service providers and no elements typical for a package (see above)
are present. 
1.3.        Consultation and expertise
The Commission held two public
consultations (in 2008 and 2009) and a number of stakeholder workshops (in
2009, 2010 and 2012). DG JUST also liaised with relevant services through the
Impact Assessment Steering Group (IASG), which was first convened in June 2009
and met three times. 
1.4.        Specific characteristics
of package travel and the legal framework in place 
Although some horizontal consumer
protection rules apply to package travel contracts as well, they do not
regulate specific aspects associated with them, such as information obligations
on the travel itinerary, the definition of liability in the event of problems
in the performance of the package and mandatory insolvency protection
requirements. The passenger rights regulations lay down specific rights for
travellers only with regard to transport services, but not in relation to the
combination of different tourist services. 
2.           PROBLEM DEFINITION
The Package Travel Directive has worked
well throughout the years creating its own market. However, with the increasing
trend towards on-line travel purchases, its scope has become unclear and
outdated. As a consequence, businesses across the Internal Market are no longer
competing on an equal footing and are facing obstacles to expand their
operations cross-border. Its outdated scope is a source of significant
detriment for consumers, who often purchase unprotected travels under the
impression that they are protected. Other outdated and unclear provisions of
the current Directive generate unnecessary costs for businesses and consumers.
2.1.        Context of the problem
definition- changes in the travel market 
73% of EU households had access to the Internet
in 2011. Almost two-thirds of EU citizens use the Internet at least once a
week. More than half of Internet users are "regular users" surfing
the Internet every day or almost every day. Travel services are the most
popular category purchased on-line. 
The Internet has changed the way in which
consumers organise their holidays. Combined travel arrangements are on the
rise: data show that 23% of EU citizens have bought them but the figures are
substantially higher for Ireland (46%), Sweden (44%), Italy (36%) and Slovenia (42%).
2.2.        Key problems faced by
businesses
2.2.1.     Absence of a level playing
field 
The market changes have led to a situation
where businesses covered by the PTD are subject to different rules and costs
compared with those that are not or do not see themselves as being covered by
the PTD, although they are competing for the same customers. The average compliance
cost for businesses has been estimated at €10.5-12.5 per package. 
2.2.2.     Unnecessary/ unjustified
compliance costs
Some provisions of the Directive have
become outdated or otherwise create unnecessary burden for companies. This
applies in particular to outdated information requirements (e.g. special
requirements for brochures or last-minute bookings), the lack of a limitation
of the organiser's liability in cases where, through force-majeure events, the
return journey cannot be provided as scheduled, and the duplication of costs
for business trips organised by Travel Management Companies (TMCs, where those
companies provide a similar level of protection as under the PTD).
2.2.3.     Legal discrepancies in the
Member States leading to obstacles to cross-border trade
The current Directive is based on minimum
harmonisation, and this has resulted in  legal discrepancies between Member
States. This fragmentation generates additional compliance costs for businesses
wishing to trade cross-border (€2 per package, meaning that such businesses end
up paying €12.5-€14.5 per package) stemming from different information
requirements, a different scope of the protection rules, differences in
insolvency protection schemes, combined with a lack of mutual recognition, and
different national rules on the liability of different parties. 
2.3.        Key problems for consumers
2.3.1.     Consumer detriment suffered
by users of combined travel arrangements
The Consumer Detriment Study estimated the
yearly personal consumer detriment for users of combined travel arrangements in
the EU27 at more than €1 billion net (i.e. after compensation). This is due to
the fact that problems concerning combined travel arrangements are more
frequent and, on average, more detrimental than problems related to
pre-arranged packages. The insolvency of an organiser or a service provider
could be particularly detrimental to consumers. It is often difficult for
consumers to understand whether the combined travel arrangements which they
bought with the assistance of a trader are protected or not. Indeed, 67% of
consumers who bought combined travel arrangements through an intermediary with
billings by different companies wrongly believed that they would receive a
refund in case of bankruptcy of one of them. This confusion could lead to
significant detriment, particularly when consumers only realise that they are
not protected once their travel company has failed and are left stranded abroad
or unable to get their money back. 
2.3.2.     Consumer detriment stemming
from unclear and outdated rules
To a certain extent also those buying
"protected" pre-arranged packages suffer detriment. This is due to
the fact that some provisions of the Directive lack clarity, are outdated or do
not meet the reasonable expectations of today's consumers. This applies in
particular to uncertain rules on liability, uncertainties in relation to
prices, lack of a right to termination and cumbersome access to justice. 
2.4.        Status
Quo - Baseline scenario (BS)
Without additional public intervention, the
problems identified would remain. In the longer run, they are likely to
increase, given the growing popularity of the internet and combined travel
arrangements.
2.5.        Does the Union have the
right to act?
The legal basis for EU action is Article
114 of the Treaty which provides that "the European Parliament and the
Council shall […] adopt the measures for the approximation of the provisions
laid down by law, regulation or administrative action in Member States which
have as their object the establishment and functioning of the Internal
Market." Furthermore, Article 114 (3) specifies that "the Commission,
in its proposals envisaged in paragraph 1 concerning health, safety,
environmental protection and consumer protection, will take as a base a high
level of protection, taking account in particular of any new development based
on scientific facts." 
The objective of enhancing consumer
protection while eliminating legal fragmentation and distortions of competition
in the Internal Market cannot be sufficiently achieved by the Member States.
3.           POLICY OBJECTIVES
The general objectives are to contribute to
the better functioning of the Internal Market in the package travel sector and
achieve a high level of consumer protection in this sector.
4.           POLICY OPTIONS
4.1.        Identified policy options
·       
Option 1 - Maintaining the status quo –
baseline scenario (PO1)
·       
Option 2 -
Guidelines (PO2)
·       
Option 3 - Package Travel Label (sub-option
A)and/ or requirement on traders selling assisted travel arrangements to state
that the services in question do not constitute a package – so-called
"This is not a package" disclaimer (sub-option B) (PO3)
·       
Option 4 - Repeal of the Directive and
self-regulation (PO4)
·       
Option 5 - Modernisation of the Directive and
coverage of "one-trader" packages (PO5)
PO 5 involves a
revision of the current PTD clarifying its scope through the explicit inclusion
of "one-trader" travel packages and updating and improving several
provisions. 
·       
Option 6 – Graduated approach - modernisation
of the Directive and coverage of both "one-trader" and
"multi-trader" packages while applying a lighter regime to
"multi-trader" assisted travel arrangements (PO6)
This option includes PO5 (all proposed
policy measures) supplemented with an extension of the scope of the PTD with a
graduated approach:
- "multi-trader" packages i.e.
all "new packages" would be subject to the same regime as
pre-arranged packages (including full liability for the performance of the
package and the obligation to procure insolvency protection),
-"multi-trader" assisted travel
arrangements would be subject to a lighter regime, limited to insolvency
protection and an obligation to state in a clear and prominent manner that each
service provider will be solely contractually responsible for the performance
of its services (policy option 3B),
·       
Option 7 – Modernisation of the Directive and
coverage of both "one-trader" packages and all
"multi-trader" travel arrangements (PO7)
This option includes PO5 and 6 whilst
subjecting also all "multi-trader" assisted travel arrangements to
all PTD requirements. This means that all obligations and liabilities would
apply to "multi-trader" assisted travel arrangements as well. 
·       
Option 8 – “Travel Directive” (PO8)
This option includes PO 7 supplemented with
an extension of the scope to all independent travel arrangements. This option
would in principle apply the same rules to all travel services irrespective of
whether the product is offered/purchased as part of a package or as a
stand-alone product. 
4.2.        Discarded policy options
It is proposed to discard PO8 because the
majority of the most common consumer problems with independent travel
arrangements can, provided appropriate enforcement exists at national level, be
successfully dealt with in the framework of existing horizontal legislation.
5.           ASSESSMENT OF IMPACTS
5.1.        Assessment of PO2 -
Guidelines 
This PO entails maintaining the PTD in its
current form and preparing guidelines. It could to some extent increase
regulatory clarity for businesses and consumers. Compared to the baseline, this
option may lead to a very small reduction of consumer detriment as the result
of better implementation of the PTD by businesses and stricter enforcement by Member
States. However, as guidelines are, by definition, not legally binding, these
benefits are uncertain. 
5.2.        Assessment of PO3 –
Package Travel Label (PO3 A) and/ or "This is not a package"
disclaimer (PO3 B), add-on option to other policy options 
As consumers would increasingly recognise
that the same label applies across the EU, PO3 A is likely to result in fairer
competition between different market players and could therefore strengthen the
functioning of the Internal Market. The label could reduce consumer detriment
as consumers would be able to take informed decisions. The disclaimer (PO3 B)
is expected to be more effective than the Package Travel Label because negative
information would warn consumers who otherwise might purchase unprotected travel
arrangements under the wrong impression that they are protected. The compliance
cost for businesses under this PO are limited to one-off average estimated
expense of €500 per company.
5.3.        Assessment of PO 4 – Repeal of the Directive
The repeal of the Directive might reduce
the compliance and administrative costs for businesses by €10.5-€12.5 per
package, which could in theory lead to lower prices for consumers. These
benefits would however depend on the willingness of Member States to repeal
their national legislation. However, most Member States are likely to maintain
consumer protection in the area of package travel. Therefore, this PO can also result in more fragmentation of the Internal Market.
5.4.        Assessment of PO5 –
Modernisation of the Directive and coverage of "one-trader" packages 
PO5 would contribute to the better
functioning of the Internal Market in the package travel sector, eliminating legal
fragmentation and levelling the playing field for operators. Some unjustified
compliance costs e.g. those related to rules for brochures, will be removed.
There would be however an increase of compliance costs for new
"one-trader" packages brought under the scope of the PTD between.
Assuming that 50% of one-trader packages are already covered by the current
PTD, the additional compliance costs would amount to €335-€424 million
(low-€7.5 and high-€9.5 estimate of compliance costs per package). These additional
compliance costs for the industry will be offset (at least partially):
–              
by the reduction of administrative costs (€395
million)
–              
cost savings stemming from the exclusion of
business trips organised by Travel Management Companies from the scope of the
Directive between €60 and €76 million (low-€7.5 and high-€9.5 estimate of
compliance costs per package);
–              
mutual recognition of insolvency protection;
–              
the introduction of a limitation (in days) to
provide alternative arrangements in case of long lasting force majeure events.
Since more "one-trader" packages
would be brought under the scope of the PTD (this option would cover about 40%
of holiday trips) and certain rules would be clarified, consumer detriment
would decrease by €348 million if 50% of one-trader travel packages are newly
brought under the scope of the PTD. 
5.5.        Assessment of PO6 -
Graduated approach - Modernisation of the Directive and coverage of both
"one-trader" and "multi-trader" packages while applying a
lighter regime to "multi-trader" assisted travel arrangements 
Compared to PO5, this option would further
contribute to the better functioning of the Internal Market in the package
travel sector, eliminating legal fragmentation and levelling the playing field
for operators The total additional compliance cost could be estimated at
€528-€654 million annually (low-€7.5 and high-€9.5 estimate of compliance costs
per package).  
Making "multi-trader" assisted
travel arrangements subject exclusively to the obligations to declare that they
do not constitute a package and to procure insolvency protection, would 
increase transparency for consumers and ensure fair competition, while avoiding
unnecessary costs associated with all obligations applying to packages.
This lighter regime would be particularly
beneficial for SMEs currently selling "multi-trader" and
"one-trader" packages as it could be difficult for them to cover
liability for the performance of all services provided by different traders.
These companies would be able to adapt their business activities so as to face
only some PTD requirements (insolvency protection and an obligation to display
the "This is not a package" disclaimer). It is impossible to quantify
precisely how many businesses would do this. However, assuming that 25% of "one-trader"
and 50% of "multi-trader" packages would in the future be sold as
assisted travel arrangements, the total additional yearly compliance costs of
PO6 could be estimated at €386-€444 million annually (low- €7.5 and high- €9.5
estimate of compliance costs per package).
For consumers, as more packages would be
brought under the scope of the PTD, the yearly consumer detriment could be
reasonably estimated to decrease by €508 million. However, using the same
assumptions as above that some traders might adapt their business models and no
longer sell packages, the total reduction of yearly consumer detriment could be
estimated at €430 million. Moreover, the "This is not a package"-
disclaimer would enable consumers to make informed choices.
5.6.        Assessment of PO7 –
Modernisation of the Directive and coverage of both "one trader"
packages and all "multi-trader" travel arrangements 
Similarly to PO6, this option would
contribute to the better functioning of the Internal Market in the package
travel sector. However, by extending the scope to all "multi-trader"
travel arrangements and by making them subject to all PTD obligations, this
option would generate disproportionate and unfair costs for companies acting
merely as intermediaries,    since they might not be able to guarantee the
performance of all services included in the travel combination.. The additional
compliance costs could be estimated at €610-€773 million annually (low-€7.5 and
high-€9.5 estimate of compliance costs per package). This PO would further
increase the number of consumer protected by the PTD and would decrease the
yearly consumer detriment by €593 million.
6.           COMPARISON OF OPTIONS
Option 6 "graduated approach",
including sub-option 3B, has a number of advantages over other POs. Indeed, it
meets the stated policy objectives as it would level the playing field whilst
ensuring that compliance costs will be reasonable for the new players falling
under its revised scope. This option also provides for a lighter regime that
would be particularly beneficial for SMEs and micro-enterprises, which might be
ill-placed to assume liability for the performance of different services
included in the travel combination. For consumers, PO6 would bring a significant
reduction of consumer detriment due to the widening of its scope, ensuring
insolvency protection for all types of combined travel arrangements,
clarification of certain outdated and unclear rules of the current Directive
and increased transparency of the information provided to consumers. It
achieves a fair balance between business and consumer interests by tackling
only those situations where there are concrete elements indicating to the
consumer that he/she is purchasing a package, while applying a "lighter
regime" with only some PTD requirements (insolvency protection and
information obligations) to situations where the link between the offered services
is less prominent.
7.           MONITORING AND EVALUATION
The monitoring and evaluation process
should focus on the objectives determined by the problem definition. A report
on the application of the Directive should be submitted to the European
Parliament and the Council no later than five years after the transposition
deadline. 
[1]               Combined travel arrangements are often referred to by
the industry as dynamic packages. The term combined travel arrangements is
therefore a synonym to dynamic packages and will be used interchangeably
throughout the document in particular when referring to the results of Study on
Consumer Detriment in the area of Dynamic Packages