CELEX: 51988PC0041R(01)
Language: en
Date: 1988-03-21
Title: Proposal for a COUNCIL DIRECTIVE on package travel, including package holidays and package tours (submitted by the Commission)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (88) 41
Vol. 1988/0008
 ---pagebreak--- Disclaimer
Conformément au règlement (CEE, Euratom) n° 354/83 du Conseil du 1er février 1983 concernant
l'ouverture au public des archives historiques de la Communauté économique européenne et de
la Communauté européenne de l'énergie atomique (JO L 43 du 15.2.1983, p. 1) modifié en dernier
lieu par le règlement (UE) 2015/496 du Conseil du 17 mars 2015 (JO L79 du 25. 3.2015, p. 1), ce
dossier est ouvert au public. Le cas échéant, les documents classifiés présents dans ce dossier
ont été déclassifiés conformément à l'article 5 dudit règlement ou sont considérés déclassifiés
conformément aux articles 26(3) et 59(2) de la décision (UE, Euratom) 2015/444 de la
Commission du 13 mars 2015 concernant les règles de sécurité aux fins de la protection des
informations classifiées de l'Union européenne.
In accordance with Council Regulation (EEC, Euratom) No 354/83 of 1 February 1983 concerning
the opening to the public of the historical archives of the European Economic Community and the
European Atomic Energy Community (OJ L 43, 15.2.1983, p. 1), as last amended by Council
Regulation (EU) 2015/496 of 17 March 2015 (OJ L 79, 27.3.2015, p. 1), this file is open to the
public. Where necessary, classified documents in this file have been declassified in conformity
with Article 5 of the aforementioned regulation or are considered declassified in conformity with
Articles (26.3) and 59(2) of the Commission Decision (EU, Euratom) 2015/444 of 13 March 2015
on the security rules for protecting EU classified information.
In Übereinstimmung mit der Verordnung (EWG, Euratom) Nr. 354/83 des Rates vom 1. Februar
1983 über die Freigabe der historischen Archive der Europäischen Wirtschaftsgemeinschaft und
der Europäischen Atomgemeinschaft (ABI. L 43 vom 15.2.1983, S. 1), zuletzt geändert durch die
Verordnung (EU) Nr. 2015/496 vom 17. März 2015 (ABI. L 79 vom 25.3.2015, S. 1), ist dieser Akt
der Öffentlichkeit zugänglich. Soweit erforderlich, wurden die Verschlusssachen in diesem Akt in
Übereinstimmung mit Artikel 5 der genannten Verordnung freigegeben; beziehungsweise werden
sie auf Grundlage von Artikel 26(3) und 59(2) der Entscheidung der Kommission (EU, Euratom)
2015/444 vom      13.   März 2015     über die   Sicherheitsvorschriften für den Schutz von  EU-
Verschlusssachen als herabgestuft angesehen.
 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                        /
                                                            COM ( 88 ) 41 final - SYN 122
                                                            Brussels , 21 March 1988
                         Proposai for a
                       COUNCIL DIRECTIVE
      on package travel , including package holidays and
                          package tours
                ( submitted by the Commission )
                                                                   \
                                                     I     V
                             V. .                  < ■      .
                              \    v
                               \    A               • -
                                  \ A>7     . .
                                    4^ ■' -у ■' ; ГГТ! т Г
 ---pagebreak---                                    EXPLANATORY MEMORANDUM
INTRODUCTION
             On 1 July 1982 the Commission transmitted to the Council " Initial
Guidelines for a Community Policy on Tourism"(1 ), which indicated that amongst
many other things the Commission would produce proposals for the protection
of consumers taking package tours .
             The Economic and Social Committee adopted its Opinion ( 2 ) concerning
that document on 27 October 1983 and strongly supported the Commission’s
intention to produce those proposals . At point 3.10 of its Opinion the
Committee recognised " that the relative division of responsibilities for
default in the chain of the touri st / consumer / travel agent / tour operator ,
etc is still in a state of flux and that the Commission should examine this
policy and suggest remedies ". In this same point 3.10 the Committee proposed
" the general adoption and harmonization of national guarantee fund legislation ".
             Expressing the view ( point 3.12 ) " that the interests of tourist
operators such as hoteliers and travel agents must not be neglected , as they
frequently have no protection against the cancellation of reservations , the
bankruptcy of other intermediaries and delays caused by strikes and bad
weather ", the Committee was nevertheless of the Opinion ( point 3.13 ) " that
the Commission should seek to harmonise the conditions for the operation of
travel agencies in the Member States ".
             The European Parliament adopted its Opinion ( 3 ) on these matters on
16 December 1983 and agreed with the Economic and Social Committee in
supporting the making of such proposals and recommended ( point 30(b )) " that
the Commission should draw up a European statute for travel agencies " and
called on the Commission ( point 31(a )) to prepare directives " to provide
legal and social consumer protection for tourists by introducing standard
regulations for the journey and the holiday resorts ".
   ( 1 ) Supplement 4 / 82 - Bull . EC .
   ( 2 ) OJ No C 358, 31.12.1983 , p. 52 .
   ( 3 ) See Parliament 's Resolution in 0J No C10, 16.1.1984, p. 281 .
                                                                                   ./.
                                                                                       2
 ---pagebreak---                                     - 2 -
              Also , the Consumers' Consultative Committee , in its Opinion dated
  13 December 1983, made detailed suggestions for improving the position of
  consumers who take package tours .
               On 10 April 1984 the Council adopted a Resolution on a Community
 policy on tourism . After welcoming the Commission 's initiative in drawing
 attention to the importance of tourism, the Council took note of the
 Commission 's Initial Guidelines for a Community Policy on Tourism, annexed
 the text of them to its Resolution, and invited the Commission to present
 proposals to it in the field of tourism, including a proposal on consumer
 protection in connection with inclusive holidays .
               In those Initial Guidelines , under the heading " The European
 Community and Tourism", it is stated in the section dealing with the
 protection of tourists' interests that as part of its consumer information
 and protection policy the Commission had carried out a number of studies on
 tourism and , in particular , on the services offered to tourists by travel
 agents and tour operators , that its first study covered the International
 Convention dated 23 April 1970 on Travel Contracts , and that this Convention
 " suffers from a number of shortcomings ".
               The principal defect of this Convention is , no doubt , that it
 relieves the organiser of the holiday from liability too easily , for it permits
 him to terminate the contract in whole or in part , without having to pay
 compensation, if before or during the period of execution of the contract
 exceptional circumstances arise which he could not foresee when entering into
 it and which , had he then known of them, would have induced him not to do so .
               Indeed , many of our Member States have since that time adopted
 legislation which is significantly more protective of the holidaytaker .
 The Commission applauds their action .
               The current legislation in the Member States is, briefly and broadly ,
 as follows :
Belgium
              Belgium operates the Brussels Convention of 23 April 1970 , which
 is often referred to as the CCV ( from the French language title , namely the
"Convention internationale relative au contrat de voyage "! The Convention was
 transposed into Belgian law by the Law dated 30 March 1973, which entered into
 force on 25 February 1976 .
 ---pagebreak---                                    - 3 -
              Persons wishing to operate as organisers or as retailers in the
 travel field must first obtain a licence from the Commissioner for Tourism,
 who also has power to suspend or even withdraw a licence he has granted .
 Applicants must show that they have a knowledge of the business , that they
are otherwise suitable to hold a licence and that they have adequate
funding .  They must furnish a financial guarantee and are obliged by law to
cover their liabilities by insurance .
              The organisation Test-Achats has prepared in conjunction with
an association of travel retailers and with certain tour organisers a set of
contract conditions and an order form for use between the organiser and the
consumer . These two documents are now increasingly used in Belgium and have
the great merit of maintaining a fair balance between the interests of the
two parties .
Denmark
              Denmark has no special legislation dealing with travel contracts
or , in particular , with package travel .    The general law of contract
applies , therefore , and the parties' rights and duties are determined by
the contract concluded by them . Most travel contracts are made on the
basis of the general conditions prepared in 1974 by the Danish Travel Agents
Association and approved by Denmark 's Consumer Council .
                                                  s
              The Travellers' Guarantee Fund was established in 1979 for
the purpose of protecting the consumer in case of insolvency on the part
of the organiser or retailer . The Fund 's resources consist of the written
guarantees given , compulsorily , by organisers and retailervand of the
revenue from a form of tax payable by travellers .
                                                       »
              Further , a recently introduced System of conciliation for disputes
between the consumer and the organiser or retailer is showing satisfactory
results .
                                                                                  L
 ---pagebreak---                                           - 4 -
  France
                 New law passed on 14 June 1982 has changed French law considerably
  with effect from 1 November 1982 by regulating the general conditions of
  sale by "agences de voyages" to their customers . The " agent de voyages" is
  the person with whom the consumer usually deals . He may be both a retailer
  and an organiser , but in any event he has an obligation to ensure that the
  services for which the consumer contracts are performed unless this is
 prevented by force majeure, fortuitous circumstances or the acts of third
 parties who are in no way connected with the providing of those services .
 The objective , in putting him in this position , is to ensure that the consumer
  is not left unheeded , if he makes complaints , during the time that the organiser
 and the retailing intermediary argue between themselves upon the question
 " who is liable ".
                 This new law applies not only to package holidays but to all package
  travel .                                                                     ‘
                 It provides , inter alia , that the price communicated to the
 traveller when he enrolls , or makes his reservations , is deemed to be the
 global and final price , and that it is unalterable except in conformity
 with the rules of law . The last instalment the consumer pays in respect
 of the price, when receiving his travel documents , must be of not less than
 thirty per cent of the total price . The consequences of cancellation by the
 organiser, and of alteration of the package,” are regulated in detail and
 aim to achieve a fair balance between the interests of the parties .
                Commercial operators , whether they are organisers or retailers ,
must obtain authorisation ( licence ) to conduct their business .                  They must
 cover their liabilities by means of insurance and, in addition, furnish a
written guarantee given by a bank or other approved body .
                                                                '   I
Germany
                The Law of 4 May 1979 regulating travel contracts entered into
force on 1 October 1979 . It required the German Travel Agents Association to amend
its general conditions of business , but the travel agents are not bound to use
these conditions , for they are only " recommended " and are therefore not compulsory .
( 1 ) See the arrete interministeriel , supplementary to the Law of 11 July 1975 and to the first
      implementing rules of 28 March 1977.
                                                                                                  S
 ---pagebreak---                                   - 5 -
  The 1979 Law applies to travel contracts which cover a
  combination of services ( semble , in English and other languages , "a package ").
  It regulates both defective performance and non-performance of the services
  contemplated by the contract , insisting on the cardinal rule that services
  contracted for must be performed in conformity with the parties' agreement .
  The organiser is nevertheless entitled to limit the amount of his liability
 to thrice the amount of the contract price .
              German law imposes no obligation on organisers or retailers in
 respect of licensing , insurance or guarantee funds .
 Greece
              Law No 393 of 26 July 1976 relating to the establishment and
 operation of travel agencies is at present under review . In order to commence
 and carry on such a business it is necessary to obtain a licence , show proof
 of adequate training in the sector , and give substantial financial guarantees .
 Otherwise , the general law of contract applies .
              The National Tourist Organisation is responsible for all policy
 regarding tourism in Greece and for surveillance of hotel and other
 accommodation available for use by tourists there . A system 6f classification
 of such accommodation is in operation .
 Italy
              Italy operates the Brussels Convention of 23 April 1970, which
 was transposed into Italian law via Law No 1084 dated 27 December 1977 .
♦To set up business as a travel agent it is necessary to show proof of
 knowledge of the trade , and adequate funding , and then be approved by the
 Provincial Tourist Office .
 Ireland
              The Transport ( Tour Operators and Travel Agents ) Act , 1982 , with the
 regulations made under it , such as the Tour Operators ( Licensing ) Regulations
 1983, the Travel Agents ( Licensing ) Regulations 1983 , the Tour Operators and
 Travel Agents ( Bonding ) Regulations 1983 , the Claims by Customers Regulations
 1983 and the Travellers' Protection Fund Regulations 1984 , plus the Air Transport
   Act 1986 , the Consumer
 Information Act ( sections 6 to 9 and 11 to 13 ) and the Sale of Goods and
                                                                                       L
 ---pagebreak---                                    - 6 -
 Supply of Services Act 1980 ( Parts IV and V , and also sections 50 to 55 )
 create a wide-ranging system of protection for the consumer , in particular
 in his role as a taker of travel packages . The general law of contract
 applies to regulate the contract concluded between the parties , terms may be
 imported into the contract by operation of law e.g. the Sale of Goods and
 Supply of Services Act 1980 . The compulsory licensing and bonding
 arrangements , in concert with the longstop Travellers' Protection Fund , give
 valuable safeguards to the consumer .
 Luxembourg
              Luxembourg has no special law on travel contracts in general or
 on package travel in particular . The provisions of the Civil Code
 therefore regulate the consumer / retailer /organiser relations . A person
 wishing to conduct business as an organiser or retailer must obtain a
 licence . To obtain it he must show proof of knowledge of the business and
of integrity . There is no obligation to insure or to give a financial
 guarantee .
Netherlands
              A Law passed by Parliament on 28 March 1979, but not yet brought
into force , would incorporate into the new Civil Code special rules for
travel contracts . These rules are in process of being reconsidered however ,
so as to distinguish , in particular , between an organiser and an intermediary
( retailer ).
              The relations between an organiser and a consumer ( in particular
a package holidaytaker ) are in practice often, but not always , regulated
by the general conditions of contract agreed between the Dutch Consumers'
Association and the Travel Agents' Association . Particular care was taken
to create in these a fair balance of rights in the event of cancellation by
the organiser and of alteration of the package after the consumer has
departed on his holiday . The organiser is responsible for ensuring that the
services contracted for by the consumer are performed , including those
relating to travel and accommodation . The old limitation of the organiser 's
liability to a financial ceiling not exceeding the price of the holiday has
been removed .
 ---pagebreak---                                  - 7 -
             The Netherlands has recently created a Travel Complaints Board
( Geschi llencommissie Reizen) for dealing with consumers' travel Complaints
by means of conciliation, if possible .
             The Travel Guarantee Fund is a voluntary fund which in fact covers
ninety eight per cent of the trade and is fed by means of flat rate
contributions levied on travel payments made by travellers who obtain their
tickets and other travel documents from an organiser or via a retailer .
If the travel contract is cancelled or the travel is impaired as a result
of insolvency, the traveller can obtain repayment out of the Fund; but it
does not provide compensation for defective or sub-standard services .
             There is no obligation on organisers or retailers of package
tours or other travel to cover their liabilities by means of insurance , nor
do they have to obtain a licence to commence and carry on business .
Portugal
               Travel agents ( whether retailers or wholesalers - see below)
and tour organisers are regulated by decree-law No . 359 / 79 of 31 August
1979 , as amended by decree-law No . 480 / 82 of 24 December 1982 , and by
 implementing decrees No . 84 / 79 of 31 December 1979 and No . 20 / 83 of
8 March 1983 .
              These texts fix the scope of liability of travel agents and
tour organisers , who are required to obtain formal authorisation , in the
form of a licence issued by the Secretary of State for the Tourist
Industry , in order to carry on their businesses . They must furnish a
written guarantee of solvency and must cover their civil liability by
means of insurance .     Their duties to customers are regulated by these
laws , as also their relationship with the hotel industry .
              Portuguese law is perhaps unique in making a distinction
between :
              Wholesale travel organisers , who plan , organise and operate
combined travel and tourist services which they sell via retail travel
agents .   The wholesaler is free to operate anywhere in the world but is
absolutely prohibited from offering or selling travel or tourist services
directly to the public .
 ---pagebreak---                                    - 8 -
                Tour organisers , who possess all the means necessary for
  organising and operating travel or tourist services anywhere in the
  world and who are authorised to offer and sell direct to the public .
                Retail travel agents , who are permitted to do business in
  Portugal but not outside it and who offer and sell direct to the public .
               Local tourist offices are permitted by law to organise
  group travel in circumstances where no other organiser or retailer is
  operating in the locality .
 Spain
               Under the Regulations on the Legal Regime of Travel Agencies
 ( Order dated 9 August 1974 ) such agencies may enter into the following
 three types of contracts with their customers :
 1.   Contracts for the provision of a single service , whereby the agency
      provides one of a number of authorized services such as ticket sales ,
      hotel or transportation reservations ;
2.    Contracts for the provision of mixed services , being a combination of
      two or more authorized services ;
3.    Contracts for travel packages , being a combination of a number of
      services for a fixed price .
              Under the first two types of contract the client is entitled
to hold the other contracting party ( the travel agent ) liable in respect
of his performance of the contract and can oblige him to render accounts ,
but the travel agency is not liable for breach or non-performance on the
part of the provider of the service ( hotel , airline , etc .) provided that
such breach or non-performance is not caused by the fraud or negligence
of the travel agent .
              The third type of contract relating to travel packages , is
the most widely used for purposes of mass tourism . The organiser may
arrange the holiday package with his own resources or may enter into
contracts with third-party suppliers on behalf of the client .      In
either case the legal nature of the relationship is a contract for a
" finished work or result " ( Travel Agency Regulations , Article 51 ) as
 ---pagebreak---                                      - 9 -
   defined in Article 1544 of the Civil Code .   From the legal point of view
   the main consequence of that classification is that the travel agent is
   regarded as a general contractor and is liable for the proper performance
   of the whole package of services , subject to a possible escape from
   liability in the event of " just cause ".
                The client may bring legal proceedings for damages directly
   against the travel agency , which may have a right to claim against the
  provider of defective services .
                Scheduled shipping lines are required by the Royal Decree of
  28 March 1984 to inform the public about the frequency of services ,
  tariffs and the general conditions . Failure to comply with these
  requirements may result in revocation of the operator 's licence and
  withdrawal from the official register of regular shipping lines .
                Passengers on scheduled flights who are refused access to an
  aircraft because it has been overbooked are entitled to compensation
  ( Royal Decrees of 13 June 1980 and 20 August 1981 , and Order of 12 March
  1984 ) and there are special rules which fix the amount of the compensation .
 United Kingdom
              The United Kingdom has no laws which govern specifically and
 exclusively the rights and duties of the parties to a contract for a travel
 package . The general law of contract , supplemented by certain specific Acts
 of Parliament , governs the contract concluded by the parties . In certain
 circumstances the law of torts ( ie.the law relating to civil liability ) also
 applies .
             The greater part of this sector of business operates under a scheme
of self-regulation . However, the Supply of Goods and Services Act 1982, the
Unfair Contract Terms Act 1977, the Misrepresentation Act 1967, the Trade
Descriptions Act 1968 and the Consumer Credit Act 1974 all contain provisions
which help a consumer who contracts for package travel .
             Since 1973 a person who wishes to organise inclusive tours
involving air travel , or certain types of charter flight , must first obtain
a licence from the Civil Aviation Authority . This body examines the
applicant 's financial status and determines the money amount of the bond
                                                                                 Ao
 ---pagebreak---                                       - 10 -
    ( written financial guarantee issued by a bank or insurer or both ) which
   the applicant is to be required to furnish for the purpose of covering
   his liabilities in the event of his insolvency . If , upon his becoming
   insolvent , that amount proves insufficient , his customers can then resort
   to the Air Travel Reserve Fund, which was established in 1975 , following the
   collapse of Court Line / Clarksons , to make sure that air package holidaytakers
   will not suffer financially through the failure of a tour operator . The Fund
   was initially financed by a government loan which was subsequently repaid
   from the proceeds of a levy on air travel organisers .      The levy was
   discontinued in 1977 when the Fund reached £ 12 million , but there is power
   to re-introduce it . In practice , the holders of air travel organisers
   licences passed on the levy to their customers in the form of a surcharge -
   in other words they collected it from the traveller .
               The Association of British Travel Agents ( ABTA ) has taken action to
  ensure that its members' customers are safeguarded against the effects of
  insolvency . The ABTA members are tour operators and travel agents ( what we
 have called " organisers " and " retailers " in this proposal ). The action
 taken by ABTA has been to require its members to post bonds , take out
  insurance cover and pay cash levies .     Also , the financial status of an.
 applicant for ABTA membership is carefully examined . The operation of the
 ABTA code of practice is monitored by the Office of Fair Trading . This code
 contains rules which members must observe concerning descriptions of holidays ,
 booking conditions , alteration and cancellation of holidays, and price
 variations .     It also provides for arbitration and conciliation procedures
 for disposing of disputes between a member and a customer .       The code is
 binding on ABTA members , who may be fined or expelled if they do not comply .
              The Advertising Standards Authority has drawn up a code of practice
 which regulates the content , presentation , and so forth , of advertisements .
 The purpose is to ensure that advertisements are " legal , decent , honest and
 truthful ". The ABTA code requires its members to comply with the ASA code .
              In 1982 the Restrictive Practices Court had to decide whether
 certain important restrictions accepted by the members of ABTA when they
 join the association, and admittedly having the effect of creating an
exclusive trading group , should be declared contrary to the public interest
or should be permitted to continue . The Court decided that except for the
restrictions concerning staffing , premises and a few other matters , the
restrictions accepted by ABTA members were not contrary to the public interest .
The above review shows that there currently exists a distortion of competition
between operators in different Member States , which ought to be eliminated in a
common market . The Directive is , therefore , based on Article 100A of the Treaty
and aims at a high level of protection . It does not create special problems for
less developed economies . There is , therefore , no need to propose provisions
appropriate to their case .
 ---pagebreak---                                    - 11
   What is the consumer 's experience in practice ?
              The efforts made by many Member States in recent years to
   modernise their laws have produced much good fruit . National consumer protectio
   departments and associations have become increasingly vocal about the problems
  which can beset the package traveller and have underlined the fact that
  when a consumer buys package travel he pays the price in full before he
  receives the services for which he has paid , it is this fact , especially,
  which undermines his bargaining position , or his room for manoeuvre , when
  things go wrong with the package , and this fact also , no doubt , which , in
  combination with other factors , has caused national parliaments to pass laws on
  package travel . Yet they are , and remain , national laws . They do not have a
  Community dimension .
             Statistics can be friend or -foe .  When the Commission first began
 to examine the field of package holidays it found great difficulty in
obtaining statistics on which it could rely . The Commission therefore caused
 a survey to be done in certain Member States by an independent firm of market
 researchers ( GfK Marktforschung , Nuremberg ) which , in the Federal Republic of
Germany , France , Italy and the United Kingdom , interviewed adults who went .
abroad on a package holiday of five days or more as their main holiday in 1982
or 1983 . The report on the survey shows that about three quarters of
interviewees in the Federal Republic , France and Italy were proposing to take
the same or a similar kind of holiday ( i.e. a package holiday ) in 1984 as they
did in 1982 or 1983 .    Only about half of the British interviewees expressed
that opinion .
             The report states that :
" It would be true to say that in 1982 and 1983 the majority of package
holidaytakers were satisfied with their holiday . This does not alter the
fact that a large number ( both percentage-wise and absolutely ) experienced
certain difficulties or problems in connection with the package holiday
they took ."
             It goes on to give the following figures concerning the
interviewees who had those difficulties or problems :
                                 1982     1983
Federal Republic                 27 X     32 X
United Kingdom                   31 %     37 X
France                           28 X     31 X
Italy                            25 X     27 %
                                                                                   Л2
 ---pagebreak---                                     - 12 -
             Bearing in mind that it is estimated that some 25 million package
 holidays are taken every year by EC consumers it will be seen that, while
 most package hoi idaytakers expressed themselves satisfied the dissatisfaction
 rates in the years 1982 and 1983 were , in absolute terms , significant .
             Objectively , however , one must distinguish between dissatisfaction
 levels and complaint levels . They are vastly different things , and the
 Commission has no interest in obscuring the point .      On the other hand. it does
 appear that the nationally reported figures relating to complaints actually
 pursued , which seem to vary between 1 % and , at the maximum ^. 5 to 5 X, are
 not useful indicators of the problem . The reason , no doubt , is that the
consumer, having paid the price in full before departing on his holiday, feels
that by making a formal complaint he may well find himself involved in an
endless argument which , if it has to be terminated in a courtroom, may cost
him more money than he can afford.'
              The Commission considers itself justified in concluding from the
report prepared for it by GfK Marktforschung, Nuremberg , that the results
produced by the survey can properly lead to the view that consumer
dissatisfaction is significant enough to warrant Community action, and that
this should take t;he form of a di recti ve . Thi s view is supported by the results
                    I
of a survey made in Ireland in 1982 ( repeating the one made in 1981 ), by Irish
Marketing Surveys Limited , for the Director of Consumer Affairs , Dublin , to
which he kindly allowed the Commission to have access ; and by the results of a
survey made in 1985 by The Survey Unit of the Consumers’ Association , London,
at the request of the Commission .
              Moreover, at the particular request of a number of Member States , the
Commission has widened the scope of its work so as to cover not only package
holidays but the whole field of package travel . Thus a package holiday to one
destination is covered . A package tour to several destinations is covered .
Conference travel , health travel , business or professional travel combined
with leisure travel , are covered . The essential criterion is that the travelling
consumer has contracted for a travel package . If he has , the rules here proposed
by the Commission would apply .
              It will be appreciated that whereas a directive on package holidays
would affect approximately 25 million EC citizens every year, the extension of
the scope so as to include all package travel will affect , beneficially, more
than 100 million , or even 150 million, EC citizens , and others , every year .
                                                                                     ■iî
 ---pagebreak---                                          13 -
                                COMMENTARY Qg THE ARTICLES
                                      Article 1
  The purpose of the directive is here stated , namely approximation of Member
  States' laws , regulations and administrative provisions concerning package
  travel , including package holidays and package tours .
                                      Article 2
  This Article contains the essential definitions .     It defines :
            package
            organi ser
            retai ler
             consumer
            the contract
 Package
            The essence of package travel is that what is offered and
 accepted is a combination of not less than two elements .
 The combination commonly includes travel and accommodation in an hotel with
 all meals . But it may consist of travel and self-catering in a chalet or
 cottage , or , conceivably , travel to and from the holiday place , plus
excursions to places of interest or pleasure from that holiday place ,
 the consumer being responsible for providing his own accommodation and meals ;
or , in some circumstances ( certain sporting holidays , for example ),
accommodation in , say , school buildings , with self-catering for meals , the
organisers making available sporting equipment and instruction but no travel -
it being a part of the holiday arrangement that the holidaytakers arrange
their own travel to and from the holiday place . The definition of
 package reflects this analysis .
Organiser and retailer
           Note , first , that the expressions " tour operator” and " travel agent "
have not been used in this proposal for a directive . The reader may be
surprised to learn that this was so as to avoid certain linguistic and legal
confusions .
           It is important to distinguish between the retailer of travel and
the organiser of it . The former is viewed in this proposal as one who
advises prospective travellers about the kinds of travel package that are
open to them, and who , if they so request , will make their reservations and book
their tickets .     He is not the person who constructs the package but essentially
an intermediary . He is herein called the retailer . The essence of his position
                                                                                     -V 0
 ---pagebreak---                                         - 14 -
  appears to be that he does the above-described things for the traveller if the
  traveller asks him to do so .
            The person who actually constructs the package, however,
  does it without waiting for a traveller to request him expressly to do so .
  He concocts the package in advance ( no doubt after a good deal of market
  research concerning trends in demand ) and offers to the public a package
  which he has planned in detail . This is the organiser . In some situations
  he may provide the package from out of his own resources ( e.g. sea travel ,
 on ships owned by him, to a holiday village also owned by him ) or partly with
 his own resources and partly with those of other persons ( e.g. a privately-
 owned airline may offer special-fare flights to , or near to, a holiday resort
 where it has arranged special-tariff hotel accommodation for the package takers
 in local hotels not owned by it ).
  Consumer
           For the purposes of this proposal the consumer is either one of
 a group of persons who take a package or an individual who takes one .
He may himself have concluded via a retailer, or directly
 with an organiser, a contract for a package , or he may be a person on
 whose behalf such a contract has been made e.g. where he is a member of a club,
or where he is a schoolchild taking a package holiday with his classmates ,
 and only one contract has been concluded for all .
           Article 8 , provides in effect that whichever of those categories
the consumer       belongs to, he shall have the benefit of the consumer
protection provisions of the directive .
The contract means the agreement whereby the consumer purchases the package
and the organiser undertakes to provide it . The contract may be concluded
in writing or by word of mouth or by any other means .    Article 4 deals with
the contractual aspects .
 ---pagebreak---                                       - 15
                                    Artide 3
  To avoid misunderstanding between the parties , and , in particular , to obviate
 any misconception on the part of a person who is seeking information about
 travel packages , this Article provides that all descriptive matter published or
 issued by the organiser or retailer about the package must be legible ,
 understandable and accurate . This rule also applies to price indications
 contained in the descriptive matter , and also to references therein to any
 other terms of the contract . Descriptive matter about package travel is
 usually contained in brochures issued by organisers . It may equally be
 contained in newspapers or other periodicals , and even in the contract .
 Wherever it appears , it must be stated so clearly and understandably that the
 customer , or prospective customer , can actually read it , grasp its meaning
 and not be misled .
         The Article specifically requires that where a brochure is issued it
shall contain adequate information ( adequate , that is , for the consumer 's needs )
about the type(s ) of transport to be used , the category ( if any ) of the
relevant hotel , plus its address and main features , the meal plan , and about
visits , excursions or other services included in the package or available, if
the consumer wants them , on payment of a money supplement .
         Furthermore , if a pre-payment is required on account of the price ,
the brochure must specify the actual amount in money, or the percentage part
of the price , which has to be so paid , and the timetable for payment of the
balance of the price .
                                   Article 4
The consumer needs to be aware of the terms of the contract .     This Article
requires him to be given a copy of them .
Paragraph ( 1 ) provides that the contract must contain all the essential terms .
The Annex to the proposal contains an illustrative list of terms which ( depending
on the circumstances ) are to be regarded as essential .
                                                                                    4C
 ---pagebreak---                                    - 16 -
 Paragraph (2 ) provides that all the terms of the contract must be stated
 in writing or in such other form as shall be comprehensible and accessible
 to the consumer . This enables it to be concluded in writing or by word
 of mouth or by various electronic means , including home ordering systems .
 If it is concluded in writing the consumer is to be given a copy . If
 concluded in some other way he is to be given a statement of the contractual
 terms , and this can be done in one document or more .
 It will be observed that the Article contains no rules relating to
 signature of the contract . The relevant national law will therefore apply
to determine this matter .
Paragraph (3 ). Where there are serious reasons which prevent the consumer
from proceeding with the package and these are communicated to the organiser
or retailer not less than one week before the departure date , he is to be
at liberty to transfer his booking to a person :
( a ) who is willing to receive it ; and
( b ) who satisfies the conditions , if any, applicable to the package and the
      legal or administrative arrangements for taking part in it .
The transferee will be responsible for paying the balance of the price .
Paragraph 4 . The basic principle as regards the price is that ; once agreed ,
it must not be changed . Paragraph ( 4 ) of Article 4 provides that consumers
are to be cushioned against unjustified price increases . In particular ,
( and this is no doubt rudimentary ) no variation is to be made in the price
unless the contract expressly so allows . If it does , the price can be
varied in order to reflect alterations in the following items :
- transportation costs , including the cost of fuel ;
- dues , taxes or fees chargeable for certain services such as airport or
   seaport taxes for landing / entry and departure /exit ;
- currency exchange rates ,
but not on any other ground and, even then , only if the aggregate variation
is in excess of two per cent of the agreed price .
 ---pagebreak---                                            17 -
 The amount of the variation in price , and the reason for it , are to be
 notified in writing to the consumer without delay ( see subparagraph ( b )).
 To ensure that there is a period of total stability of price , subparagraph ( c )
 proposes that once the consumer has paid the price in full he shall then
 enjoy one of the following benefits ( depending on the national law that
 govern the contract ) :
 either      ( i ) no variation in price during the period of thirty days preceding
                   the date of departure ;
or         ( ii ) no price variation during the period of three months following
                   the conclusion of the contract .
Paragraph (5 ) describes the circumstances in which the consumer is to be
entitled to withdraw from the contract before departure , namely if
important alterations are made to the terms of the contract as agreed , and
particularly :
( a ) if the price is increased by ten per cent or more ; or
( b ) if the package is modified significantly ; or
( c ) if , for whatever cause , other than the fault of the' consumer , departure
      is delayed unreasonably .
      What is reasonable , or unreasonable , will inevitably depend on the
      circumstances . Ultimately it will be for the courts to decide .
Paragraph (6 ) provides that if the consumer withdraws 'from the contract
pursuant to Article 4(5 ), or the organiser cancels the package before the
agreed date of departure ( for whatever cause , other than the fault of the
consumer ) the consumer is to be entitled :
( a ) to take an equivalent substitute package iith that organiser, at no extra charge to
       the consumer ; or
( b ) to be repaid all sums that the consumer has p^id under the contract and, wher
      appropriate, be compensated either by the orgariiser or by the retailer (and it will be
      for the relevant national law to determine which of these must pay
      the compensation ) for non-fulfilment of the contract .               There will be no
      duty to compensate , however , in the following circumstances : first , if
      cancellation is on the ground that the number of persons who enrolled
      for the package is less than the minimum number specified by the
 ---pagebreak---                                        - 18 -
  organiser in the brochure , or elsewhere , and the consumer is informed of the
   cancellation , in writing , not less than twenty one days before the
  advertised or subsequently agreed date of departure ; and secondly if the
  package is cancelled for reasons of force majeure . Force majeure , in
  this context , does not include overbooking .
  Paragraph ( 7 ) provides that a significant failure of performance ( or , in other
  words , non-fulfilment of a significant part of his obligations under the
  contract ) on the part of the organiser after the consumer has departed on
 the package, or the organiser 's realisation that he will be unable to procure
 the performance of a significant part of the services contemplated in the
 contract will be performed, ( in either case, for whatever cause other than
 the fault of the consumer) produces the consequence that the organiser must :
  ( a ) make suitable alternative arrangements, if they are capable of being
        made, so that the consumer is enabled, without extra cost to himself , to
        continue the package ( and if it is a package holiday to a destination at
        which he has already arrived, to continue his holiday at that place )
        or, if such arrangements are impossible to achieve, or the consumer does
        not agree them, '
 ( b ) provide suitable transport for the consumer to bring him back to the place
        of departure or to such other return-point as was agreed between them; and
  ( c ) where appropriate, compensates the consumer according^as the relevant Member
         State 's law shall provide , for significant inconvenience caused to him; and,to
        the extent that the agreed services have not been provided, for non¬
        performance of them, proportionally .
                                          Article 5
This Article requires the Member States to take the necessary measures to
ensure that the services for which the consumer has contracted are rendered
punctually and efficiently . This applies whether they are to be performed by
the organiser or by a third party . It means , amongst other things that the
organiser must construct the package in such a way that the various services which -
under the contract , are to be performed for the package taker are in fact
performed in the manner agreed . The package must "work". It is not enough
to say that the services provided in satisfaction of the contract ( whether
                                                                                      44
                                                                                     /.
 ---pagebreak---                                       19 -
 furnished by the organiser himself or by a third person ) must be provided
 without major breakdown .    Rather should one say ( i ) that those services
 must be performed , and ( ii ) that they must be performed punctua l ly and
efficiently .
 The implications of this basic rule are very far-reaching .      Thus , for
example , in selecting and contracting with third persons who are to provide
transport , or other services for the benefit of the holidaytaker in or
about the package holiday , the organiser must use proper care and skill ,
and make sure that they are persons whose performance will satisfy the
requirements of the contract .
The effect of paragraph ( 2 ) is to require the Member States to make a choice
and to fix the liability for any deficiency in performance of the services
EITHER on the organiser OR on the retailer , to the intent that the
consumer will have one interlocutor when things go wrong . In France , for
example , under current French law , the consumer treats with the retailer .
In other Member States he will treat with the organiser .
                                  Article 6
In point 3.16 of its Opinion the Economic and Social Committee says that
" while formal legal protection in the tourist industry is necessary in a
fall-back situation , the average citizen does not want to rush into legal
action if his grievance can be otherwise redressed . The Committee
therefore proposes the harmonization of simple complaints procedures in the
Member States , and the superimposition of a new Community procedure if
necessary . It suggests the establishment of a national arbitration body
in each Member State with responsibility for settling disputes arising
within the national territory and consulting its opposite number in other
countries in respect of disputes arising abroad ".
Under paragraph ( 1 ) of Article 6 the Member States are to ensure that the
package taker is informed in writing of the name of the organiser 's local
representative , if any , at his destination(s ) and of the means whereby the
package taker may make contact with that person , who must do his best to
put right the consumer 's complaints , especially if they are substantial .
 ---pagebreak---                                     - 20 -
                                                           to the extent possible
  Under paragraph ( 2 ) the Member States are to ensure thatylocal tourist
  authorities , whether they are publicly controlled or are private bodies ,
  do actually investigate consumers' complaints concerning their travel
  packages , that they seek solutions and attempt to obtain amicable settlement
  on the spot . Moreover , if no remedy is forthcoming , those bodies are to
  provide assistance in the recording of evidence of significant complaints .
  The Commission has incorporated into its text the basic idea expressed by
  the Economic and Social Committee , and paragraph ( 3 ) contemplates the
  setting up , in those Member States which do not already have it , of a rapid,
 efficient and inexpensive procedure whereby package takers' complaints about
 their package travel can be dealt with . The object is to enable them to be
             whether by public or private bodies,
 conci liated,v without the interference of lawyers , if they are not settled
 amicably by agreement between the parties .
                                       Article 7
At point 3.10 of its Opinion the Economic and Social Committee recognised
" that the relative division of responsibilities for default in the chain
of the tourist / consumer / travel agent / tour operator , etc . is still in a state
of flux and that the Commission should examine this policy and suggest
remedies . The Committee proposes the general adoption and harmonization of
national guarantee fund legislation ."
After considering those views with great care        the Commission has come to the
conclusion that in fact there are two facets to this matter . First there is
the question whether organisersy/cover the risks of their trade by means of
insurance . In most Member States they are obliged to do so - but not in all .
The public would be better served if organisers in all Member States were under
obligation to contract insurance covering a- failure .to provide punctually and
efficiently the services which they have contracted to supply . But it appears
that at the present
                                                                                     Z(
 ---pagebreak---                                    - 21
time there are risks which cannot be covered by insurance ( or which , today ,
are not' so covered ). An example is the insolvency of the organiser . It is
possible that insurers will in future years issue policies which do in fact
provide this cover , but they will need time to examine the difficult
problems involved , and in the meanwhile the package takers stand
in need of an answer to the question : " What happens to our claims if the
organiser is insolvent ?".
This is the second facet of the matter , and the Commission advocates the
creation, in every Member State, of a guarantee fund to secure the consumer
against the insolvency, and even the disappearance, of the organiser.
 Article 7 provides , then, both for compulsory insurance and as a distinct and
 complementary safeguard, a guarantee fund .
Guarantee funds already exist in. four Member States ,    namely Denmark , the
 Netherlands , Ireland and the United Kingdom . In the    first two of these
 countries the fund covers the problems of insolvency     only . In Denmark it was
established by law and is compulsory , whereas in the     Netherlands it is
purely voluntary and its income derives from those travellers who , having
booked tickets with an organiser, or via a retailer, who is a "member" of
the Travel Payments Guarantee Fund , then pay him a small sum in cash , half
of which he pays over to the fund and he keeps the other half to cover
his expense's . - Ninety eight per cent of the organisers and retailers are
" members " of the fund .
           The Irish fund is constituted by " bonding " i.e. the issue of a form
 of guarantee bond by an insurer . It was established by law and is compulsory .
 In the United Kingdom , where the guarantees are provided partly by cash
 contributions from the trade and partly by written guarantees ( like Ireland 's
 " bonding ", except that in the United Kingdom the guarantees are given both
 by insurers and banks ) the Air Travel Reserve Fund was created to cover any
 insuffiency of the amount of money provided by bonding . Tour operators
 ( i.e. those persons who in this proposal for a directive are called
 " organisers ") who organise inclusive tours involving air travel , and those
 who organise certain types of charter flight , have to obtain a licence from
 the Civil Aviation Authority , which examines the applicant 's financial status
 and determines what amount of bond is necessary to cover the applicant 's
 liabilities in the event of insolvency . The Air Travel Reserve Fund exists
 to cover any shortfall in the amount of the bond and the actual cost of
 repatriation and repayment of travellers . Also , the Association of British
 Travel Agents ( ABTA ) has taken action to ensure that its members'
 customers are protected against the effects of insolvency on the part of
 ---pagebreak---                                     - 22 -
   any member . ABTA 's members are tour operators and travel agents ( i.e. the
   persons ‘called in this proposal for a directive "organi sers"and " retailers "
   respectively ). The action taken by ABTA was to require its members to
  arrange bonding and , in addition , to obtain insurance and pay cash levies
   into a guarantee fund . Further , the financial status of an applicant for
  membership of ABTA is thoroughly examined before membership is granted .
  Member States will determine for themselves which kind of guarantee scheme
  they wish    to have .
                                   Article 8
  The protection contemplated by the proposal for the directive is intended to be
  available not only to the contracting package taker but also to all those
  for whom he contracts . Article 8 so provides .
                                   Article 9
  This Article permits Member States to adopt more stringent provisions to
 protect the consumer in the field covered by the proposal for a directive ; and ,
  if they already have in their law more stringent provisions for that purpose ,
 they are at liberty to keep them .                         '   >
                                   Article 1 0
 Paragraph 1 fixes the date by which the Ffenber States are to bring
 into operation the measures which are necssary for the purpose of
 implementing the directive , that is to say not later than 31 December 1990 .
 They are to inform the Commission .
 Paragraph 2 requires the Member States to send to the Commission the texts
 of the main provisions of law which they adopt in implementation of the directive .
                                  Article 1 1
 The directive will be addressed to the Member States .
The Annex is to be read in conjunction with Article 4 and contains a list of terms
which should be included in the contract if they are appropriate to the particular
package contracted for .
                                                                                   n
 ---pagebreak---                    Proposal for a directive on package travel
               including package holidays and package tours
The COUNCIL OF THE EUROPEAN COMMUNITIES ,
Having regard to the Treaty establishing the European              Economic
Community , and in particular Article 100 A thereof ,
Having regard to the proposal from the Commission ,
In cooperation with the European Parliament ,
Having regard to the opinion of the Economic and Social Committee ,
Whereas one of the main objectives of the Community is to complete the Internal
Market , of which the tourist sector , is an essential part , by 1992 at . the latest
Whereas paragraph 36(b ) of the Annex to the Council 's Resolution of 19
May 1981 on a second programme of the European Economic Community for
a consumer protection and information policy invites the Commission to
study , inter alia , tourism , and , if appropriate , to put forward
suitable proposals with due regard for their significance for consumer
protection    and   the   effects  of    differences  in   Member   States'
legislation on the proper functioning of the common market ;
Whereas the    Council adopted on 10 April 1984       a   Resolution on     a
Community policy on tourism , wherein , after welcoming the Commission 's
initiative in drawing attention to the importance of tourism , and
after taking note of the Commission 's Initial Guidelines for a
Community Policy on Tourism , the Council invited the Commission to .
present proposals to it in the field of tourism ;
Whereas the Commission 's Communication to the         Council concerning
consumer protection policy , which was entitled        A New Impetus for
Consumer Protection Policy and was approved by          Resolution of the
Council on 6 May 1986, lists in paragraph 37 ,         among the measures
proposed by the Commission , the harmonisation         of legislation on
 ---pagebreak---                                   - 2 -
package tours , and point 12 of the Annex setting out the timetable for
action envisages the adoption by the Council of a directive on package
tours in 1987 ;
Whereas national laws of Member States concerning package travel show
many disparities and the various national practices in this field are
markedly different ,  with the result that the national markets operate
divergently from each other and that distortions of competition arise
amongst operators established in different Member States ;
Whereas certain common rules on package travel will contribute to
achieve a common market in services ,          thus helping operators
established in one Member State to render their services in another
Member State and consumers to benefit      from equal   conditions when
buying a travel package in any Member State ;
Whereas , in concluding contracts for package travel , consumers often
thereby contract for the provision of services which are of an
international character , such as transportation across frontiers and
accommodation and associated services ,      in payment whereof large
amounts of money are transferred between Member States ;
Whereas tourism plays an increasingly important role in the economies
of the Member States ; whereas package travel constitutes an important
part of tourism ; whereas the package travel industry in Member States
would be stimulated to greater growth and productivity if at least a
minimum of common rules were adopted in order to structure it to a
Community dimension ; and whereas this would not only produce benefits
for Community citizens undertaking package travel organised on the
basis of those rules , but would attract tourists from outside the
Community who seek the advantages of guaranteed standards in package
travel ;
                                                                        гг
 ---pagebreak--- Whereas experience has shown that package travel , commonly paid for in
 full in advance of departure ,         has caused a certain level of
dissatisfaction , and that the level of dissatisfaction is high enough
to justify action ,        in the form of a Council directive ,    by the
Community ;
Whereas the organiser of the package and the retailer of it should be
under obligation to ensure that in descriptive matter ,               and
particularly in brochures , relating to package travel which they
respectively organise and sell , information should be given which is
accurate and also clearly legible and understandable by the consumer ;
Whereas the consumer needs to have a record of the terms of contract
applicable to the package ; whereas this can conveniently be achieved
by requiring that all the terms of the contract be stated in writing
or such othei!v^)fyPi^nlir^shall be comprehensible and accessible to him,
and that he be given a copy thereof ;
Whereas the consumer should be at liberty in certain circumstances to
transfer to a willing third person a booking made by him for a
package ;
Whereas the consumer should be protected against          any unjustified
increase in the price of the package ;
Whereas    the  consumer   should  in  certain circumstances  be free  to
withdraw before departure from a package travel contract concluded
with him ;
Whereas there should be a clear definition of the rights available to
the consumer in circumstances where the organiser of the package
cancels it before the agreed date of departure ;
Whereas if ,    after the consumer has departed on the package ,    there
occurs a significant failure of performance of the services for which
he has    contracted ( for whatever cause other than the fault of the
consumer ) or the organiser perceives that he will be unable to procure
a significant part of them to be provided , the organiser should have
certain obligations vis -a-vis the consumer ;
 ---pagebreak---                                        - 4 -
Whereas consumer dissatisfaction could be much reduced if there were
 imposed on the person who arranges or sells the package an obligation
 to ensure that     all  the services which the traveller contracts to
 receive are rendered at the proper time and efficiently;
Whereas the consumer should be informed in writing of the name of the
organiser 's    local    representative ,        if    any ,   at    the   package
destination(s )    and   of   the    means    of    making   contact    with  such
representative ,    who should use his best endeavours to rectify the
consumer 's complaints; whereas'ytflc!>lfer^t<5u?Tl>i e authori ties should
investigate complaints made to them by consumers , should suggest
solutions and endeavour to obtain amicable settlement of complaints ,
and provide assistance in recording evidence of significant complaints
which have not been remedied ; and whereas both the consumer and the
package travel industry would find that consumers' complaints in this
field would be disposed of more expeditiously than at present if in
each Member State there existed a rapid, efficient and inexpensive
procedure for dealing with . those complaints which are not resolved
amicably whether provided by ptblic or private bodies;
Whereas both the consumer and the package travel industry would
benefit if organisers were placed under an obligation to cover by
means of insurance those parts of their liability under this directive
as are insurable ; whereas , similarly, each Member State should ensure
that within its territory a guarantee fund is available for payment of
claims sustainable under this Directive which remain unpaid from some
other source ;
Whereas the     consumer    should    have the      benefit of    the protection
contemplated by this Directive irrespective of whether he is a direct
contracting party , a transferee , or a member of a group on whose
behalf another person has concluded a package travel contract ;
Whereas Member States should be at liberty to adopt , or retain, more
stringent provisions relating to package travel for the purpose of
protecting the consumer ;
HAS ADOPTED THIS DIRECTIVE :
 ---pagebreak---                                       - 5 -
                                    Article 1
 The purpose of this Directive is to approximate the laws ,      regulations
 and administrative provisions of the Member States relating to package
 travel , including package holidays and package tours .
                                    Article 2
 For the purposes of this Directive :
 Package        means the pre-arranged combination of not less than two
                of the following when organised at a global price and
                marketed as such :
                1 . transport ,
                2 . accommodation ,
                3 . other services      not   ancillary   to  transport   or
                    accommodation;
                     and the expressions "package holidays ", "package
                    tours " and "package travel " shall be interpreted
                    accordingly .
Organiser       means the person who " in the course of his business ,
                organises the package and offers it by means of
               brochures , or other forms of advertising , to the public
                generally .
Retai 1er      means the person who sells the package on behalf of the
               organiser .
Consumer       means the     person who     takes or   agrees to   take the
               package .
The contract   means the agreement whereby the consumer purchases the
               package and the organiser undertakes to provide it .
                                                                             •2P
 ---pagebreak---                                        - 6 -
                                       Article 3
With regard to the marketing and sale of the package , Member States
 shall ensure that all descriptive matter published or issued by the
organiser or the retailer concerning a package , the price thereof and
any other terms applicable to the contract therefor,             is legible ,
understandable and accurate, and that brochures relating to a package
contain adequate information, where relevant , concerning :
              ( a ) the type(s ) of transport to be used ;
              ( b ) where hotel or other accommodation is involved , the
                    category ( if any), address and main features thereof ;
              ( c ) the meal plan ;       •
              (d ) visits , excursions or other services included in the
                    package or available optionally on payment of a
                    supplement ;
and that brochures specify :
             ( e ) either the monetary amount , or the percentage of the
                    price which is to be paid by way of pre-payment , on
                    account of the price ; and
             ( f ) the timetable for payment of the balance of the price .
                                  Article 4
Member States       shall ensure    that  in  relation to  the contract  the
following principles shall apply :
( 1 ) that the contract contains all the essential terms ; by way of
      illustration there is annexed hereto a list of terms which ,
      depending on the circumstances , are to be considered essential ;
 ---pagebreak---                                          - 7 -
 ( 2 ) that all the terms of       the contract ( including such of those set out in
         the annex hereto as are appropriate to the particular package ) are
         stated in writing or such ot1leivTor)n as shall be comprehensible
         and accessible to the consumer ;      and that he shall be given a copy
         thereof ;
 ( 3 ) that if the consumer is for serious reasons ( such as sickness ,
        bereavement ), which he duly communicates          to the organiser or
        retailer not less than one week before the departure date ,
        prevented from proceeding with the package , he is free to transfer
        his booking to a wilting person who satisfies the conditions , if
        any , applicable to the package , and the legal or administrative
        arrangements , if any , for taking part in it , and who shall be
        responsible for payment of the balance of the price ;
( 4 ) that consumers are protected against unjustified price increases ,
       and in particular :
        ( a ) that the price is not varied unless the contract expressly so
               provides ; and that if the contract does so provide , the
               organiser may , subject to subparagraph ( c ) below ,
               alter   the  price   solely   in   order   to  take   account  of
               modifications in :
              - transportation costs , including the cost of fuel ;
              - dues , taxes or fees chargeable for certain services , such as
                 airport taxes , landing fees ;
              - currency exchange rates ,
              but only if the resulting aggregate variation is in excess of
              2 X of the agreed price ;
       ( b ) that the amount of the variation in price , and the reason
              therefor, is notified in writing to the consumer without
              delay ;
       ( c ) that the consumer has one of the following guarantees after he
              has paid the whote of the price agreed in the contract :
 ---pagebreak---                                               - 8 -
              either       ( i ) from the thirtieth day prior to the agreed date
                                  of departure the price will not be increased; or
                          ( ii ) during the period of three months following the
                                  conclusion of the contract the price will not be
                                  increased ;
 ( 5 ) that the consumer is entitled to withdraw from th.e contract before
       departure if important alterations are made to the terms of the
       contract as agreed, and in particular :
        ( a ) if the price is raised by ten per cent or more ; or
        (b ) if the package is modified significantly ; or
       ( c ) if there is an unreasonable delay in departure,             howsoever
              caused, otherwise than by his own fault ;
( 6 ) that if the consumer withdraws from the contract pursuant to
       point 5 above , or if , for whatever cause , other than the fault of
       the consumer, the organiser cancels the package before the agreed
       date of - departure, the consumer is entitled :
       ( a ) to take an equivalent substitute package at no extra charge to the
       consumer ; or
       (b ) to be repaid all sums paid by him under the contract , and where appropriate,
            be compensated either by the organiser or by the retailer
               according as the relevant Member State 's law shall provide or
               determine , for non-fulfilment of the contract , except where :
               (i)   cancellation is on the ground that the number of persons
                     who enrolled for the package is less than the minimum
                     number specified by the organiser in the brochure or
                     elsewhere ,       and the consumer is informed of the
                     cancellation, in writing , not less than twenty one days
                     before the advertised or subsequently agreed date of
                     departure ; or
 ---pagebreak---                                           - 9 -
               (ii)    cancellation is for reasons of force majeure ; but these
                       reasons shall not include overbooking ;
 ( 7 ) that where , after departure , a significant part of the services
        contemplated by the contract is not provided or the organiser sees
       that he will be unable to procure a significant part of them to be
       provided, ( in either case , for whatever cause other than the fault
       of the consumer ) the organiser :
        ( a ) makes suitable alternative arrangements ,      which are free of
              cost to the consumer , for the continuation of the package ( and
              if it is a package holiday to a destination at which he has
              already arrived, to continue it at the place where he is ) if
              such arrangements are capable of being made ; or , if such
              arrangements are impossible to achieve or are not agreed by
              the consumer ,
       ( b ) provides suitable transport for the consumer, free of cost to
              him, to return him to the place of departure , or to such other
              return-point as was agreed between them ; and
       ( c ) where appropriate , compensates the consumer according as the relevant
              Member State 's law shall provide :
              ( i ) for significant inconvenience caused to him; and
              ( ii ) to the extent that the agreed services have not been
                     provided, for non-performance of them, proportionally .
                                       Article 5
The Member States shall ,          as regards the performance of the contract ,
take the necessary measures to ensure :
( 1 ) that the services which under the contract are to be provided for
      the consumer, whether by the organiser or by a third person, shall
      be rendered punctually and efficiently .
 ---pagebreak---                                               - 10 -
    ( 2 ) that Vis-a-vis the consumer, liability for any deficiency in the
           provision of those services lies either with the organiser or ( in
           those Member States which so prefer ) with the retailer .
                                             Article 6
With regard to complaints , Member States shall ensure :
 ( 1 ) that not        later than the time when the tickets or other travel
         documents are       delivered to the consumer he is informed in writing
         of the name of , and the means of making contact with , the
         organiser 's local representative,             if any ,     at the relevant
         destination(s ); and that this representative               uses      his     best
         endeavours to rectify the consumer 's complaints , particularly if
         they are substantial ;
              to the extent ptjssible
( 2 ) thatVlocal tourist authorities , whether public or private bodies ,
         investigate complaints made to them by consumers , suggest solutions
         and endeavour to obtain amicable settlement of complaints , and
         provide assistance in recording evidence of significant complaints
         which have not been remedied ;
                                                                       _ whether^provided by public or
(3 ) that in each of their territories there is available          avai lable*'/ a rapid , private bodies
         efficient and inexpensive procedure for use by the consumer in
         dealing with his complaints concerning any package for which he
         has contracted, where these are not resolved amicably .
                                            Article 7
Member States shall ensure :
          ( a ) that organisers cover by means of insurance such part of their
                liability under this Directive as is insurable ; and
          ( b ) that   there     is   available   in  each of    their    territories     a
                guarantee fund for payment of claims sustainable under this
                Directive which remain unpaid from some other source .
                                                                                                       33
 ---pagebreak---                                         - 11
                                      Artide 8
  The consumer shall have the benefit of the protection contemplated by
  this Directive if he is :
  ( a ) the person with whom the organiser or the retailer has concluded
         the contract , or in the event of a transfer, the transferee ;
  ( b ) a person in respect of whom the organiser or the retailer has
         concluded the contract with another person , such as a parent ,
         guardian or group convener .
                                      Article 9
 Member States may adopt , or retain,        more stringent provisions in this
 field to protect the consumer .
                                    Article 10
 1 . Member States shall bring into force the measures necessary to
       comply with this Directive not later than 31 December 1990 . They
       shall forthwith inform the Commisjion thereof .
 2 . Member States shall communicate to the Commission the texts of the
       main provisions of law which they adopt in the field governed by this
       Di rective .
                                    Article 11
 This Directive is addressed to the Member States .
Done at Brussels ,                                        For the Council
 ---pagebreak---                                        - 12 -
                                       ANNEX
Terms for inclusion in the contract if appropriate to the particular
package
 (a)  the travel destination(s ); and, where periods of stay are
       involved , the relevant periods , with dates;
 ( b) the type(s ) of transport to be used , the date and time of
      departure and return and the times of transport connections , if
      appropriate ; and particulars of the place to be occupied by the
      traveller e.g. cabin /berth on ship, sleeper compartment on train ;
(c)   the departure point and return point ; •
                                                                 -s
( d)  where the package includes hotel accommodation the name,, address
      and category ( if any ) thereof, the meal plan ( if included ), and a
      statement whether a private bathroom or shower is included; and
      where the package includes another type of accommodation such as
      a vi lla , chalet , apartment , flat , room or caravan, a description of
      its main features ;
(e)   the price of the package, and a statement that it will not be
      varied except in the event that the organiser is himself
      compelled to accept modifications , which he cannot avoid or
      reduce, in respect of transportation costs ( including cost of
      fuel ), certain dues, taxes or fees chargeable for services ( such
      as airport or seaport taxes ,        landing .or departure fees ) and
      currency exchange rates ;
( f)  the timetable for payment of the price;
(g )  other services , if any ( e.g. excursions ) which are included in the
      price ;
 ---pagebreak---                                   - 13 -
(h) any special requirements which the traveller has communicated to
    the organiser or retailer when booking his travel , and which
    either of them has accepted .
(i) the name and address of the organiser and , where appropriate , of
    the retailer .
 ---pagebreak---                                                                 ANNEX
           COMPETITIVENESS AND EMPLOYMENT IMPACT STATEMENT
 What is the main reason for introducing the measure ?
  Features of the businesses in question .      In particular :
  (a)   Are there many SMEs ?
 ( b ) Have any mergers been noted in any regions which are :
        ( i ) eligible for regional aid in the Member States ?
      ( ii ) eligible under the ERDF ?
 What direct obligations does this measure impose on businesses ?
 What indirect obligations are local authorities likely to impose
on businesses?’
Are there any special measures in respect of SMEs ?
Please speci fy . .
What is the likely effect on :
( a ) the competitiveness of businesses ?
( b ) employaient ?
Have both sides of industry been consulted ?
Please indicate their opinions .
 ---pagebreak---                                           PACKAGE TRAVEL
  I. The main reasons for introducing the measure , and thus the essential
       policy objectives , are :
       1 . by establishing common rules on package travel , to contribute to the
            creation of a common market in tourism services - and thereby to
            contribute to the completion of the internal market ;
      2 . to set minimum standards of consumer protection for the EC in relation
            to package travel .
      Action needs to be taken at EC level :
      ( a ) because the national rules and practices are markedly different .
             The disparities will not be removed unless the EC approximates the
             underlying laws .
      ( b ) because dissatisfaction amongst EC consumers who have taken travel
             packages , especially package holidays , has been running too high and
             has been greater in some Member States than in others . Common
             minimum standards should help to change this situation .
     As voluntary codes do not produce law-approximation effect ^, and as
     attempts at self-regulation by the trade have not dissipated consumers'
     dissatisfaction , the consequence of non-intervention by the EC would
     be that the present divergences of law and practice would widen and
     that many consumers would continue dissatisfied .
II . The proposal has implications for tour operators and travel agents .
     The tendency is for the former to become very large , often by takeover
     ( mostly by positive desire for expansion , but occasionally by need
     of " rescue " acquisition of badly managed or otherwise failing businesses ).
     Travel agencies tend to be small concerns , except for those which form
     part of a chain .
     As tourism and travel services become better organised - and it seems
     virtually certain that every Member State will increasingly look
     to them as sources of revenue and as havens of employment - it is to be
     expected that new, small travel agencies will be established which .
                                                                              ./.
                                                                                    19
 ---pagebreak---                                                                                   2.
        if they prosper , will grow in 'size and , hopefully , in their profit making .
       Tour operators and travel agents are not concentrated in regions eligible
       for regional aid in Member States , or for ERDF .
       The proposal has implications for competition , notably in so far it will
       require tour operators in the EC to achieve higher standards of
       performance both at the stage of design or planning of travel packages
       and at the stage of executing them . The competition element does not
       stop there , however , for the raising of performance standards in the
       package travel business in the EC should have the effect of enabling
       tour operators established in the EC to offer finer service than their
       competitors operating from outside it .
III . In order to comply with the directive , businesses will be required vis
      a vis the traveller ( see Articles 3 to 7 in the draft proposal ) :
      - to provide accurate, legible'and understandable information ;
      - to perform agreed services punctually and efficiently;
      - to offer alternative services in certain cases of cancellation ;
         to refund the traveller 's payments and also pay compensation, in
         certain other cases ;
      - to insure their liability to the traveller .
      The propsoal is not expected to give rise to additional costs for
      businesses - save as regards insurance , the additional cost whereof is
      not likely to be more than marginal . On this point , see the letter , dated
      16 March 1987 from the Comite Europeen des Assureurs , Paris , to
      Mr Latham, EC Commission , DG XI .
      So far as can be foreseen , the directive would not stop businesses from
      continuing with any present activity .
      In the absence of a directive the package traveller would remain at risk
      and there would be no structural move towards common rules of law and
      common practices .
                                                                          ./.
 ---pagebreak---                                                                                  3.
       Administrative costs are not Likely to be pushed upwards by the directive .
       If anything , the effect of having common rules and practices for certain
      aspects of package travel would be to reduce administrative costs .
IV . Those Member States whose laws do not correspond to the provisions of the
      directive would have to legislate for the purpose of implementing its rules .
      Action thereafter would lie with the trade ; except that :
      ( 1 ) in those Member States which decide to institute a travel guarantee
            fund as a publicly administered fund ( see Article 7 ( b ))   State
            measures will have to be adopted ;
      ( 2 ) under Article 6.(2 ) local tourist authorities , whether public or
            private , will have to provide a consumers' complaints investigation
            service , plus machinery for making recordsof evidence in particular
            cases .
     A small extra cost for businesses may arise as a result of the
     establishment of the guarantee fund , but part of the cost of such funds
     can be covered by levy on travellers themselves , as in the Netherlands .
     No other organisations would be involved with the implementation of
     the directive .
V. The proposal contains no special provisions in respect of small and
     medium-sized businesses . SMEs could not be exempted from the scope of
     application - for if they were granted exemption the result would be a
     very uneven consumer protection cover .
     On the other hand , SMEs are actually likely to be stimulated by such
    a directive , in so far as the tourism and travel services industries ,
    benefiting from the common rules here proposed , would be more highly
    organised , efficiency - conscious and, prospectively , expansionist .
                                                                                  KO
 ---pagebreak---                                                                                     4.
 VI . ( a ) See paragraph II above .
       ( b ) Increased demand for services in the tourist and travel trades
             should actually lead to the creation of many new jobs , full-time
             and part-time :
             - in the tourist destinations ( especially Greece , Italy , Portugal ,
              ' Spain , Central and Southern France , bul also in other Member
                States );
             - in the travel designing , planning and organising centres i.e.
                generally , the originating countries ( meaning those whence the
                travellers come ).
       There is no reason to suppose that the directive would cause any
       existing jobs to be lost .
VII . Discussions have been held with :
      - The Group of National Travel Agents Associations within the EEC
          ( Head Office , Brussels ) both by DG XI. and DG VII .
      - The International Association of Tour Managers Ltd . ,
      - The* Belgian Commissariat au Tourisme .
      - The Comité Européen des Assureurs .
      - The Association of British Travel Agents ( ABTA ).
      - Several Consumer Organisations , including Test Achats , Belgium and
         BEUC .
      - The National Swedish Board for Consumer Policies .
      - The Norwegian Consumers' Ombudsman .
      Also , several meetings were held with government experts from all
      Member States .
                                                                            ./.
 ---pagebreak---                                                                            5.
  What opinions were expressed ?•
  Briefly , the first reaction of the trade was that if there has to be
  an EC directive :
 - it should not be too detailed ; and
 - it must cover all package travel ( voyages a forfait ) and not merely
    package tours / holidays .
 Government experts shared that view .
 Consumer organisations showed that they were keen for the EC to have
a directive on package travel . The failure of the International Convention
 ( the Brussels Convention , 1970 ) and the inability of any international
or ( even regional ) body or grouping to make progress in attempts
to produce common rules , were , in truth , ample reasons for the support
given by consumer organisations to this work .
We would contend that now , when all parties know perfectly well that such
a proposal is :
         - justified in principle ;
         - not over-detailed ; and
         - essentially reasonable and sensible in approach ,
it will actually be welcomed , in the expectation that the directive ,
when adopted , will produce thoroughly useful results .
                                                                           41