Collective Commentary about the New Package Travel Directive

ARTICLE 3 | MARC MC DONALD 155 included in the protection rules since the consumer harm in question is quite different from the harm requiring repatriation, and is not that different from consumer harm arising from the loss of pre-paid booked accommodation when a local hotel becomes insolvent. If the non-tourist consumer has to carry the risk of supplier insolvency in the latter case, why should the tourist-consumer in the former case be treated differently? The preamble to the 1990 Directive doesn’t provide much indication of the policy objective of the insolvency rules it introduced. Other than to say “the consumer and the package travel industry would benefit if the organiser and/or retailer were placed under an obligation to provide sufficient evidence of security in the event of insolvency”. Likewise, the provisions in the 1990 Directive dealing with insolvency protection could hardly have been less detailed. Essentially all it said in three lines in Article 7 was that organisers and/or retailers must provide ‘sufficient evidence of security’ for two types of consumer loss – refunds of money paid and repatriation. In 2007 at the start of the consultation process that led to the 2015 Directive the EU Commission highlighted changes in the holiday travel market since 1990: “There had been a rapid evolution in the travel sector during the last years. The development of the internet had made it possible for consumers to make their reservations themselves using the websites of airlines, hotels …The entry of low cost airlines has revolutionised the supply, enhancing competition. Consumers have got access to tickets at lower prices … These market developments have blurred the distinction between airlines, organisers and retailers.” 4 . These changes had led to uncertainty over what was a package and what wasn’t 5 . Further specific shortcomings with the insolvency provision in the 1990 Directive were identified: “Article 7 does not prescribe how the obligation [to provide sufficient evidence of security] is to be implemented. The wording ‘sufficient evidence of security’ is imprecise. As a result a multitude of systems have appeared, e.g. collective funds, bank guarantees and insurance schemes. There seems to be significant differences in the level of consumer protection across Europe and anti-competitive situations may occur.” 6 . 4 EU Commission, [2007a], Working Document on the Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours, 26.7.2007, p 5. 5 For an updated view of these issues, see EU Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Bringing the EU Package Travel Rules into the Digital Age, COM[2013] 513 final, p 5/6. 6 EU Commission, [2007a], p 13.