Collective Commentary about the New Package Travel Directive

176 COLLECTIVE COMMENTARY ABOUT THE NEW PACKAGE TRAVEL DIRECTIVE Size of Security Guarantee How large should the amount of the security guarantee be? The relevant Articles in the Directive, 17 and 19, not surprisingly, are not prescriptive on the matter. They only say what the security must be used for, not how to figure out how large it should be. It is left to the MS who have been operating their own formulae for calculating the size of the security under the 1990 Directive for almost a quarter century, if not longer when local law alone required security. Calculating the amount is a contentious exercise and involves some guesswork. Organisers/facilitators will tend to look on the amount as dead money. It cannot be used in the on-going business and is set aside for an event they believe and hope will never happen. It will seldom be known in advance how large the security should be since it will depend on a variety of unknown variables – how many consumers will be affected by the insolvency? How many will need repatriation? What will the pre-repatriation costs be? How many pre-departure, pre-payments will need to be refunded? However, Para 40 of the Preamble to Directive 2015/2302 sets out at some length the general considerations which should influence MS when fixing the size of the security, including the factors mentioned in the previous Para 39. It states: “The … protection should be sufficient to cover all foreseeable payments made by or on behalf of travellers … in peak season, taking into account the period between receiving such payments and completion of the trip or holiday, as well as, where applicable, the foreseeable cost for repatriations. That will generally mean that the security has to cover a sufficiently high percentage of the organiser’s [package] turnover [and some other factors. The] necessary cover may be calculated on the basis of the most recent business data, for instance, the turnover achieved in the last business year, or [adapt the sum] in the event of increased risks [including increased sales, but not highly remote risks such as] the simultaneous insolvency of several of the larger organisers [if this] would disproportionately affect the cost of the protection… In such cases the guarantee for refunds may be limited.”. Peak season may vary for different organisers/facilitators. Turnover percentage during that period may also vary. Fixing a single turnover percentage for all traders may be difficult, especially if some are in sounder financial health than others. One alternative to a variable percentage figure is to have a fixed one with some sort of reserve fund, however composed, which can be called on when the percentage figure turns out to be too small. Other alternatives are a security