Collective Commentary about the New Package Travel Directive

ARTICLE 3 | MARC MC DONALD 177 which involves an unlimited indemnity for all allowable loss from, say, an insurance source, a bank guarantee or cash deposit with the regulator or more simply a compulsory add-on consumer-purchased insurance policy. The reference in the quote above to limiting the refund amounts is presumably confined to situations where the security comes from a collective fund made up of contributions from a number of traders. Where that is not the case, where the guaranteed amount is an independently constituted figure there is no reason why refund payments should be limited. It is thus left to each MS to decide what formula to use when calculating an effective security 49 , whether to opt for standard or variable percentage figures and whether to allow for reserve funds or some other method. Whatever the method, the consumers are likely to end up paying one way or another. The method chosen will have administrative implications. It can determine which body has responsibility for dealing with travellers when the insolvency occurs and what administrative burden, if any and over what period, is placed on an organiser/facilitator to prove to a regulator that it has sufficient security. A consumer-purchased insurance security will impose the obligation on the insurance company to, for example, organise repatriation. A state administered security will require the regulator to deal with repatriations and refunds. A security which is not channelled through organisers/facilitators – such as a security composed of a state-imposed levy of some type – has the advantage of reliving organisers/facilitators of the significant administrative burden of periodically proving they have sufficient security to a regulator. A disadvantage of a variable percentage figure is that a larger administrative burden involved in separately assessing a variable figure for each organiser/facilitator. To date, Ireland has operated a combination of organiser [tour operator] security consisting of a bond set at 10% of projected licensable turnover and 4% of same for retailers [travel agents] 50 . Where this is not sufficient there is a state established/run reserve fund, the Travellers Protection Fund [TPF], not administered by the Irish regulator, composed of a standard levy on packages purchases during a period in the 1980’s which is drawn on as required. There are questions now whether the TPF needs to be refunded in light of some recent large organiser insolvencies and to cater for the new law. To date, where an Irish organiser has faced greater financial risk these percentage figures have not been 49 For a brief overview of some MS and non-MS schemes, see Commission for Aviation Regulation, Review of Travel Trade Legislation in Ireland, Commission Paper 5/20, 2.9.2008, p 25-28. 50 S.I. No 10 Tour Operators and Travel Agents [Bonding] Regulations, 1983.