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The Dekagram: 11th December 2023

Articles, News | Mon 11th Dec, 2023

This week’s Dekagram focusses on the European Commission’s proposals for reforming the Package Travel Directive from which the UK’s Package Travel and Linked Travel Arrangements Regulations 2018 derived. Whilst not strictly speaking directly relevant to the UK’s forthcoming reforms, the EU’s decisionmaking around such thorny questions as the viability of the linked travel arrangements concept and the vouchers v refunds question is bound to inform the debate domestically. Now that the EU has given up on linked travel arrangements, can the UK be far behind? And will the UK government agree that a small increase in the cost of holidays is a price worth paying for enhanced consumer protection?

The Results Are In! The EU’s Proposed Reforms to the Package Travel Directive Are Now Confirmed; Will the UK Follow Suit?

Regular readers will be mindful of the seemingly endless consultations ongoing in the personal injury and cross border world at the moment. So it gives us great pleasure to be able to bring to your attention the fruits of one such consultation – albeit a Euroconsultation rather than a domestic one.

On 29th November the European Commission adopted a series of proposals designed to strengthen passenger rights. The new rules will build on lessons learned in the course of various calamities in the travelsphere, including the Thomas Cook bankruptcy in 2019 and the Covid-19 pandemic in 2020, both of which had a major impact both on travellers and on the travel market.

Multimodal journeys

Multimodal journeys occur when passengers combine at least two collective transport modes to reach a final destination, such as a flight with a rail service, or a rail service with a coach service. Multimodal travel typically involves travelling with a number of separate tickets that passengers buy individually (‘category C’ tickets). In addition, some intermediaries bundle such separate tickets into a multimodal product on their own initiative and sell it as such to passengers in one single commercial transaction (‘category B’ tickets). Finally, a limited number of carriers also offer multimodal journeys under a single contract of carriage (‘category A’ tickets). It is estimated that 91 million passengers performed multimodal journeys in 2019, and the number is expected to grow to 103.6 million in 2030 and 150.9 million in 2050. Expressed as share of the total number of passengers, multimodal passengers are estimated to increase from 0.7% in 2019 to 0.8% by 2050.

As matters currently stand, while passengers who travel with only one collective transport mode (i.e. only by air, rail, bus or ship) enjoy rights in the event of travel disruptions, they are not entitled to the same rights when switching to another mode as part of their journey. In addition, there is no clear framework for determining the respective obligations and liabilities of the different travel service providers involved in a multimodal journey. National legal frameworks generally do not include provisions covering multimodal transport either. To exacerbate the problems associated with multimodal journeys, the current offer of travel insurances for these journeys remains limited. The rights of passengers in the context of multimodal journeys depend therefore on the terms and conditions of the specific contract(s) of carriage.

Consequently, the Commission believes that passengers lack information on the extent of their rights before and during multimodal travel and are not given information in real-time on possible travel disruptions and security alerts when they need to switch between modes. Moreover, they are subject to different treatment with regard to contract conditions and tariffs for multimodal journeys on the basis of their nationality or of the place of establishment of the carrier or intermediary. In addition, these passengers do not receive assistance (e.g. reimbursement, rerouting, accommodation, meals and refreshments) during their journey in the event of a travel disruption occurring when switching between transport modes. Passengers have reported difficulties in complaining to carriers and other possible relevant actors (such as terminal operators and ticket vendors) about the lack of information or assistance, nor do they have clarity on which national authority to contact in such cases. This lack of a specifically designated authority also leads to uncertainty in the enforcement of information and assistance to be provided to passengers during multimodal travel.

The current lack of rules for multimodal journeys also means that persons with disabilities and persons with reduced mobility are not entitled to any particular assistance under EU law when transferring between transport modes, including at multimodal connecting points such as air-rail hubs. In the absence of such assistance, this cohort of travellers cannot benefit from a seamless travel experience similar to that of other passengers.

The Commission’s proposals are designed to clarify the rules on reimbursement when flights or multimodal journeys are booked via an intermediary, so that passengers are better protected against cancellations. They are also intended to provide for smoother journeys, especially those involving different travel services or transport modes, ensuring that passengers have access to direct support, and enhanced real-time information, for example on delays and cancellations. Special attention is also paid to the needs of passengers with disabilities or reduced mobility to address and facilitate the switch between transport modes and improve quality assistance where it is needed.

The structure of the proposed Regulation is inspired by the existing Regulations on passenger rights, and in particular the most recent Regulation (EU) No.2021/782 on rail passengers’ rights and obligations. It will consist of the following main chapters:

  • Chapter I: General provisions. Chapter I contains the general provisions of the Regulation specifying the subject matter and objectives, the scope and the definitions.
  • Chapter II: Transport contracts and information. Chapter II contains provisions on transport contracts and information to be provided to passengers by carriers, intermediaries and multimodal hub managers. It describes the information to be given to passengers before and during their journey (in real-time), and the modalities for exchange and cooperation on the matter between different types of undertakings involved.
  • Chapter III: Liability in the event of missed connections. Chapter III contains provisions on the assistance of passengers (reimbursement, re-routing, care) having a single multimodal contract in the event of a missed connection of a subsequent transport service. In addition, it spells out the reimbursement process where the transport contract was negotiated via an intermediary. It also clarifies the liability of carriers and intermediaries offering combined multimodal tickets. Finally, it introduces a common form for reimbursement and compensation requests.
  • Chapter IV: Persons with disabilities and reduced mobility. Chapter IV outlines rules for the protection and assistance of persons with disabilities and reduced mobility in the context of multimodal travel. It also introduces the establishment of Single Points of Contact at multimodal passenger hubs.
  • Chapter V: Service quality and complaints. Chapter V contains rules on service quality and on the handling of complaints by carriers, intermediaries and multimodal hub managers.
  • Chapter VI: Information and enforcement. Chapter VI contains provisions on information to passengers on their rights as well as the enforcement of the Regulation. With regard to the latter, it includes rules on the designation of a national enforcement body, the risk-based approach to the monitoring of compliance with passenger rights, the sharing of information by the relevant undertakings with national enforcement bodies and cooperation between Member States and the Commission.

The Commission’s proposal clarifies that where a right to reimbursement arises under the Package Travel Directive, the latter will take precedence over the Regulation. Which brings us nicely to the new proposals in relation to packages.

Packages

The Commission’s review identified a number of areas in which the Package Travel Directive of 2015 (still known, to some of us, as the ‘new Directive’) required amendment:

  • Information. Holidaymakers will receive clear information on whether a combination of travel services constitutes a package, who is liable if there are problems, and on their rights as package travellers. Whether they will read it or not must remain a moot point, however.
  • Downpayments. The industry has reacted badly to the news that under the new proposals downpayments made by travellers for packages may not be higher than 25% of the package price, except when organisers face costs justifying a higher downpayment, for example because they have to pay a full ticket price to an airline up front. Organisers may not ask for payment of the total price earlier than 28 days before the start of the package.
  • Refunds. Travellers will continue to be entitled to a refund within fourteen days, but following the Great Refund Saga of 2020/2021 package organisers will have the right to a refund from service providers within seven days. Whether this will actually work in practice is anyone’s guess, of course.
  • Vouchers. Travellers who are being offered a voucher will receive clear information that they may insist on a refund, and will have to be informed of the characteristics of the voucher before accepting it. Vouchers will be refunded automatically if not used before the end of their validity period. Moreover, vouchers and refund rights will be covered by insolvency protection. All sensible proposals, in the author’s view.

The proposed amendments are as follows:

  • Article 3(2) (package): The definition of a package will be adapted to reflect that, when services are purchased from separate traders through linked online booking processes, they are considered as a package when the traveller’s personal details are transferred from one trader to another trader. Bookings of different types of travel services for the same trip or holiday at one point of sale within a short period of time are considered to be packages in the same way as bookings of different types of travel services for the same trip or holiday at one point of sale where the services are selected before the traveller concludes the first contract. This avoids the current overlap in the definitions of package and linked travel arrangement as defined in Article 3(5)(a) and accordingly, Article 3(5)(a) will be deleted. The revised Directive also clarifies that a combination of one or more types of services related to transport, accommodation or car rental with one or more other tourist services that do not account for more than 25% of the value of the combination and are not advertised as and do not represent an essential feature of the combination, do not constitute a package. The reference to 25% is taken from Recital 18 of the current Directive and replaces the formulation ‘significant proportion’.
  • Article 3(5) (linked travel arrangements): This definition will be simplified and clarified. Article 5(1) will be amended to specify that information on the traveller’s right to terminate the package travel contract due to unavoidable and extraordinary circumstances will be made mandatory in addition to a cancellation right against a termination fee.
  • New Article 5a (payments): A new article on payments will be inserted. This article provides that, in principle, downpayments may not exceed 25% of the package price and that the remaining payments may not be due earlier than 28 days before the start of the package. However, higher downpayments may be requested where this is necessary to ensure the organisation and performance of the package. Article 5a does not apply to packages booked less than 28 days before the start of the package and for package travel gift boxes.
  • Article 7(2) (content of the package travel contract and documents to be supplied before the start of the package): The contract must now specify that the organiser is the party responsible for refunds and that travellers may contact the organisers via the retailer. It adds that the relevant information form set out in Annex I to the Directive should be attached to the package travel contract so that it remains easily accessible to travellers after the pre-contractual stage.
  • Article 12(2) (termination of the package travel contract and the right of withdrawal before the start of the package): The new wording of this paragraph on terminating a contract due to unavoidable and extraordinary circumstances contains further specifications to clarify the right to cancellation. The new wording clarifies that the right applies in the event of unavoidable and extraordinary circumstances at the travel destination or its immediate vicinity or affecting the journey to the destination – but also at the places of residence or departure, in all cases significantly affecting the performance of the package travel. The new wording also clarifies that contracts may be terminated where it can be reasonably expected that the performance of the package travel contract will be significantly affected by unavoidable and extraordinary circumstances.
  • New Article 12(3a): A new paragraph  will be added to clarify that official travel warnings issued by authorities or serious restrictions covering the travel destination or after returning from there are important elements in assessing whether unavoidable and extraordinary circumstances have arisen and significantly affect the performance of a package – something that arises with some regularity in Covid refund cases.
  • Article 12(4): This provision will be amended to clarify that the organiser is obliged to refund the traveller in the event of a termination of the contract under Articles 12(2) or 12(3), regardless of whether the traveller specifically asks for a refund.
  • New Article 12a (vouchers): A new article on vouchers will be inserted. It specifies that when a contract is terminated, organisers may issue travellers with vouchers instead of a cash refund, but before accepting them, the traveller must be informed that they are not obliged to accept the voucher. Such vouchers should be valid for 12 months and their duration may be extended once with the approval of both parties. Their value must be at least equal to the amount of the refund. They must be transferable and covered by insolvency protection.
  • The proposed new text of Article 17 aims to make insolvency protection more effective and uniform in the EU by adding some clarifications and specifications, some of which stem from the new Directive’s Recitals. In the first sub-paragraph of paragraph 17(1) it is clarified that refund claims and vouchers are also covered by insolvency protection. Article 17(2) will be amended to reflect that the security should be sufficient to cover costs for refunds and repatriations in cases where an insolvency occurs at a time when an organiser holds the highest sums in a business year and that the security should take into account changes in the volume of packages sold and of necessary repatriations to be covered compared to the anticipated volume. Article 17(3) specifies that Member States should supervise the insolvency protection arrangements of organisers, monitor the market for the provision of insolvency protection, and may require a second level of protection, such as a back-up fund. Article 17(6) includes a more specific deadline for refunds in the event of cancellation of the package as a result of insolvency, in addition to the general criterion ‘without undue delay’. This period is three months after the traveller has submitted the documents needed to examine the request.
  • Article 22 (right of redress and refunds from service providers to organisers): A new paragraph will be added specifying that where service providers cancel or do not provide a service which is part of the package, they have an obligation to refund to the organiser the payments received for the relevant service within seven days.
  • Annexes I and II to the new Directive will be replaced in order to provide travellers with clearer information on their rights.

Overall the Commission believes that the increased burden on travel companies would remain limited and ‘only slight price increases for travellers’ are to be expected, particularly because the proposal deletes one type of linked travel arrangements (type (a) linked travel arrangements) and three information forms from the Directive, which should make life easier for businesses and consumers alike.

Comment

The Commission’s proposals are of more than merely academic interest for English lawyers. The UK’s own consultation on proposed alterations to the Package Travel and Linked Travel Arrangements Regulations 2018 is about to close (on 13th, so there’s still time to submit a response), and inevitably the government will be rummaging through the proposed Euroamendments to the Directive to see if there’s anything we should be doing along the same lines.

Of particular interest is the tacit admission that linked travel arrangements, although a well meaning concept, have not been a success, not least because no one understands them. The tweaks to the refund mechanisms are also to be welcomed, although whether retailers are now likely to be any more successful in obtaining refunds from suppliers within seven days is surely a matter for conjecture. Restrictions on the use of vouchers are also overdue. But perhaps the most interesting aspects of the proposed amendments relate to what the Commission has decided not to do. Unlike the UK, the EC does not propose to draw any distinction between travel for pleasure and business travel, nor is there any differentiation between domestic and international travel, or any proposal to introduce a two tier system whereby people booking cheaper holidays would receive less protection than their wealthier compatriots. And it is suggested that these were the correct decisions; there is no obvious reason why a person travelling to France should enjoy greater protection than a person holidaying in Jersey, or why a person who cannot afford an expensive holiday should not be covered by consumer protection legislation whilst someone wealthier (or more profligate) is protected. Time will tell whether the UK will diverge from the EU on these and other matters, although it seems certain that there will be a degree of divergence on insolvency protection, which ironically will not matter to most businesses working within the UK market, since if they also direct their business activities to Europe they will need to comply with the provisions of the new Directive in any event. 2024 looks set to be an interesting year for the industry and its vampiric satellite professions – but then, every year sees new developments in this most vibrant and exciting area of law.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases. She was appointed a KC in March 2023.

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