A European directive from 1990 which regulates package holidays should be scrapped or re-written to protect all travellers, ABTA is urging.
The travel industry trade body says the EU Package Directive must cover consumers regardless of whether they book a holiday package or not.
ABTA claims that there is a “stark imbalance” as to who has to provide refunds for pre-payments in the event of a travel company failure.
All travel suppliers including providers of transport services should be subject to this regulation, the association says.
ABTA quoted the Transport Studies Unit of Oxford University as identifying 50 European airlines that went bankrupt between 2000 and 2005.
“These airlines represented 1,437,311 weekly seats and some 63,000 passengers were stranded. Nearly half of these passengers required government intervention to be repatriated,” ABTA said.
“A separate law would need to be created (after a full regulatory impact assessment was undertaken), which would repatriate consumers to the point of departure when their travel provider fails financially. This law would not be restricted just to package holidaymakers.”
ABTA was responding to a European Commission Working Document on the 1990 EU Directive on Package Travel.
ABTA chief executive Mark Tanzer said: “The current laws on travel protection are no longer working. 63,000 passengers were stranded by the 50 European airlines that went bankrupt between 2000 and 2005.
“The law has not kept pace with the way consumers buy travel. The expansion of the internet, the growth in no-frills airlines and the targeting of leisure travellers by full service airlines, has meant that the proportion of consumers protected under the Civil Aviation Regulations (or Air Transport Organisers Licence), which is broadly in line to the package travel sector, has shrunk to 57%, compared to 98% in 1997.
“In addition, the burden of that protection falls on one specific sector of the market whilst other sectors are being developed outside of existing regulation.
“The way the travel industry is regulated must be fundamentally reviewed. The present imbalance in regulation distorts market conditions. This cannot be justified.”
ABTA recommends the creation of a “uniform and fair system” where all travel companies and providers share the burden of regulation to protect all travellers.
European Commission should consider whether the current protection is justified and proportionate. If it decides it is, then ABTA believes the scope of the law must be widened to all sectors of the industry.
Alternatively, all issues dealt with under the Package Travel Directive, other than repatriation, can be addressed under existing EU laws and so the EU Package Directive could be scrapped entirely.
If the directive is not scrapped, ABTA proposes a changes to the existing legislation including:
Definition of a Package:
The question of what constitutes a package holiday has lead to litigation and is an issue that continues to cause confusion within the industry and amongst consumers. The confusion has been caused by the attempts to create an artificial but significant distinction between services that are inherently the same – a distinction, which is not needed if all travellers are covered by the same laws.
Definition of organiser and retailer:
The Directive currently creates confusion by its use of the phrase ‘organiser and/or retailer’ throughout. Responsibility for a package holiday rests with an organiser, and this should be clarified. If retailers have specific obligations, these should be spelt out, otherwise the concept of retailer should be removed from the Directive.
Pre-contractual information requirements:
The focus on brochures information provision is now misplaced as they are only one method consumers use to gain pre-booking information. Their long life-span makes it largely impossible to provide details of a price that will be accurate throughout its shelf-life An obligation to fix a price in a brochure is not practicable or commercially viable, as sellers of non-package travel services are able to vary prices to reflect demand.
The restrictions on passing on variations in costs contained within the Directive is unfair to package holiday organisers.
There now exists a multiplicity of schemes covering package and certain other non-package travel. This situation causes confusion and is in need of review. ABTA believes there should be equalisation between organisers of package holidays and providers of other services. If this happened in a scheme that protected pre-payments, ABTA believes the following should happen:
1. All consumers should be protected irrespective of place of residence in the EU
2. Organisers should provide information at time of booking notifying the consumer of who to contact in the event of a failure
3. Pre-payments should be refunded without deduction
4. Repatriation should be effected at no additional cost to consumers
5. Compliance of the scheme of one member state should satisfy the requirements of any other member state.