EU Package Travel Directive effective from 1 July 2018 – is your business prepared?
The current Irish law (the Package Holidays and Travel Trade Act 1995 and the Transport (Tour Operators and Travel Agents Act) 1982) applies to 'traditional' package holidays combined by an organiser and sold at a single price. The Package Travel and Linked Travel Arrangements Directive (Directive 2015/2302) was introduced in 2015 to provide protection for the increasing number of consumers using the internet to combine travel services for the purposes of a single trip. The impact of the Directive will be felt by all businesses in the travel sector but particularly by online businesses facilitating the combination of travel services through the new concept of 'linked travel arrangements'.
A 'package' under the Directive is the combination of two or more different types of 'travel service' for the purposes of the same trip or holiday. The travel services can be combined either in a single contract or under separate contracts with individual providers where the services are:
- selected before payment and purchased from a single point of sale;
- offered, sold or charged at an inclusive or total price; or
- advertised as a 'package' or similar term (e.g. 'combined deal' or 'all-inclusive');
- combined after the conclusion of a contract where a trader entitles the traveller to choose among a selection of different types of travel service; or
- purchased from separate traders through linked online booking processes where the traveller's name, payment details and e-mail address are transmitted from the first trader to the second trader and the second contract is concluded at the latest 24 hours after the first.
Linked Travel Arrangements
The introduction of the new concept of a 'linked travel arrangement' ("LTA") is one of the key features of the new Directive. An LTA arises where:
- a traveller selects and pays for two types of travel service on a single visit to a business's point of sale; or
- a business 'facilitates in a targeted manner' the procurement of at least one additional travel service from another business where the second contract is concluded at least 24 hours after the confirmation of first.
'Travel services' include transport, accommodation and vehicle rental as well as 'other tourist services' (e.g. admission to a concert or sporting event, guided tours, ski passes, rental of sports equipment or spa treatments). Where businesses offer a 'classic' travel service (e.g. accommodation) combined with an 'other' travel service (e.g. tickets to a concert) they could be creating a package or LTA where the 'other' travel service accounts for a 'significant proportion' of the value of the combination (i.e. over 25%) and where the 'other' travel service is advertised as and represents an 'essential feature' of the combination.
Insolvency and Licencing
One of the most significant changes under the Directive is in relation to the insolvency of package and LTA organisers. The Commission for Aviation Regulation (CAR) currently administers a bonding scheme for licenced travel agents and tour operators trading in Ireland. The Directive requires Member States to ensure that organisers established in their territory provide security for the refund of all payments made by or on behalf of travellers in the event of the organiser's insolvency. From 1 July 2018, entities established in other Member States doing business in Ireland will be regulated in the Member State in which they are established. The CAR has published a guidance note on the transitional arrangements which will apply until the implementing legislation is published (available here).
Liability for Performance
The Directive makes the organiser of the package or LTA automatically responsible for the performance of the travel services included, irrespective of whether those services are performed by a different provider. The Irish implementing measures may introduce concurrent liability for the 'retailer' of the package (i.e. the trader who sells packages combined by the 'organiser'), although a report prepared by Indecon for CAR on the new Directive has not recommended the introduction of this option.
Enhanced Information Obligations
The Directive includes a standard form of pre-contractual information which must be made available to a traveller before they are bound by any package contract. Certain elements of this information, including the description of the main characteristics of the travel service and the total price, are deemed to be an 'integral part' of the contract and cannot be altered unless the parties expressly agree. Travellers will not be liable for any costs or charges which have not been notified to them.
Cancellations Rights and Contract Alterations
Travellers will be entitled to cancel a package contract before it starts on payment of a "justifiable" termination fee. Businesses cannot charge termination fees where a traveller cancels due to 'unavoidable and extraordinary circumstances' at the destination or its immediate vicinity which 'significantly affect' either the performance of the package or the carriage of passengers to the destination.
Of particular relevance to online businesses is the option under the Directive for Ireland to include a 14-day cooling-off period during which travellers can cancel contracts concluded online without giving any reason.
One to watch…
As of the date of publication, Ireland has not transposed the Directive into Irish law. As the deadline for transposition (1 July) has passed, it is open to the European Commission to take infringement action against Ireland. Indications are that a Statutory Instrument will be published shortly. In the meantime, businesses should ensure they are prepared for the changes as set out in the Directive.
Date published: 4 July 2018