Pan-European industry bodies have criticised European Commission proposals to limit prepayments for package holidays, warning they risk “upending” the travel sector by “changing financial flows” and pushing up prices.
The EC published a series of proposals on enhanced passenger rights and revision of the European Package Travel Directive (PTD) on November 29, including a clarification of the right of package organisers to refunds from service providers when holidays are cancelled.
But the EC also proposes to limit downpayments on package holidays to a maximum 25% until 28 days before travel, “except when organisers face costs justifying higher downpayment” such as having to pay an airline ticket price in full.
The European tour operators’ and travel agents’ association ECTAA, of which Abta remains an affiliate member, welcomed the intention to clarify the right to refunds from suppliers within seven days.
It noted the proposal recognises intermediaries “do not hold consumers’ prepayments” and said it “will help limit package organisers’ financial exposure, in particular in time of crisis”.
But ECTAA expressed “deep frustration” at the EC’s decision to limit prepayments, warning: “This will raise overall package prices to the detriment of consumers, ‘fragilise’ traders and offer minimal benefits to consumers, potentially excluding the most vulnerable [from protection].”
It pointed out: “Package travellers already have their prepayments protected against the organiser’s insolvency.”
The association warned: “By doubling the burden on intermediaries, with no proposal to limit the financial exposure of travellers booking standalone services, the Commission will contribute to the decline of packages.”
ECTAA also suggested the changed rules could interfere with organisers offering instalment payments, disadvantaging poorer consumers.
Eric Dresin, ECTAA secretary general, argued: “There is a clear imbalance between package organisers and airlines when it comes to protecting consumers’ prepayments.”
He said: “We are at risk of fewer packages being offered and ultimately fewer consumers being protected while travelling.”
Europe’s leading carriers also criticised the proposals.
Brussels-based Airlines for Europe (A4E) urged EU policymakers to “proceed cautiously” with the proposal for reform of the Package Travel Directive and “not upend the tourism sector in Europe”.
It warned the proposal “will have implications for all providers in Europe”, “could result in higher costs for consumers” and lead some to choose cheaper options that do not offer package protections.
A4E said a 25% limit on downpayments for package holidays “risks negatively impacting the entire tourism value chain, including airlines”.
It expressed concern that “the Commission is using an exceptional event, the Covid crisis, as the basis for such a big change”.
A4E managing director Ourania Georgoutsakou said: “The proposed revision of the directive will change financial flows in the tourism sector.
“It is disappointing the pandemic is being used as a benchmark for regulation despite the package travel sector demonstrating its crisis resilience.”
Georgoutsakou called for the outcome to be “as balanced as possible”.