Industry lawyers have welcomed revisions by the European Council to European Commission (EC) proposals for reform of the Package Travel Directive (PTD).
The Council represents EU member governments and, together with the EC, forms the executive of the EU, with European directives and legislation emerging from a three-way negotiation, or trilogue, between the Council, EC and European Parliament.
EC proposals to reform the directive, issued in November 2023, include both a significant extension of consumers’ rights to cancel a holiday booking and a limit on customer prepayments which has alarmed package organisers and led Abta to express relief that the revision would not apply in the UK.
The EC proposes to extend consumers’ right to cancel a holiday in the event of “unavoidable and extraordinary circumstances” not only “at the destination or in its immediate vicinity or affecting carriage to the destination” but also at a consumer’s “place of residence or departure”.
It also proposes to limit advance payments to 25% of a package price, with the balance payable only 28 days before departure, although the EC would allow higher prepayments if costs, such as having to pay “the full ticket price” to an airline, justify it.
The European Council has cut the prepayments proposal entirely and amended the extension of cancellation rights to cover only a consumer’s place of departure, deleting the place of residence.
Klára Dvořáková, co-managing partner at law firm Holubova in Prague, described the Council’s position as “very positive”.
She told a meeting of the International Travel Law Network (ITLN) which includes UK law firm Travlaw last week: “The Council has cut back the EC’s proposals. We hadn’t expected it to be so much on the side of organisers. The chance to influence the Parliament now is bigger.”
However, she noted: “It won’t be easy to influence the Parliament. It’s more consumer friendly [than the Council].”
Both the EC and Council propose a new right for package organisers to seek refunds from suppliers such as airlines within seven days of a cancellation. However, Dvořáková said: “None of us think this right to a refund in a short period can be enforced.”
Klaus Siebert, partner at German law firm Engels-Siebert, agreed. He suggested: “It would be lovely to have suppliers reimburse organisers within seven days, but it will never happen.”
The European Parliament has yet to clarify its position on the reform.
EC proposes extension of consumer rights
The Package Travel Directive is the basis of the UK Package Travel Regulations (PTRs) which are subject to separate reform by the Department for Business and Trade.
The EC reform proposals emphasise the extension of consumer rights but include some reforms beneficial to package organisers including a requirement for suppliers to refund organisers within seven days in the event of a cancellation to “enable them to refund their clients within two weeks”.
Other key EC proposals refer to official travel warnings, the offer of vouchers in lieu of refunds to consumers and changed rules on Linked Travel Arrangements (LTAs).
The EC proposes the directive make clear that official travel warnings “are important when determining whether a package cannot be performed due to unavoidable and extraordinary circumstances”.
It proposes the offer of vouchers be allowed in the event of cancellation, provided “travellers receive clear information on their right to insist on a refund within 14 days” and the vouchers are protected against insolvency.
And it proposes rules on Linked Travel Arrangements be modified so that “when services are purchased from separate traders through linked online booking processes, they are considered a package when the traveller’s personal details are transferred”.
European Council issues counter proposals
The European Council’s position on the PTD, issued in December and referred to as its “negotiating mandate”, diverges from the EC proposals in significant ways.
It proposes to remove the EC’s limit on prepayments, requiring instead that consumers simply receive “information on the price and payments due at the time of booking”.
The Council has also modified the EC line on official travel warnings, arguing these “can be elements taken into account” in assessing whether a cancellation is justified, but “will have to be considered on a case-by-case basis”.
It notes that the absence of an official travel warning “does not prevent establishing the existence of those [unavoidable and extraordinary] circumstances”.
Rather than accept a modification of the rules on Linked Travel Arrangements, the Council proposes LTAs be removed altogether from the directive “for the sake of legal certainty”.
Instead, it proposes online traders which invite travellers “to conclude an additional contract of a different type of travel service (e.g. car rental or a transfer) . . . [be] required to inform the traveller by a clear, visible notice before the new contract is concluded [whether] the second booking does or does not constitute a package”.
So, a booking which might now be considered an LTA with limited financial protection would either become a package or have no protection.
The Council has also proposed a clarification of the information travel companies must supply to travellers.
Negotiations on the final directive are due to start as soon as the EU Parliament adopts its position.