The EU legislature has been pushing for the harmonisation of consumer protection in the travel sector for several decades now. The entire process has progressed in a piecemeal fashion, with a focus on selected
transport services as well as
package tours. Typically, after putting in place a set of common norms in one area, the EU would shift its attention to another, trying to build upon prior experience while also addressing new issues. Over time, discrepancies between harmonised norms across the different areas would become apparent and discussions would centre on the needed revisions. The Court has also remained quite busy responding to the questions posed by referring courts, especially in the field of air transport. References made in relation to other transport modes and package travel have been more limited, but not without importance, as the recent judgment in
Kuoni Travel shows (see:
Somber CJEU case on package travel...).
By contrast, travel services not covered by the main strand of regulatory debate (i.e. not qualifying as transport by air, rail, bus or coach, or as a package tour) have long escaped EU attention, partly for competence reasons. This has slightly changed when online travel platforms, such as Booking.com, Airbnb and Uber, entered the scene. First, the new Package Travel Directive of 2015 promised to take account of the ongoing developments in online travel markets. Second, in 2016 the European Commission adopted its agenda on collaborative economy, highlighting, among others, the associated challenges for consumer protection. Five years later, however, the EU law continues to have little to offer to consumers who plan their trips via online travel platforms. The 2015 Package Travel Directive (PTD) and its concept of linked travel arrangements (LTAs)* appears to complicate the regulatory landscape without bringing significant value to consumers, and travel platforms are only marginally affected (and some of them not at all - like Uber) by the recent work streams on consumer protection and online platforms. Finally, the impact of COVID-19 pandemic on EU travel law is yet to be seen, but a renewed focus on the well-established fields of EU travel law seems likely.
Report on the Package Travel Directive
To get an idea of the current EU position on travel law it is worth taking a look at the Commission's
report on the application of Package Travel Directive published earlier this year. The report is already several months old but remains worthy of attention, as it reflects the Commission's appraisal of the existing
acquis and reveals the directions of future regulation.
Different services and consumer protection norms
The report begins with some illustrative stats. It notes that "in
2017, packages represented around 9% of all tourism trips of EU27
residents and had a share of around 21% of the total tourism
expenditure." More recent numbers are not provided and even those
given are not put into perspective, e.g. taking into account the
corresponding shares of various stand-alone services and related trends.
To its credit, the report does recognize that the concept of a 'linked travel arrangement' and its distinction from a 'package' are somewhat problematic. In particular, with regard to 'click-through bookings' it seems very difficult to establish whether a package, an LTA
or none of them was concluded. As the Commission admits:
"A travel service provider who, after
completion of a booking, transfers the traveller’s name, payment details
and e-mail address to another trader with whom a second service is
booked within 24 hours of the confirmation of the first booking, is the
organiser of a package and hence liable for the performance of both
services. If one of those data elements is not transferred, the first
trader facilitates a LTA and is only liable for the performance of its
own service, provided the second booking happens within 24 hours. If it
happens later, the PTD is not applicable at all" (p. 6). [Of course, there is also no LTA where the contract conclusion was facilitated for just one travel service, e.g. transport or accommodation. - AJ]
The report further points out that concerns
have been raised as to what kind of obligations should be placed on the
traders facilitating LTAs. These, for the time being, concern primarily
insolvency protection
and pre-contractual information. As regards the latter, several industry stakeholders argued that the information LTA facilitators are required to provide "could be considered confusing and
deterrent, as travellers are primarily informed that they do not benefit
from rights applying to packages" (p. 7). The Commission responded that it "was precisely the aim of
this information requirement to draw the attention of consumers to the
different level of protection offered by packages as opposed to LTAs and
thus give them an informed choice between the two models." It is likely that a similar logic applied to the information duty which was recently added in Article 6a of the Consumer Rights Directive (CRD), concerning a different standard of protection in business-to-consumer (B2C) and peer-to-peer (P2P) contracts concluded via online marketplaces.
Prima facie, the above regulatory approach seems reasonable, leaving consumers a variety of options at hand while providing them with information about relevant differences. However, on a closer look information duties in neither PTD (on LTAs), nor CRD (on the supplier's status) truly bring added value to consumers in online travel markets. In the Package Travel Directive, a choice is offered between broadly similar products (in both cases a combination of at least two travel services) with a key difference pertaining to the level of protection. That's fair enough, but in reality consumers may prefer to choose particular travel services at different points in time or from different providers, which is precisely what online platforms make possible. For this (arguably growing) group of consumers the choice between a higher and a lower level of protection is not available. Moreover, the recently amended Consumer Rights Directive could suggest that the level of consumer protection offered by EU law is higher in case of B2C contracts for stand-alone travel services as compared to P2P transactions. On a closer look, however, also this is does not really hold true. When we delve deeper into stand-alone travel services offered by businesses and by peer providers via online platforms (thus, e.g. excluding air or rail transport, for which P2P markets do not exist), we find that the protection offered to the consumers of those services by the EU acquis is almost non-existent, regardless of the supplier's status. Elsewhere in the report the Commission recognizes that a question remains open whether harmonised norms for linked travel arrangements should not be broadened, e.g. so as to also cover liability for the
performance of relevant services and not only insolvency and information. Traders facilitating the conclusion of contracts for
stand-alone travel services as well as individual providers of such services, however, are left out of the picture. As for the latter, one could think that the EU may not want to enter into the business or regulating small providers. These, nonetheless, can already be covered by the provisions of package travel law, as the commented report explicitly acknowledges (p. 5). Overall, the discussion about the scope of EU travel law and the corresponding role of package travel framework has not moved any further through the cited report.
Thomas Cook bankruptcy and COVID-19 pandemic
While reflection on the scope of the PTD, and EU travel law more generally, contained in the report falls short of expectations, the opposite is true for the extensive sections devoted to the impacts of Thomas Cook bankruptcy and the COVID-19 pandemic on the package travel sector. The analysis of both events is solid and contains valuable insights. For example, the Commission admits that the burden of Thomas Cook bankruptcy has been shared by the various travel guarantee funds and insurance companies, since the company continued to have insolvency protection in different Member States and did not rely on the PTD's mutual recognition mechanism. Nonetheless, the bankruptcy has not been without impact on the market for insolvency protection for package travel organisers and reportedly prompted a number of banks and insurance companies to pull out of the market. With this in mind, the report points to the need of new solutions to effectively protect travellers against the risk of insolvency, such as a "pan-EU guarantee fund as a kind of re-insurance for the first line guarantors" (p. 11). Moreover, following the disruptions caused by the COVID-19 pandemic, some stakeholders had argued that the protection of consumer refund claims should be extended beyond insolvency, and also cover termination due to
unavoidable and extraordinary circumstances (p. 20-21). The Commission seems open to the idea and it seems, in general, that protection of the travellers in case of supplier's
insolvency (in package travel and beyond) as well as, possibly, in case of major
liquidity problems will be one of the upcoming goals for regulation. Indeed, it may be the lack of corresponding mechanisms that had led many travel service providers to withhold refund payments or to push consumers to accept vouchers instead of monetary refunds during the peak of COVID-19 crisis. The result of this was a serious mess, which consumer organisations are still working to clear up (see e.g. a recent press release by BEUC:
Major airlines told to comply with passenger rights...).
Finally, the report can also be credited for drawing attention to characteristics of the value chains in the "travel ecosystem". For example, when discussing the possibility of limiting
pre-payments and requiring travellers to pay only
when they receive the service, possible negative impacts on suppliers' liquidity and ability to operate at scale are discussed. Moreover, a question has been raised whether suppliers of travel services (e.g. air transport) that are ultimately not provided to a given consumer following the latter's termination of a package travel contract should have a
refund obligation towards the package organiser who reimbursed the traveller. Such an obligation is currently not in place, which - the report suggest - could lead to an unfair sharing of the burden among economic operators. Travel could therefore become another area in which B2B unfairness becomes a regulatory topic - after
agriculture, food supply and
online intermediation.
Concluding thought
The EU travel law is in need of rethinking. The current regulatory landscape looks like an increasingly complex patchwork, with some issues being addressed meticulously and other being resolved only at the surface. Admittedly, the analysis of well-established business models, such as package travel, is rich and detailed, yet the share of package tours in the overall travel sector pie is shrinking. While one can hardly imagine a field more fit for harmonisation, the EU approach to (online) travel markets remains fragmented. Clearly, the COVID-19 pandemic has surfaced challenges which we had previously not reckoned with and which now will need to be addressed. The Commission intends to do that as part of its upcoming analysis of EU package travel and transport law planned for 2022. It would be a waste of potential if stand-alone travel services and online travel platforms were to be kept, yet again, out of Commission's view.
* For a definition, see Article 3(5) PTD. Essentially an LTA means at least two different types of travel services purchased for the purpose of the same trip or holiday, not constituting a package, resulting in the conclusion of separate contracts with the individual travel service providers and facilitated by one trader in a specific way.
** The author carries out a research project on consumer protection in the collaborative economy, financed by the National Science Centre in Poland on the basis of decision no. DEC-2015/19/N/HS5/01557.
