Since ETOA’s founding in 1989, the landscape of the travel industry has changed enormously. The internet, low-cost flights and changing travel habits, to name but a few, have kept the inbound industry on its toes. But while the trade has responded, tourism legislation such as the Package Travel Directive (PTD) remains stuck in the past.  PTD must change but, as with other tourism legislation, it is important that associations such as ETOA are fully involved in this process.

The objective of the Package Travel Directive 1990 was to create a level playing field across the EU for the sale of the standard package holiday. By definition, a package includes a combination of any two components from transport, accommodation or other services. This has to be purchased on a pre-arranged basis, at a single price. If someone sells, or offers for sale, one of these ‘packages’ they are an ‘organizer’ for the purposes of the legislation.

The Directive covers:
            • the contents of brochures, information for clients and terms of the contract
            • consumer remedies in the event of a failure to deliver
            • compulsory refund and repatriation in the event of insolvency

The financial security is provided by a bond, insurance or trust fund. These are usually established through national trade associations, such as ABTA.

In the UK there is an additional requirement to have an Air Tour Operator’s License (ATOL). If held it counts towards the financial security obligation.

1. It does not consider consumers self-packaging their holidays.
2. It does not cover consumers based in one country purchasing from suppliers based outside the jurisdiction of the EU.
3. It does not cover scheduled airlines. If an airline goes bankrupt, consumers will be protected only if they purchased their flight from a consolidator – if they purchased directly through an airline website, then they are exposed to the risk of total loss. Over the past few years, the proportion of holidays that are ‘protected’ has fallen from about 90% to about 60%.
4. It acts as an effective block on cross border trade. Consumers do benefit from financial protection if they purchase from an organizer in another country of the EU, as the company would have to have bonding. But as their recourse in the event of financial collapse is to that organizer’s bond in its country, the practicalities of doing so are onerous. Thus Europe has the least integrated market for travel services of any major trading block on earth. Consumer demand follows consumer protection, sitting neatly in silos through each member state.
5. There is considerable confusion as to who accepts liability for what, and when a customer is covered an when they are not. For instance additional security can be obtained by someone using a credit card (but not if the billing is taking place in the Republic of Ireland). This is not extended to those using a debit card.

Whilst there is a clear consensus that the Package Travel Directive is out of date and in urgent need of reform, there is difficulty in agreeing what the reform should be.

A proposal by the Civil Aviation Authority in the UK to charge a £1 levy on every flight to create a fund to bond airlines in the event of financial collapse was rejected by the UK government.

There are concerns about the desirability of dropping the current requirement for package holidays to be bonded, moving towards a more general system of insurance as underwriters may be reluctant to underwrite such commercial risks as operating an airline or running a tour operator.