Package Travel Directive

Research Title: In the light of decided cases in the European Court of Justice and the European Commissions Report on the implementation of the package travel directive (SEC [1999 1800] final) critically assess the success of the directive as a consumer protection measure

The protection of consumer interests is an area of developing importance within the European Union; under Article 153 of the Treaty, the Community shall promote consumer interests and ensure a high level of consumer protection. The Commission's Consumer Policy Strategy 2002-6 underlines this and sets out three mid-term objectives in this area:

1 A high level of consumer protection
2 Effective enforcement of consumer protection rules
3 Involvement of consumer organisations in EU policies

These measures are aimed at redressing what it perceives as structural imbalances between individual consumers and businesses, flowing from limits to consumers' access to information and legal expertise as well as more limited economic resources.

In some situations, providing a basis for informed choices and possible avenues of redress has not been considered sufficient, especially with regard to the protection of physical health and safety. In these areas, harmonised rules, have been considered appropriate in order to guarantee an adequate level of protection to all consumers, unaffected by their respective abilities to protect themselves by making informed choices. The Package Travel Directive 190/314/EEC is one such measure.

The Commission report on the Package Travel Directive has identified a number of shortcomings and further evidence has come to light in the form of complaints to both the Parliament and Commission, as will be detailed later. The Consumer Policy Strategy recognises that the directive (in addition to the timeshare directive 94/47/EC) could benefit greatly from fuller harmonisation, in order to minimise variations in consumer protection rules across the EU that create fragmentation of the internal market, thereby having a negative impact on both business and consumers.

The Commission is to undertake further review of these directives and their implementation. The matter is somewhat complicated by the fact that the directive on package travel contains a mixture of contract law remedies and commercial practice rules, thought the latter at least could easily be amended under one of the many initiatives flowing from the 2001 Green Paper on EU consumer protection. To some extent therefore the ongoing strategic criticisms rather beg the question as to the effectiveness of this directive as a consumer protection measure; it is indeed evident from an analysis of the case law and relevant commission investigation, that these criticisms arise from a variety of legitimate grievances on the part of individual consumers.

A main objective of the Directive has been to provide consumers with a single, easily accessible contract partner, solely responsible for the whole package, a goal which is not generally met in practice in many Member States because of difficulties consumers face in obtaining recognition and enforcement of their rights. In many Member States, including the United Kingdom -which sends more of its inhabitants abroad on package holidays than any other EU country - complaints about package holidays have continued to rise sharply year on year; with 80% of the complaints in the UK being upheld by ABTA 2. The conclusion seems in the light of this to be that the Directive has failed to raise standards in the EU package travel industry sufficiently and has thereby failed consumers in its present form.

Directive 90/314/EEC holds the tour operator or the travel agent liable for complete fulfilment of the contract, enabling the consumer to enter into a contract with a partner in his country of residence who shall be liable for the fulfilment of the said contract, and provides for refunding and/or repatriating the consumer in the case of insolvency or bankruptcy of the operator/agency; however a considerable number of provisions of this Directive allow a wide-ranging interpretation, thus leading to different approaches by national law-makers, without prejudice to a correct transposition into national legislation by Member States. Package travel is often cross-border, and therefore consumer protection must be on a cross-border basis rather than be subsumed under the issue of subsidiarity. As an example of the potential for divergent interpretation under national law, Annex A sets out the various ways in which national legislation has sought to implement Article 7 of this directive.

The Commission Staff working paper that looked at the implementation of the directive on package travel noted a number of problems hindering its effectiveness. This paper probed various discrepancies in interpretation among Member States, and suggested that either there should be a more common interpretation of the Directive, or if necessary modifications to the Directive itself. It was considered that such modifications might include:
clearer descriptors, clarifying the definition of a package holiday
liability, to determine more rigorously the respective liabilities of organisers and retailers;
scope, perhaps to include sightseeing excursions or organised tours and events;
consumer protection in the field of aviation.

To date, the following issues appear to be of particular interest and have been identified by the Commission in its staff working paper and approved as areas of concern by both the Parliament and Council: several concepts used in the Directive are capable of varying interpretations, including (as identified by the Commission), "pre-arranged combination" (Article 2(1)), "other than occasionally" (Article 2(2)), "reasonable notice" (Article 4(3)), "limitations ... unreasonable" (Article 5(2)), "appropriate solutions" (Article 6) "price" (Article 3(1), Article 4(5)).;the fact that the Directive, as it stands, does not limit consumer liability in case of withdrawal by the consumer within a reasonable time from the contract, may also need to be reconsidered; in Article 7, moreover the coverage of "sufficient evidence of security" in the case of insolvency or bankruptcy of the operator/agency, namely for refunding and/or repatriating the consumer, is the subject of differing interpretation by Member States. It should be noted that the Commission and other executive bodies are primarily concerned with those elements of the Directive and its interpretation that distort the balance away from the consumer.

Many package travel operators currently consistently deny responsibility for failures to deliver by airlines, hotels or other agents, even when such agents may be fellow subsidiaries of the same parent company. There are no rules for cancellations in the Package Travel Directive, and differing systems of consumer protection prevail in different Member States in this regard. The Directive is not applicable to air travel except when included in a package, despite increasing complaints by consumers in this regard.
The European Parliament has stressed the importance that anomalies and omissions within this Directive are effectively addressed prior to the accession of candidate countries, lest such problems become magnified, and "Recommends that the Directive be updated, widened in scope and deepened in application, and re-issued as a priority. 3"

The European Parliament Resolution provided for a long list of specific changes, of which the most important are:

Calls for the current wide variations in interpretation by Member States to be significantly reduced, in order to give equally effective consumer protection throughout the EU;
Calls for a widening of scope of the Directive to recognise that the recent surge in low-cost airline and internet bookings have encouraged more consumers to book separate holiday components for themselves rather than buying complete packages; notes that it would be inappropriate for consumers to be more highly protected for package travel than for other leisure travel purchased in advance;
Calls for better and perhaps newer definitions and clarifications of terms such as "inclusive price", "package", "pre-arranged" and "consumer";
Calls for greater clarity regarding the precise liability of organiser and/or retailer regarding failure to perform the contract, or for the improper performance of it, whether or not the operator or agent has directly supplied the service in question;
Urges Member States to ensure that consumers are made more readily aware of their rights of redress under the law and how to claim these rights;
Calls for the organiser and/or the retailer to be obliged to inform the consumer of any circumstances that he/she is aware of which might impact upon the enjoyment of the holiday (for example, ongoing construction work in the hotel, the immediate area and/or nearby);
Calls for the organiser, pursuant to Article 4 (5), to inform the consumer of any significant changes to the essential terms of the holiday no later than 14 days before the departure date;
Calls for Article 5(1) to be reinforced, to specify more detailed requirements concerning industry obligations regarding provision to consumers of comprehensive health information appropriate to the holiday destination;

The extent to which the Parliament, Commission and Council have all contributed to this lengthy list of proposed changes to the directive, only serves to underline the impression that it is failing in its purpose of protecting consumers, due to uncertain interpretation and an inability to respond to the changing nature of consumer travel requirements, in particular the rise of low cost airliners such as Ryanair and Easy Jet, which have done much to undermine the package travel industry. It is interesting to note that the European Parliament calls for a codification of ECJ case law arising as a result of the directive.

Whilst the ECJ has attempted to clarify a number of issues, the volume of the case law this directive has generated serves to emphasise the practical difficulties inherent in its implementation. It was noted by Advocate General Tizzano in his opinion on case 168/00, Leitner v TUI Deutschland that:

"the directive was prompted by the existing differences noted between the Member States in relation to operating practices and regulations in respect of package travel, package holidays and package tours…which give rise to obstacles to the freedom to provide services and distortions of competition…"

It is an obvious irony that the variety of possible interpretations of this directive as construed at national level have resulted in frustrating this over-riding objective. Indeed the very objective of protecting consumers in this way was recognised in Dillenkofer4 . At issue in the Leitner case itself was the transposition of the directive into Austrian national law, and the court held that the national authorities ought to have looked at the purpose of the directive as evidenced from its preamble when giving effect to Article 5 which was in dispute in the particular case.

This is one of a raft of cases in which a lack of legislative clarity has led to the need for Article 234 references. Another example is c-400/00, Viagens e Turismo SA, in which clarification was called for with regard to particular wording and phrases in the directive. Whilst in the majority of cases that have come before it the ECJ has adopted a purposive approach and as a result found for the consumer, this is as a whole far from a satisfactory solution. Whilst those with the time and resources to pursue a claim through the ECJ may have been able to achieve redress, it does not take a great leap of imagination to extrapolate back to those many holiday makers who must have been baffled by legislative obscurity and prevented from following the due legal process by issues of time and cost. This underlines the importance of the recommendations of both Commission and Parliament that consumers should be given greater awareness of their rights and, where possible, the extensive case-law of the ECJ be codified. The purposive approach adopted by the ECJ in this area is to be commended, as it acknowledges the spirit of the directive, and also the legislative base in the Treaty, Article 95(3) which has as its stated intent that legislative measure aimed at protecting consumers should be based on a high level of protection. As advocate general Tizzano observes: "The very fact that holidays have assumed a specific socio-economic role and have become so important for an individual's quality of life, means that their full and effective enjoyment represents in itself an asset worth protecting."

Nevertheless, recent developments, especially the decisions of the Court of justice in the cases Dillenkofer (C-178/94), VKI vs Österreichische Kreditversicherung (C-364/96) and Ambry (C-410/96) give reason to believe that the measures chosen by some Member States to implement e.g. Article 7 are not in keeping with the Court's interpretation of that provision and other articles suffer from similar problems. It is, furthermore, not simply in the areas of case law that these problems are made evident:

WRITTEN QUESTION E-0082/99
by Anita Pollack (PSE) to the Commission
(27 January 1999)
Subject: Package Travel Directive
Will the Commission support calls for tougher safeguards to protect consumers against the collapse of package tour operators by bringing forward proposals to amend the Package Travel Directive, in order to give consumers additional information on the safeguarding of pre-payments, enable bookings to be transferred if their holiday is jeopardised and ensure that holidaymakers are brought home if the company goes bankrupt?

The written question above is but one example of the extensive volume of correspondence put to the European Parliament on this issue, see also written questions 1629/99, 3665/97, 1838/97 etc.
When analysing a consumer protection directive and the relative success or failure of its implementation, it might be considered something of a truism to suggest that the consumer is the ultimate judge. In this context however this is undeniably the case, and the overwhelming weight of evidence, in the form of complaints, suggests that directive 90/314 EEC is hitherto failing to achieve its purposed. The test in the future will be the extent to which legislative reform can be implemented both effectively and swiftly to ensure that the lessons learnt from the current inadequate state of legislative measure are properly applied. If this is achieved then the package travel directive, in its present form, will be a learning and development phase and not consigned to failure.
Annex A: Member States' Legislation concerning Article 7 standards of protection

These different amounts of protection are reflected in Member States' legislation. In Germany the implementing provision provides for the refund of the price that has already been paid, as far as services are not performed because of the insolvency or bankruptcy of the organiser and/or retailer. In addition to this, necessary costs for the repatriation of the consumer which he has incurred as a consequence of the insolvency or bankruptcy of the organiser and/or retailer shall be refunded.
In the Netherlands the relevant provision demands, alternatively, the transfer of the obligation of the organiser and/or retailer to another person or refund of the price. In any event the repatriation of the consumer has to be "taken care of", which seems to allow its actual arrangement as well as a refund of its costs. The preparatory documents to the Dutch Act state that "as a matter of fact" the costs for the repatriation can be deducted from the refund of the price. The Dutch SGR (a guarantee fund for the travel industry) refunds prepayments if one of its members is, as a consequence of "financial inabilities" unable to fulfil his obligation.
In Denmark the law specifies four services of the (obligatory) guarantee fund: the prepaid amount is refunded if the trip cannot start because of financial difficulties of the organiser and/or retailer. Repatriation of the consumer shall be arranged by the fund. The fund also grants "reasonable compensation" for a fundamental breach of contract during the trip. Accommodation abroad can be arranged, but the consumer has no enforceable right to it.
In the United Kingdom the implementing law takes over the wording from the Directive and adds that for the purpose of minimum protection "a contract shall be treated as having been fully performed if the package or, as the case may be, the part of the package has been completed irrespectively of whether the obligations under the contract have been properly performed for the purposes of liability of the organiser and/or retailer for proper performance. This seems to indicate that lower quality of performance does not lead to a refund claim and leaves the consequences of a cancellation of a package after departure unclear. However, the UK is apparently the only country that has a Government-backed guaranteed back-up fund : experience suggests that bonding or insurance provided solely by the commercial market could never guarantee 100% of claims as the Directive clearly envisages.
Austria implemented the rest of the Directive first, and waited a while until it issued an ordinance concerning insolvency protection. This states that the security must cover the refund of prepayments, as far as services have not been performed due to the insolvency of the organiser and/or retailer. The security must also cover all necessary costs incurred by the consumer for his repatriation. These can be the price of a ticket, a night spent in a hotel (waiting for the next available flight), telephone calls etc.
At first sight the Italian decree implementing the Directive seems no better in this respect: it plainly provides for securing the refund of prepayments and the repatriation of the consumer but the questions remained unresolved and are left to scholars and judges. Yet the decree also demands a compulsory civil liability insurance of the organiser and/or retailer; thus the insolvency guarantee only becomes relevant in cases where refund claims or the costs of reparation remain unpaid by this insurance (e.g. because the organiser has not taken one up or has not paid his premiums).
Portugal has a very consumer-friendly implementation; the security the organiser and/or retailer must provide has to cover not only the refund of prepayments and the repatriation of the consumer, but also additional expenditures incurred by consumers as a consequence of a non- or defective performance on behalf of the organiser and/or retailer, as well as reimbursement of the consumer for any damage inflicted upon him by the organiser and/or retailer or its agents. In this case detailed provisions about the amount of protection and sophisticated distinctions between "refunds" and "refund" seem superfluous, as they are all covered by the security.

  1. SEC [1999] 1800[^ Return]
  2. source: Association of British Travel Agents[^ Return]
  3. European Parliament resolution on general aspects of consumer protection and information policy onapplication of Directive 90/314/EEC (2001/2136(INI)[^ Return]
  4. conjoined cases 178/94 and 179/94[^ Return]

BIBLIOGRAPHY:

Commission Consumer Policy Strategy 2002-6 COM (2002) 208 Final

European Commissions Report (SEC [1999 1800] final)

European Parliament resolution on general aspects of consumer protection and information policy on application of Directive 90/314/EEC (2001/2136(INI))

Opinion of Advocate General Tizzano on c-168/00

Legal Notice - None of our work is to be passed off as your own or as anyone else's, nor is it to be reproduced either in whole or in part. This a breach of copyright. It also constitutes plagiarism and will breach University Regulations, consult your guidelines if you are unsure. If we suspect that any law essays or materials are being used for such purposes then we will refuse to carry out that work and all future essay work for the person involved.

Refund Policy : Law Essays UK has a strict no refund policy due to the highly specialised and individual nature of the services we provide. Our services are provided as is, and accordingly the customer orders on their own initiative. However, for your peace of mind, we guarantee that if you are not satisfied with an essay, for whatever reason, then we can amend it accordingly to your specifications. In addition, under our crystal clear guarantee, we will clarify anything contained within an essay or study material free of charge

Note: We offer a wholly independent law and legal research service. We are not affiliated with the Bar Council or any other organisation in any other way. Nor are they affiliated with us. We regret that we are unable to take on work from members of the public and businesses outside of doing model answers as law essays, legal essays, research and tutoring as to do so would contravene Bar Council regulations. All research services and materials offered are subject to availability. 5 day completion for law essays of 5,000 words or less only. All services are subject to availability. All trademarks and copyrights of other bodies and organisations are recognised and respected.

order-now

Visitors have also looked at...

  • 1Law Essay Scams

    Essay writing scams can be hard to spot.
    Click here to find out how to avoid the essay scams

  • 2Essay writing in the press

    Find out what the press say about essay writing in the 21st century.

  • 3 Meet the Law Essays UK Team

    Find out more about the individuals that provide this first class essay writing service.