Prepublication of the book “The New Package Travel Directive” published by ESHTE and INATEL – Marc McDonald (Ireland)

Linked travel arrangements and their protection under the new Package Travel Directive – Professor Marc McDonald, Former Lecturer in Law, School of Hospitality Management and Tourism, Dublin Institute of Technology. President of International Forum of Travel and Tourism Advocates (IFTTA).

The consultation phase leading up to the enactment of Directive 2015/2302 has heavily influenced the extension of compulsory insolvency security to facilitators of LTA’s. For this writer the absence of convincing evidence of the need for this extension and the differing treatment of airlines and facilitators, raises questions over the real motivation for the extension and, in turn, whether Article 19 complies with wider principles of EU law. However, until the ECJ decides on this question, one must accept the Directive as it stands.

Once the confusion over whether a travel arrangement is a package or an LTA settles down, what may happen, assuming any challenge to Article 19 fails, is that the distinction between a package and an LTA may force the market to alter itself, rather than reflect the market and, indeed, rather than make it safer or more efficient. Some facilitators may decide to leave the facilitation market if the cost of security is too high. The market may become less flexible. The need to prove to a regulator, on whatever periodic basis a MS uses to check on their security, and to get clearance before doing business differently, will at least in the short term, rob smaller business especially of much flexibility to adapt to changing market conditions. Traders for whom facilitation is not their main business may decide to stop doing so and LTA-facilitators who currently act as travel agents may decide to stop linking in or referring on. Much will depend on the size and cost of the security required by national regulators and on attempts to avoid the security obligation by exploring ways round it, especially the 24 hour rule. The freedom which MS are allowed under Directive 2015/2302 to decide their own formulae for calculating the size of facilitator security may lead to shopping by facilitators to establish themselves in those MS with the least expensive security costs. Legal challenges which should end up in the ECJ can almost certainly be expected.

MS face challenges in adopting their legal and administrative frameworks to establish central contact points and evolve working methods to make sure the mutual recognition of foreign security guarantees works satisfactorily and also to ensure that claims against the security of an insolvent facilitator in other EU states are dealt with as well as claims made at home. Ireland may be a little better positioned than some MS as regards designating a central contact point and having compulsory security for travel agents, but it still faces challenges over the degree of reform it undertakes to provide rational and well-resourced legal and administrative frameworks to cope with the new law.

It is difficult to avoid a sense of unease, ethical if nothing else, over the real motivation behind Article 19. Many stakeholders who sought reform were motivated by a desire to impose a cost on assumed new competitors, not to further consumer protection, but to create for them a level playing field. Consumer confusion was highlighted as if confusion and a learning curve were not to be expected when offerings from new technology rival existing ones. Informant measures to remedy that confusion were not deemed enough on their own or even without a trial period, but are deemed enough alongside the extension of the security obligation. It bears recalling that market distortion is not unfair competition if brought about by technological innovation. A cynic might wonder whether the lobbying power of the established tour operator industry is greater than that of the fledgling industry behind LTA’s.

Having said all that and leaving aside questions over the real motivation for Article 19, one readily admits to admiration for the drafters of Directive 2015/2302 and the analysis and inventiveness that led to Article 19 and the definition of an LTA in Article 3 [5]. They had the unenviable task of grappling with complex new sales channels, still in evolution, and proposing workable legal solutions.