Reimbursement processes for cancelled trips simplified; ceiling for advance payments set at 25 percent; full refund guarantees better enforced for airline tickets purchased through intermediaries.
These are some of the measures featuring prominently in the European Commission’s proposal to revise the directive on package travel to make the protection of travellers more effective. The Commission thus moves to respond to travel situations arising, among other things, from the covid-19 pandemic or the collapse of one of the world’s biggest travel companies. Meanwhile, the EU member nation states push to reinforce passengers‘ rights in the context of their last-minute cancellations due to unforeseeable circumstances.
The Commission proposed this regulation in late 2023. Revising several existing pieces of legislation, it aims to reflect both the digitalisation of the travel industry and the findings garnered over several recent years. The member states agreed their negotiating position on the proposal in late 2024.
Specifically, the Commission proposes to curb advance payments by travellers to a maximum of 25 per cent of the package price. Exceptions may apply in justified circumstances, such as when the package organiser incurs high advance expenses through payments to downstream service providers. Travel companies will also not be allowed to ask for the total payment any earlier than 28 days before the start of the package.
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Other proposed measures include the right of package organisers to a refund from service providers within seven days of cancellation. This will enable them to refund their clients within two weeks.
When cancelling their packages, many travel companies compensate their customers with vouchers. If so, they will have to state clearly that the customers retain the right to insist on a cash refund instead. When not redeemed in time, the vouchers are automatically refundable.
Booking via intermediaries, multimodal journeys
The Comission proposal also addresses the practice of booking airline tickets via intermediaries. As stipulated by European law, passengers are unequivocally entitled to a compensation, e.g. in the case of a flight cancellation. Issues arise, however, when the ticket is not booked directly with the airline. In such cases, customers find it difficult to claim refunds or compensation. The revised legislation mandates the airline to compensate the passenger by paying the due amount to the intermediary within seven days. The middleman will then have another seven days to compensate the passenger.
For the first time, the proposed legislation also addresses the rights of passengers using several different modes of transport. “Multimodality, or the combination of various modes of transport, may reduce the total transportation emissions by allowing passengers to choose the most efficient and sustainable mode of transport,“ the Commission states.
It aims to reinforce the rights of such passengers to receive accurate and timely information (e.g. on how much time their transfers require). If the purchase of their ticket is governed by a single mutimodal contract, they are entitled to assistance, particularly in the context of a missed connection between different transport modes.
The Council of the European Union, which represents the member nation states adopted its position to the revision in December. Specifically, it introduces the need for the involved transport providers to give their such collaboration a contractual basis. It also requires that if one service offers passengers the purchase of another service (e.g. car rental or airport transfer), it provide clear information on whether the latter is part of the multimodal package, in which case it would be subject to the new rules, or not.
The member states also call for strengthening the rights of travellers when they cancel their package due to unforseeable circumstances. In such cases, travellers should be able to cancel the service without paying a termination fee. The states also wish to specify the legislation to greater detail in the context of travel companies going bankrupt. In such a case, the states assert, the passengers should be informed that they will be refunded within nine months of the declaration of insolvency.
Trips cancelled due to the pandemic and bankruptcies
The impetus for the revision of the existing rules came partly in the form of the collapse of Thomas Cook. The British company, one of the world’s biggest travel agents, went under in September 2019. It left over 600,000 travellers stranded abroad, giving rise to the largest British repatriation effort in peacetime history. Another part of the impetus arrived with the wave of trips cancelled due to covid-19 pandemic.
The European Parliament is yet to declare its own position on the Commission proposal. Once it does so, talks on the final shape of the legislation will be set to begin.
Above all, the talks are expected to clarify the rules on compensation for cancelled flights booked via intermediaries.
