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Reform of EU package holiday law is flawed says ETOA

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Many years in the making, the revision emerged last summer, over-engineered and badly designed, as evidenced by the 435 amendments that engulfed the Commission's original proposal.

The European Parliament's IMCO committee will vote on the proposed replacement for the Package Travel Directive, the principal legislation governing package travel in the EU; a plenary vote is expected in March. The European Tour Operators Association, (ETOA), which has as its members all the major inbound tour operators, has said that neither the current not the revised directive are fit for purpose.

Many years in the making, the revision emerged last summer, over-engineered and badly designed, as evidenced by the 435 amendments that engulfed the Commission's original proposal.

ETOA’s Head of Policy and Strategy, Tim Fairhurst, said: “What started out in the 1980s as a well-intentioned attempt to protect consumers from the consequences of airline or operator insolvency, and ensure that package tours were marketed and delivered responsibly, has turned into a self-defeating legal tangle whose provisions are impractical, unenforceable and certain to generate much litigation.”

The central fallacy is that there is an inherent financial risk to consumers in buying a packaged product that is absent in non-packaged products. The financial risk does not come from packaging but from payment in advance, and the potential cost of repatriation.

The reform proposals exhibit an institutional preference for complexity:

"Full harmonisation would prevent Member States from adopting, where necessary [ETOA's emphasis], more stringent provision in favour of consumers as it is now the case with the current Package Travel Directive. In many member states, the proposed review would reduce national consumer protection standards."

By this logic:
1. Some EU states' consumers are more needful of protection than others.
2. EU legislation should level up to that of the most regulated country or, if harmonisation is impossible, provide sufficient scope for national variation to be politically palatable.

“This isn't an open market: it is an over-regulated mess in which domestic priorities cause EU-wide confusion,” stated Tim Fairhurst. “The proposed directive remains an ill-informed anachronism dressed up as an enlightened attempt at consumer protection. It is no such thing.”

Consumers show every sign of being far more sophisticated than European legislators presume. This is demonstrated by consumer behaviour over the last two decades; most growth has been in the areas of the travel industry outside the remit of the Package Travel Directive. The Commission and Parliament seemingly now propose to make that part of the industry less competitive. “Why not make all of it more competitive?” asks Fairhurst.  

“Efforts seen elsewhere to promote the provision of cross border trade and services find no echo here. DG Enterprise and Industry has recently opened a consultation on cutting red tape for EU tourism businesses: the package travel proposal will, if passed, achieve precisely the opposite. This is an absurd and damaging state of affairs.”

ETOA believes that the essential requirement is a scheme, recognisable EU-wide, that offers consumers a choice of financial protection in respect of pre-payment and cost of repatriation, and simplifies methods of redress. The current proposal will not provide an EU-wide scheme. It will perpetuate national and regional market silos. Meanwhile, businesses based outside the EU will benefit from a marked competitive advantage.

Does any MEP believe any of the following statements about the proposed directive?
1. It will encourage cross-border competition and trade in tourism (a sector identified as having growing economic importance).
2. It will reduce the disadvantages arising from EU establishment.
3. It will encourage innovation and improve consumer choice.

If so, we would welcome evidence. If not, we urge both the Parliament and the Commission to abandon the current proposal and consider, from first principles, what sector-specific regulation is necessary.
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