Checklist for analysis on EU proposals
Title of EU proposal: Package Travel and
Assisted Travel Arrangements
Lead dept/agency: BIS
Other depts/agencies with an interest:
DfT, DCMS
Date:
Lead policy official: Kevin Davis – 020 7215
0329, kevin.davis@bis.gsi.gov.uk
Lead lawyer: Donna Birthwright - 020 7215
2238, donna.birthwright@bis.gsi.gov.uk
Lead economist: Enrik Noka – 020 7215 8357,
enrik.noka@bis.gsi.gov.uk
Lead UKRep desk officer: Kathryn Boyd - + 32 2
282 8918, kathryn.boyd@fco.gsi.gov.uk
July 2013
What are the potential impacts of the Commission proposal on the UK?
The Commission’s Impact Assessment has set out the costs and benefits (both quantitatively
and qualitatively) at the EU 27 member state level.
AFFECTED GROUPS:
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The Directive applies to businesses (travel service providers) who sell one-trader and
multi-trader packages, including multi-trader assisted travel arrangements, typically
consisting of transport and accommodation (and/or other significant tourism services)
sold together.
The types of businesses affected would be: hotels, car rentals, airlines, and businesses
operating in the transport sector other than airlines and car rentals.
SME’s/micro businesses are captured in the scope of the Directive.
Travel arrangements organised on a business-to-business basis (via Travel
Management Companies) are not captured in the scope.
There are approximately 271,200 businesses in the EU that fall within scope of the
Directive.
Consumers would also be affected as they would be the beneficiaries of the revised
rules.
BENEFITS TO CONSUMERS
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This proposal would increase protection for consumers in areas which are currently not
regulated (for example entitlement to refunds of advance payments and repatriation in
the event of insolvency and redress in the event of non-performance of contracts). As a
result, the annual consumer detriment would be reduced by £436 million.
Sub option B (businesses would have to display a disclaimer to state if something does
not constitute a package) would enable consumers to make an informed choice prior to
making a purchase. If traders do not sell packages (and are only subject to sub-option
B) then the reduction of consumer detriment is estimated at £369 million annually.
COSTS TO CONSUMERS
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Businesses may pass on their compliance costs to consumers in the form of the final
price paid by the consumer. Such possible price increase is expected to be less than
2% of the total price of the package.
COSTS TO BUSINESS
One-off Costs
 Businesses brought under the scope of the Directive would incur a one-off
administrative cost of £2.4 million annually.
 Providers of “multi-trader arrangements, subject only to the lighter information regime
(to provide the “this is not a package” in a durable medium) would incur a one-off
administrative costs of £429 per company, amounting to £14.57million for the whole
industry in the EU.
Ongoing cost::
 The industry would incur ongoing costs cost of £453-£561million annually if the market
structure remains unchanged.
 However as SMEs are likely to adapt their business models and no longer sell
packages, the predicted increase in ongoing costs for new and current SMEs is
estimated at £331 - £381 million annually.
BENEFITS TO BUSINESS
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Creates a level playing field as more products would be bought under the scope of the
Directive; the disclaimer would create transparency and travel arrangements which
have similar characteristics would be subject to the same requirements. Consequently,
competition is likely to improve.
Additional compliance costs for the industry will be offset (at least partially) by:
- The reduction of administrative costs (elimination of the brochure requirement).
- Cost savings stemming from the exclusion of business trips (organised by Travel
Management Companies) from the scope of the Directive.
SMEs currently selling "multi-trader" and "one-trader" packages could find it difficult to
cover liability for the performance of all services provided by different traders. These
companies would be able to adapt their business activities so as to face only some
PTD requirements (insolvency protection and an obligation to display the "This is not a
package” disclaimer).
Businesses in the EU are expected to benefit from an average cost saving per package
of £1.82 per package. Amounting to a annual cost saving to business of £1,947
million,1
ENFORCEMENT:
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The current Directive is enforced primarily by the local authority Trading Standards
Service who can enforce in respect of the criminal offences in respect of individual
offences, and by the Office of Fair Trading via injunctive action in respect of matter
which affect consumers more generally. This arrangement will continue with the
revision of the Directive, although by the time of implementation the Competition and
markets Authority will have taken on the OFT’s enforcement role.
LEGAL IMPLEMENTATION/COPY-OUT:
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This Directive will need to be transposed – primarily by changing existing law.
Ministerial sign-off:
I have read the analysis above of the potential impacts of this proposal and I am
satisfied that, given the significance of the proposal, the time and evidence available,
and the uncertainty of the outcome of negotiations, it represents a proportionate view of
possible impacts.
Signed by the responsible Minister:
Date:
Parliamentary Under-Secretary of State for Employment Rights and Consumer Affairs.
1
The IA estimates that 918.5 million packages will be brought under the Directive; this is
multiplied by the average cost per package of £2.25, and results in an annual cost of
£2,066,625,000.
The Directive will reduce the administrative cost per package by £2.12, so 918.5 million
packages multiplied by £0.13, results in an annual cost of £119,405,000.
This amounts to an annual cost savings of £1,947,220,000.