(1)

On 30 January 2020, the World Health Organization declared the COVID-19 outbreak a ‘public health emergency of international concern’ and, on 11 March 2020, characterised it as a pandemic (1). The consequent serious impact on international and domestic travel, both for business and leisure, has been pervasive in Europe and the rest of the world since 1 March 2020.

(2)

The COVID-19 pandemic has resulted in national travel bans as well as warnings or restrictions at borders. This has led to a vast number of cancellations and many citizens being unable to travel. The current unprecedented worldwide travel restrictions (2) have caused almost a standstill of travel in Europe and many other parts of the world. This is having a serious impact on carriers, organisers of package tours (‘organisers’), and providers of other tourism services as part of package tours.

(3)

At the same time, many passengers and travellers have been affected by the economic impact of the crisis and have seen their income reduced as a result of the curtailment of economic activities which impacts the prospects of both employers and employees (3).

(4)

The travel and tourism sectors in the Union report a reduction of bookings in the range of 60 % to 90 % compared to the same period last year. Refund requests from travellers due to cancellations far exceed the level of new bookings. According to preliminary estimates of the European Travel Agents’ and Tour Operators’ Association (ECTAA), the COVID-19 pandemic may cause a loss of EUR 30 billion (minus 60 %) in the first quarter of 2020 and EUR 46 billion (minus 90 %) in the second quarter, compared to expected turnover based on previous years.

(5)

Carriers in all modes of transport are faced with a sharp decline in their business and nearly a complete standstill of their operations. This is resulting in a reduction of their cash-flow, due to the COVID-19 pandemic (4).

(6)

The conditions and criteria under which containment measures can be lifted depend largely on data that are developing over time, among other things, on epidemiological data. It follows that a clear timeline for a de-confinement which will allow a full resumption of transport services and tourism is not yet available (5).

(7)

Regulations (EC) No 261/2004 (6), (EC) No 1371/2007 (7), (EU) No 1177/2010 (8) and (EU) No 181/2011 (9) of the European Parliament and of the Council (‘the Union passenger rights Regulations’) provide for passenger rights in the event of cancellations. In the event of a cancellation by the carrier, passengers have the choice, to be offered to them by the carrier, between reimbursement (refund) and re-routing (10). As re-routing is hardly applicable under the present circumstances, the de facto choice is mainly between the various possibilities for reimbursement.

(8)

Reimbursement of the full cost of the ticket is due within 7 days following the passenger’s request in the cases of air, sea and inland waterways transport, 14 days after the offer has been made or the request has been received for bus and coach transport and 1 month after the request in the case of rail transport. Under the Union legislation, the reimbursement can be made in money or in the form of a voucher. However, reimbursement by means of a voucher is only possible if the passenger agrees (11).

(9)

Directive (EU) 2015/2302 of the European Parliament and of the Council (12) (‘the Package Travel Directive’) provides that, if a package trip is cancelled due to ‘unavoidable and extraordinary circumstances’, travellers have the right to get a full refund of any payments made for the package, without undue delay and in any event within 14 days after termination of the contract. In this context, the organiser may offer the traveller reimbursement in the form of a voucher. However, this possibility does not deprive the travellers of their right to reimbursement in money.

(10)

Similarly, where changes to a package travel contract (for example postponement) or a substitute package are proposed (13), and where those changes or the substitute package result in the traveller accepting a package of lower quality or cost (14) or terminating the contract (15), a voucher may also be offered by the organiser, provided that travellers are not deprived of their right to reimbursement in money.

(11)

On 18 March 2020, the Commission adopted Interpretative Guidelines on EU passenger rights Regulations in the context of the developing situation with COVID-19 (16). The Commission recalled that passengers have the choice between cash reimbursement and reimbursement in the form of a voucher.

(12)

On 19 March 2020, informal guidance on the application of the Package Travel Directive in connection with COVID-19 has been published on the Commission’s website (17), confirming the traveller’s right to get a full refund, but also stating that it is possible for the traveller to accept a voucher.

(13)

The numerous cancellations entailed by the COVID-19 pandemic have led to an unsustainable cash-flow and revenue situation for the transport and travel sectors. The liquidity problems of organisers are exacerbated by the fact that they have to reimburse the full price of the package to the traveller while they do not themselves always receive reimbursement of prepaid services that form part of the package in due time. This can de facto result in an unfair sharing of the burden among the operators in the travel eco-system.

(14)

If organisers or carriers become insolvent, there is a risk that many travellers and passengers would not receive any refund at all, as their claims against organisers and carriers are not protected. The same problem may arise in a business-to-business context, where organisers receive a voucher as reimbursement for prepaid services from carriers, which later become insolvent.

(15)

Making vouchers more attractive, as an alternative to reimbursement in money, would increase their acceptance by passengers and travellers. This would help to ease the liquidity problems of carriers and organisers and could ultimately lead to better protection of the interests of passengers and travellers.

(16)

To that end, vouchers should be protected against insolvency of the carrier or of the organiser. Such protection could be set up by the private or the public sector, and should be sufficiently effective and robust. It should cover at least those vouchers that present the characteristics described in this Recommendation.

(17)

Those characteristics should pertain notably to the minimum validity period, to the period of time after which, in the event of vouchers with a validity period longer than the minimum, travellers or passengers are entitled to reimbursement if they so wish, and to the conditions of reimbursement for vouchers that have not been redeemed. They should also pertain to the range of services for which the voucher can be used, to the time available for using the voucher and to its transferability. Additional characteristics may also be considered to increase the attractiveness of vouchers further.

(18)

The issuance of a voucher in parallel to the chargeback under credit card schemes could ultimately lead to a form of double refund. Therefore, where the traveller or passenger opts for a voucher, the carrier should transmit that information to the organiser, travel agent or other intermediary.

(19)

With the aim of making vouchers attractive to passengers or travellers, Member States might consider the adoption of schemes to support operators in the travel and transport sectors in line with Union State aid rules. For example, they could set up dedicated guarantee schemes for vouchers directly based on Article 107(3)(b) of the Treaty. In addition, Member States could support operators in the travel and transport sectors by granting de minimis aid in line with Commission Regulation (EU) No 1407/2013 (18).

(20)

Member States that provide support to operators in the travel and transport sectors to ensure that reimbursement claims resulting from the COVID-19 pandemic are satisfied, should ensure that such schemes apply to all passengers or travellers covered by the Package Travel Directive or the relevant Union passenger rights Regulations regardless of their service provider.

(21)

As regards possible additional liquidity needs of operators in the travel and transport sectors, on 19 March 2020 the Commission adopted a Temporary Framework for State aid measures to support the economy in the current COVID-19 crisis (19) based on Article 107(3)(b) of the Treaty to remedy a serious disturbance to the economy in the Member States. The Temporary Framework was amended on to cover additional aid measures, both on 3 April (20) and on 8 May 2020 (21).

(22)

The Temporary Framework applies in principle to all sectors and undertakings including transport and travel undertakings and recognises transport and travel as being among the most affected sectors. It aims to remedy the liquidity shortages faced by companies by allowing for instance direct grants, tax advantages, State guarantees for loans and subsidised public loans. To address urgent liquidity needs in particular of small and medium-sized enterprises in a speedy manner, Member States may give, up to the nominal value of EUR 800 000 per company, zero-interest loans, guarantees on loans covering 100 % of the risk, or provide equity. In addition, the Temporary Framework provides for possibilities of aid covering liquidity needs beyond the EUR 800 000 per company in the form of guarantees and interest rate subsidies, subject to, inter alia, minimum pricing conditions. In this context, Member States may decide upon support to operators in the travel and transport sectors to ensure that reimbursement claims caused by the COVID-19 outbreak are satisfied with a view to ensuring the protection of passenger and consumer rights, and equal treatment of passengers and travellers.

(23)

In this context, the Commission will take account of decisions granting aid to the aviation sector already taken by Member States, to ensure that additional aid to the same beneficiaries does not result in overcompensation in view of the need to protect the level playing field in the internal market.

(24)

Finally, Member States may decide, following the bankruptcy of a carrier or organiser, to cover reimbursement claims of passengers or travellers. Such coverage of reimbursement claims would only benefit passengers or travellers and not undertakings. Therefore, it would not constitute State aid and can thus be implemented by Member States without prior approval of the Commission.

(25)

The Commission stands ready to provide assistance and advice to Member States with regard to State aid policy issues in designing such measures.

(26)

Member States and operators should be encouraged to consider the use of the Union schemes available to support undertakings’ activity and liquidity needs.

(27)

In order to maximise the effects of this Recommendation, all interested parties should be informed about and encouraged to implement it,