Government proposes to improve protection of consumers in case of travel package cancellations due to the coronavirus epidemic
The Government proposes that, in the event of a cancellation of a travel package, travellers would receive compensation from the State for the fees paid to the tour operator. Travellers could also be compensated for a travel voucher issued by the tour operator instead of a cash refund. Normally, it is the tour operator’s obligation to refund the fees or the value of the travel voucher. The temporary act would apply to situations where the tour operator has been declared bankrupt and the cancellation of the travel package has been caused by the coronavirus epidemic.
The Act will ensure an equal status of all consumers if a tour operator goes bankrupt. The refunding of trips cancelled as a result of the coronavirus epidemic and the travel vouchers issued as their alternative are currently not covered by insolvency protection, that is, in the form of a security. As a result, consumers whose travel packages have been cancelled because of the coronavirus epidemic have been in a different position compared with consumers whose trips have been cancelled as a direct consequence of the tour operator’s insolvency.
Travellers’ right to receive their money back
In a situation caused by the coronavirus epidemic, where the traveller or the tour operator has cancelled the travel package, the traveller has the right to be fully refunded for the fees without undue delay and no later than within 14 days after the cancellation of the travel package. The fees can be refunded in cash or, if the traveller consents, in the form of a travel voucher. A travel package is defined as a combination of at least two travel services purchased for a joint price for the same trip or holiday, most commonly transport and accommodation.
Compensation from the State could only be granted for claims that cannot be refunded from the security provided by the tour operator. Travellers would not be entitled to compensation if they receive compensation based on another act or agreement, for example from a credit card company. The Finnish Competition and Consumer Agency would decide on the payment of compensation.
Legislative amendment to improve the use of travel vouchers
The aim is to make the receipt of travel vouchers by consumers an equal alternative to a cash refund. The possibility of compensation would reduce the risks incurred by the traveller for receiving a travel voucher. A more extensive use of travel vouchers may, in turn, ease the financial challenges faced by tour operators. The European Commission has therefore recommended that the Member States undertake measures to make travel vouchers more attractive.
On 3 September 2020, the Government submitted a proposal for a temporary amendment to the Act on Providers of Travel Service Combinations. The Act would apply to claims made after the Government imposed national travel restrictions, that is, 16 March 2020. The Act would remain in force until 31 December 2022. The proposal is related to the fifth supplementary budget proposal for 2020.
Sari Alho, Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 295 049 007