How the EU is killing the travel industry
The Dutch travel industry is in danger of collapsing, writes Paul Gevers, director of the Netherlands-based tour operator Matoke Tours, which specializes in African travel expriences. But corona is not directly to blame for the decline of the industry. The real culprit is the European Package Travel Directive.
Up until the corona crisis, the Dutch travel industry had been enjoying record turnovers. There was bound to be a hitch, a much-needed correction. But it was unimaginable that the industry, especially the long-haul segment, would face a 90% year-over-year revenue loss. Even the entrepreneurs who had calculated the risks of a possible pandemic were suddenly trapped like rats. The Dutch travel trade organizations ANVR and SGR have underestimated the risk of a pandemic for years and have not taken any action to limit it. The Dutch Calamity Fund excludes a pandemic as a calamity. The same applies to the trip cancellation policies of most insurance companies.
As a consequence, Dutch tour operators still carry all the risk resulting from the pandemic, even if they are affiliated with the ANVR, SGR and Calamity Fund, have taken out liability insurance, and attract customers with excellent travel insurance policies.
Enter the European Package Travel Directive
The root of the problem is not the pandemic. The cause lies much deeper, in Brussels, where the European Package Travel Directive was devised.
A package holiday is nothing more than a combination of two or more travel services that a tour operator sells to a consumer. For example, if you offer a rental car plus hotel, you are in effect selling a package holiday. Since almost all tour operators in the Netherlands sell at least two services to their customers (e.g. flights, hotels, excursions, transport, etc.), they are in fact package travel providers.
“It’s too easy to blame the pandemic for the problems we are facing. It is European legislation and failing European policy that has completely shut down the travel industry”
Since 1 July 2018, all entrepreneurs in the Dutch travel industry have been subject to the new European Package Travel Directive, as translated into the Dutch Package Travel Agreement Act. This law has been applied to the travel conditions of the ANVR, which concern both the tour operator (if affiliated with the ANVR) and the consumer. As a result, since 1 July 2018, the ANVR states:
“If unavoidable and extraordinary circumstances occur at the destination or in the immediate vicinity, with significant consequences for the execution of the trip, and the trip has not yet started, you can cancel the agreement free of charge and the organizer will pay all your prepaid money back.”
Death blow
The above paragraph has dealt the final blow to the travel industry. It effectively states the tour operator should carry all risk and absolves the consumer of all responsibility. As soon as the government changes its travel advice for a specific destination to “code orange” due to “unforeseen circumstances,” a travel company is required to offer its customers a full refund within 14 days.
This disregards the fact that the travel company has already invested both time and money to organize trips. A well-organized trip is often tailor-made. Flights, transport, excursions, hotels, etc. have to be purchased in advance. For long-haul destinations, this entails purchase outside of Europe. Those foreign partners have nothing to do with EU law. As a result, tour operators may sell a trip to a customer for 10,000 euros, lose 6,500 euros in purchasing costs, and because of EU law, they ultimately have to return the original fee of 10,000 euros to the consumer due to “unforeseen circumstances.” Obviously, this has led to immense losses for the entire industry.
To make matters worse, these risks cannot be covered by regular insurance, the SGR or Dutch Calamity Fund. Thus, the tour operator remains at the mercy of the pandemic gods. We could all spot this disaster from afar, but couldn't guard against it. The ANVR, Calamiteitenfonds and SGR have closed their eyes. And now the moment of reckoning has come.
“The abject failure of EU policy regarding corona travel advice both within and outside the bloc only adds insult to injury”
EU drama
Without a doubt, the European Package Travel Directive has dealt a deadly blow to the travel industry. The abject failure of EU policy regarding corona travel advice both within and outside the bloc only adds insult to injury. The European Union has failed to collectively apply the same travel advice, confronting consumers with wildly conflicting information. Fear and uncertainty have caused bookings to stall. Moreover, countries resemble traffic lights, jumping from green to orange at the drop of a hat, which means the consumer again has the right to cancel free of charge.
It’s too easy to blame the pandemic for the problems we are facing. But it is European legislation and failing European policy that has completely shut down the travel industry. Without the European Package Travel Directive, the industry would not have been in such dire straits. The EU has left us for dead.
