Summer’s here and with it the annual holiday tradition of travel problems.  The first high profile casualty of summer 2024 has been the bankruptcy of German Travel Group FTI who has offices all over Europe providing package holidays to consumers across the single market.

The German branch of FTI filed for insolvency in June 2024, and the French branch in July leaving thousands of customers abroad and many more waiting to travel on their planned package deals. 

As administrators move in and third party suppliers worry about whether their bills will be paid, Euroconsumers’ Belgian organisation Testachats has moved in to advise holidaymakers on their legal rights and reassure them about what protections are in place.

Testachats hotline reveals major problems with EU Package Travel protections 

Through Testachats’ helpline, they were able to advise that FTI will have taken out mandatory insurance against financial insolvency which provided coverage against losses for consumers.  Anyone who has booked and paid for a holiday will be reimbursed, and if a trip is in progress, then the hotels, flights, travel and other associated costs like repatriation are all covered by this insurance.

But as the questions and concerns came into the helpline, a pattern of confusion around the multiple operators involved in package travel emerged.  Trips booked with FTI France through  Belgian travel agencies, particularly Neckermann, faced particular problems. 

Digging deeper, the Testachats legal teams concluded these were due to some cross-border inconsistencies with the way the EU-wide Package Travel Directive had been transposed into national law.  This is significant as the purpose of an internal market with cross-border travel should be to provide for consistent, uniform treatment of consumers regardless of their country of residence. 

Package Travel Directive: key problems for Belgian consumers

A problem arose  around which insurance company had responsibility for the consumer.  This is down to differences between the law in France (where the branch of FTI, FTI France was based) and in Belgium.  

In French law, both the organiser (in this case FTI France) and the retailer (ie the travel agent) are required to have insolvency protection. This means that people were protected by insurance regardless of where they booked the trip and with whom.   However in Belgium, it is not mandatory for retailers to have insolvency protection, it’s only the organiser who is liable. This is consistent with the EU the Package Travel Directive.

This appears to create a situation where the insurance company of the French organiser is not liable under French law, yet as retailers are not required to have insurance in Belgium then the Belgian retailer is also not liable. This obviously leaves consumers exposed and unprotected – which is surely not the intention of the EU Package Travel Directive. Testachats initially wondered whether the French Authorities had transposed the directive incorrectly, and raised this question with the Belgian Consumer Protection Authority.  They discovered that the French transposition was correct, as the Package Travel Directive leaves it up to each member state to set out how to manage insolvency protection.  

This creates a situation where consumers in different countries have different protections. These enforcement inconsistencies behind the scenes are creating stress, uncertainty and unfairness for consumers who are unable to exercise their consumer rights and who have already had their holidays ruined.

Critical lessons for Package Travel Directive revision

The difficulties caused by differences between two neighbouring countries also raises critical questions for the current revision of the Package Travel Directive.

Euroconsumers welcomes the proposals on improving the scope of insolvency protection.  These include covering  vouchers and pending refunds in protection schemes, and having tighter controls and monitoring of insolvency schemes by authorities.

The experience of consumers in Belgium and the disparities between national insurance protection for insolvency highlight that more careful attention must be given to the transposition of directives.

The new directive gives a clear opportunity to make sure that consumers are fully protected if a situation like FTI bankruptcy happens again.  The level of protection should not be dependent on their country of residence – it should be consistent across the single market. 

Euroconsumers and its members will keep a close eye as the revisions progress to make sure loopholes like this are closed both in the drafting of the directive and in its transposition.