The main purpose of the Bill is to transpose EU Council Directive No. 90/314/EEC on package travel, package holidays and package tours into Irish law. The Bill will also make a number of technical amendments to the Transport (Tour Operators and Travel Agents) Act, 1982, mainly to remedy a number of anomalies which have come to notice in the light of experience of operation of this Act since 1982.
The EU Directive was designed to harmonise aspects of national provisions relating to travel in the Union, and to improve protection for the consumer in the travel trade sector. Package holidays now form a fundamental part of tourism, but the laws governing these packages vary considerably between member states. These disparities in national practices give rise to inconsistencies in the field of packages and package travel in the various member states.
The directive aims to stimulate greater growth in the package travel industry by removing these disparities and distortions thus enabling consumers in the Union to benefit from comparable conditions when buying a package in any member state, in other words, to secure a level playing field between all member states. The directive makes an important contribution to protection of consumers and to completion of the Single European Market by laying down common rules and a common framework for holiday packages in all member states.
The Bill before the House sets out a framework for regulating all the essential elements of the travel contract, including the information which must be contained in brochures and its accuracy and clarity; the information which must be provided by the organiser and/or the retailer to the consumer, both before conclusion of the contract and before the start of the package; the essential features of the contract and the responsibilities of organisers and retailers for the performance of the contract; the ground rules for cancellation or transfer of bookings; and the security to be provided by the package provider in the event of insolvency to enable the stranded holidaymaker to be returned to the point of departure or, in the event of the holiday not having commenced, to be refunded moneys paid over.
All of these elements taken together are the essential features of any holiday package and contribute to ensuring that the consumer gets what he or she paid for and has adequate means of redress in the case of a genuine grievance.
The Act will be brought into operation by means of a commencement day order under section 1. I will be bringing the Act into operation on a date which will allow adequate time for its implementation in order to allow tour operators and travel agents time to prepare fully for the new requirements. An important point here is that during the lead-in implementation time the onus will be on the travel trade to ensure that they stock only brochures which — on the date when the Act comes into operation — comply fully with the new requirements. I know the trade has been following developments in this legislation very closely. As soon as the Bill is enacted my Department will be bringing its provisions to the notice of all tour operators and travel agents. In the interests of consumers it would not be reasonable that there should be a delay of longer than three months in bringing the Act into operation.
At present the consumer buying a package holiday is in the vulnerable position of paying in full and in advance for a product almost entirely on the basis of the description in the brochure. In future, intending purchasers of prearranged packages will be able to rely on the descriptions in the brochure. Package organisers will not be able to make exaggerated claims about particular holidays and will have to be able to stand over any description given in advance. In addition, the brochure must contain general information about passport and visa requirements, which apply to the purchase of the package, and health formalities required by national health authorities in the countries to be visited. The information to be provided to the organiser before the start of the package must include the name, address and telephone number of the representative or agent of the organiser at the holiday location or, if there is no such representative or agency, a telephone number which will enable the consumer to contact the organiser or the retailer. This provision is, to my mind, very reasonable. If the consumer gets into difficulties of some kind, it is only right and proper that he or she be able to contact some representative of the organiser to provide assistance.
There has been much discussion about what precisely will constitute a package holiday under the new Bill. The Bill defines a package as a combination of at least two of the following components: transport, accommodation and other tourist services accounting for a significant proportion of the package. The combination of two of these items must be prearranged by the organiser, sold or offered for sale at an inclusive price, and must cover a period of more than 24 hours or include overnight accommodation. I understand that the Director of Consumer Affairs, who will be policing the legislation when it is enacted, has suggested that his office will draw up guidelines in conjunction with the travel industry on what exactly constitutes a package. These guidelines will make it clear that business travel is not included.
In the case of bed and breakfast accommodation, the Bill will not apply where such accommodation is offered on its own — in other words, to the vast majority of cases. The Bill will apply where accommodation is combined with transport or with another tourist service, such as golf or fishing. People on these kinds of holidays will spend considerable amounts of money. It is only right and proper that they should have the protection of the kind provided for in the Bill, whether they are staying in hotels or bed and breakfast accommodation.
The Bill is about regulation of package holidays. Ad hoc arrangements made by travel agents, specifically for the requirements of individual customers, do not come within the scope of the proposed legislation. If, for example, a business person walks into a travel agency, asks for a flight to London and also asks the agent to book a particular hotel, this is not a prearranged “ready made” package, it is a “made to measure” one, and does not constitute a package. If, however, the travel agent advertises a weekend in London which includes flight and accommodation, this would be prearranged and would constitute a package.
Questions have been asked about whether youth and educational exchange organisations come within the scope of the Bill. The short answer is that they do. Youth and educational exchange organisations are engaged in the business of selling packages to the public on a full-time basis. Consumers in this sector are no less entitled than others to have the comfort of knowing they have the protection of this legislation, both from the point of view of getting what they pay for and having their money secure in the event of the organisations in question being unable to meet their obligations. This is all the more important as those involved are often young people.
This treatment of educational and youth exchange organisations is consistent with that taken by other member states, none of whom has exempted this kind of travel from their legislation transposing the directive into national law. Packages in Ireland, organised on an occasional basis, such as scout camps and school or parish outings, are quite a different thing. I will be exempting these packages by way of regulations made under the Bill.
It is important to note that this Bill encompasses, in addition to travel agents and tour operators, everybody who organises or sells packages such as carriers and hotels. The exception to this are organisers who organise and sell packages on an occasional basis; they are excluded from the provisions of the Bill.
Following the enactment of the legislation, I will be introducing regulations specifying precisely the classes of persons who are deemed to be acting occasionally as package organisers. Examples of such classes would be community, social, sporting or voluntary organisations which organise packages within Ireland as part of the general objectives of that organisation, schools or educational institutions which organise packages, parish outings and pilgrimages and packages organised by charities or benevolent institutions in pursuit of the objectives of that body. I should point out that this exemption will apply to home packages only. The organisation and sale of packages abroad will, of course, continue to come within the provisions of the Transport (Tour Operators and Travel Agents) Act, 1982, as has been the case since 1982.
One of the main features of the Bill is that it will make the organiser of a package holiday primarily responsible for the proper performance of the obligations arising out of the contract. I am aware there is concern in the travel trade industry regarding the extent to which organisers could be held liable to the consumer following the implementation of this legislation. In this regard, I would like to clarify that the retailers, liability to their customers will not be dramatically increased following the Bill's enactment. Under the Sale of Goods and Supply of Services Act, 1980, the seller, or retailer in the case of the travel trade, is already responsible in almost all cases for the performance of their side of the contract. The effect of the Bill will be to place responsibility on the organiser similar to that already on the retailer under the Sale of Goods Act.
There has been some speculation that the new legislation will make the organiser liable for any or, indeed, all damage suffered by the consumer. This is not the case. Section 20 of the Bill makes it clear the organiser will not be responsible if the failure to perform the contract, or its improper performance, is not due to the fault of the organiser or the retailer or another supplier of services. If, for example, the consumer suffers damage entirely due to his or her own negligence, then the organiser would clearly not be liable. In the event of a claim about failure to perform the contract, or improper performance, the specific conditions of the contract pertaining to the package would have to be taken into account in each particular case in determining the organiser's liability, if any.
I must stress again that this is consumer protection legislation. One of its main purposes is to ensure that the consumer can, without difficulty, seek redress from the retailer and/or the organiser in the event of improper performance of the contract. Should this improper performance be the fault of a supplier of services, the retailer and/or the organiser will, of course, be able to seek legal redress from that supplier.
Concern has been expressed in recent months regarding the safety of Irish holidaymakers overseas. There have been cases of tragic accidents abroad in recent years resulting in injuries and even the death of Irish holidaymakers. While these have fortunately been small in number relative to the numbers holidaying abroad — it is estimated 350,000 Irish people will go abroad on holidays this year — I can fully understand the concerns raised.
This Bill is meant primarily to transpose the EU Directive on Package Travel into Irish legislation. It is not a vehicle for introducing wider measures. The Bill provides, in line with the EU Directive, that where a package in a member state includes accommodation the contract with the consumer must state the compliance of the accommodation with the laws of the member state. This will put a greater onus on the package organiser to ensure all accommodation it provides for Irish holidaymakers is of an acceptably safe standard and to ensure all elements of the contract with the consumer are fully and properly performed.
As this legislation is a consumer protection measure the Director of Consumer Affairs will, as I said, have the primary role in enforcing it. The Bill will operate in addition to the Sale of Goods and Supply of Services Act, 1980, and the director is, given his other responsibilities in the field of consumer legislation, the appropriate competent authority to police this area. As is standard practice, the Bill provides that breaches of specific provisions will be offences, either summary of indictable, depending on the gravity of the offence.
Some worries have been expressed that the implementation of this Bill will affect the prices of holidays being sold. Any increase in the price of package holidays as a result of these measures will be minimal. Travel agents already must carry insurance to cover their activities. While some extra insurance by organisers may be necessary to cover the actions of foreign suppliers of services, there should not be any need for large increases in liability insurance because there will be little change to the levels of liability already carried under the Sale of Goods and Supply of Services Act.
The price of holidays may rise modestly in the first year but the present high level of competition in the travel trade business will have a stabilising effect and bring prices down again quickly. The Director of Consumer Affairs, who will be enforcing the legislation, will be vigilant to ensure the Bill is not used as an excuse for increasing prices beyond the level which is absolutely necessary. The added benefits and security the consumer will enjoy will more than compensate for any small increase in prices in the short term.
I have been speaking up to now about the various elements relating to regulation of the travel contract. I will now turn to the second main area covered by the Bill, which also arises from the EU Directive. The Bill lays down the arrangements for the security of moneys paid over by consumers to enable them to be brought back to their point of departure or, where they have not travelled, to be refunded deposits which they have paid over.
The Bill provides for two options for the package provider in arranging the necessary security for moneys paid over by consumers. A package provider who is a member of a body approved by the Minister to administer bonds, such as a trade association, may provide security by means of a bond taken out with an institution authorised to issue such bonds, such as a bank.
Alternatively, security may be provided by means of an insurance policy taken out by the package provider or retailer in favour of the consumer. Transport carriers, hotels and anyone organising holiday packages now come within the definition of package organiser as specified in the directive and under the Bill must have security against insolvency in respect of their package travel activities.
The effect of the financial security provisions is to give people holidaying in Ireland who are customers of Irish based package organisers comparable protection to that which people going on holiday overseas enjoy under the Transport (Tour Operators and Travel Agents) Act, 1982. It is only proper that Irish people spending their holidays at home should have this protection in the event of insolvency of the package provider or retailer. People taking holidays in Ireland who are customers of package organisers in other EU countries will be covered by the legislation implementing the directive in their countries of origin.
As I mentioned in my introductory comments, there is a third element to the Bill. I am taking the opportunity to amend certain provisions of the Transport (Tour Operators and Travel Agents) Act, 1982, which has been the Principal Act governing the sale of overseas travel up to now. Before turning to these amendments I will outline the reasons for the enactment of the 1982 Act and the philosophy underlying it.
The House may be aware that prior to the introduction of the 1982 Act the Irish travel industry operated on an unregulated basis. In December 1980 Bray Travel Limited, then one of the largest tour operators, went out of business resulting in the loss of holiday money and the deposits of over 1,500 people and the stranding of a number of holidaymakers abroad. There were also a number of other collapses in 1981.
While voluntary bonding arrangements have been introduced by the Irish Travel Agents Association and by a number of individual operators in response to these developments, it was evident that a need existed for a statutory framework to protect holidaymakers. The basic elements incorporated in the 1982 Act were a bonding arrangement for tour operators and travel agents for the protection of their customers; a backup travellers protection fund to be raised by contribution from tour operators and to be used where individual bonds proved inadequate; and a system of licensing to regulate entry to the trade.
The Act sought to prevent failures in the trade as well as to provide remedies where failures occurred. Consumer protection was the major motive, but the licensing and bonding elements had also as a major objective the imposition of certain rigours and disciplines designed to seek to prevent failures and ensure the financial viability and operational integrity of tour operators and travel agents. These disciplines related to the financial affairs, the business and organisational resources and the general fitness of applicants to hold travel agent's and tour operator's licences.
Following the passing into law of the 1982 Act, regulations were enacted which set out in detail for the travel trade how the new procedures would operate in practice. Contributions to the travellers protection fund were suspended in April 1987 as it was felt that there was sufficient money in the fund to deal with possible contingencies. There are at present 320 licensed travel agents and 55 licensed tour operators bonded under the 1982 Act.
I am satisfied that the system of existing licensing and bonding has worked well over the years. Where there have been collapses of tour operators and travel agents, customers affected have been repatriated where necessary and moneys passed to the operator or agent have been refunded. These funds enable the customers, if they so wish, to make alternative holiday arrangements. I realise that is not as easy as it sounds. Apart from some minor amendments, I do not propose to change the 1982 Act. The Bill now before the House will operate in addition to this Act and will also provide added protection to the consumer.
I propose to amend a number of the definitions in the 1982 Act to make them consistent with the current Bill. The Bill will also make it clear that the provisions of the 1982 Act now apply to all travel commencing in the State to destinations outside the State or Northern Ireland. Problems were experienced with the operation of the 1982 Act in identifying what was encompassed by overseas travel. In particular, the 1982 Act referred only to travel to a place outside Ireland and did not specify that the travel had to commence in Ireland.
The 1982 Act excluded carriers from its licensing and bonding requirements, that is, persons whose principal business is the provision of transport. The Bill before the House provides that carriers selling package holidays outside the State or Northern Ireland will in future require a licence from my Department. This will level the playing field between carriers and the tour operators with whom they compete.
The principal benefits to the consumer of the Bill before the House are that consumers will have easier access to redress; more comprehensive and concrete information will be available; consumers will be guaranteed a minimum degree of protection; the quality of service will be improved; and there will now be provision for security against insolvency for domestic as well as outbound packages.
I understand that the home holiday business generated approximately £400 million last year. It is important to the national economy and makes a significant contribution to year round tourism. In recent years the trend has been one of steady increases in short holidays outside the peak months. It also generates substantial employment. Domestic tourism accounted for an estimated 20,000 jobs in the Irish economy in 1994. I hope that the protection accorded to domestic holidaymakers by this legislation will encourage more people to stay in Ireland for their holidays generating additional business and assisting job creation.
Outbound tourism is also a major business. It is estimated that approximately 350,000 people will take holidays abroad in 1995. For most customers a package holiday is a once a year experience for which they have gone to considerable expense. They are entitled to a safe and enjoyable holiday which runs as smoothly as possible. The new legislation will enhance even further the already high quality of the Irish travel trade industry. It will provide a framework which will give a better quality of service and improved protection for the consumer while at the same time keeping to a minimum the potential costs for the package organiser.
Before concluding, I take the opportunity to express my appreciation of the large amount of preparatory work done on the Bill by the former Minister for Transport, Energy and Communications, Deputy Brian Cowen. He was responsible for seeking and obtaining Government approval for the drafting of the text of the Bill and much of the initial consultations with the travel industry were held when he was Minister. It is only proper that his contribution should be acknowledged.
I am happy to recommend the Bill to the House.