I move: "That the Bill be now read a Second Time."
The main purpose of this 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 amend certain provisions of the Transport (Tour Operators and Travel Agents) Act, 1982.
The directive is one of a number of measures adopted by the EU aimed at protecting the consumer in the travel and tourism sectors. In addition to the directive on package travel, other legislation adopted covers airline computerisation systems and the overbooking of airline seats, and the provision of unbiased information to air travel sales desks.
The legislation has been introduced in view of the fact that national laws and international regulatory developments are the major influences on travel and tourism services and because significant differences in consumer protection can exist from one member state to another.
The EU directive on package travel was designed to harmonise aspects of national provisions relating to travel in the Union and thereby improve protection for the consumer. Package holidays 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 obstacles to the freedom to provide services in the field of packages and package travel.
The directive aims to stimulate greater growth in the package travel industry by removing these disparities, thus enabling consumers in the European Union to benefit from comparable conditions when buying a package in any member state.
The directive makes a significant contribution to the protection of consumers and completion of the internal market by laying down common rules and a common framework for holiday packages in all member states.
The Bill sets out the ground rules for regulating the travel contract, the security to be provided by the package provider in the event of insolvency and amends certain provisions of the Transport (Tour Operators and Travel Agents) Act, 1982. The main provisions of the Bill relate to: the accuracy, clarity and content of brochures and other promotional material about packages; the information to be provided by the organiser and-or the retailer to the consumer about the package, both before the conclusion of the contract and the start of the package; the liberty of the consumer to transfer bookings to a willing third person; the rules concerning the alteration or cancellation of a package, for example, the price of the package cannot be changed except where the contract specifically provides for this; the essential features of the contract and the responsibilities of organisers and retailers for the performance of the contract; the security to be provided by the package provider in the event of insolvency, to enable the stranded holiday maker to be returned to the point of departure, or, in the event of the holiday not having commenced, to be refunded moneys paid over; and the elimination of certain anomalies in the Transport (Tour Operators and Travel Agents) Act, 1982 which have come to notice in the light of experience. As is standard practice, the Bill provides that breaches of specific provisions will be offences, either summary or indictable, depending on the gravity of the offence.
On the provisions relating to the regulation of the travel contract, a consumer buying a package holiday is in the vulnerable position of paying in full in advance for a product almost entirely on the basis of descriptions of the product contained in a holiday brochure. Intending purchasers of pre-arranged packages will now be able to place greater reliance on the descriptions in the brochure.
Package organisers will not be able to make exaggerated claims about holidays as they will have to be able to stand over any advance descriptions given in brochures. In addition, the brochure must also contain general information about passport and visa requirements which apply to the purchase of the package and health formalities required for the journey and stay.
The information to be provided by 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 retailer. This provision is reasonable. If a consumer gets into difficulties it is only right and proper that he or she should be able to contact some representative of the organiser to provide assistance.
There has been much discussion as to what precisely will constitute a package holiday under the new Bill. It defines a package as a combination of at least two of the following components; transport; accommodation; other tourist services accounting for a significant proportion of the package. The many people providing bed and breakfast accommodation in guesthouses throughout the country are not covered unless the accommodation is being offered by the guesthouse owner as part of a larger pre-arranged package which includes some other significant element. The combination required to constitute a "package" must be pre-arranged by the organiser when sold or offered for sale at an inclusive price and must cover a period of more than 24 hours or include overnight accommodation.
Ad hoc arrangements made by travel agents specifically for individual customer's requirements do not come within the scope of the proposed legislation. For example, if somebody, say a business person, walks into a travel agency and asks the agent for a flight to London and to book a particular hotel, this does not constitute a package. If, however, the travel agent advertises a weekend in London, which includes flight and accommodation, this would be pre-arranged and would constitute a package.
The Directive is not as exact as it might have been in clarifying what precisely constitutes a package. However, the number of possible booking scenarios is legion. It would be completely impossible for any legislation, no matter how detailed, to cover all the possible combinations. I understand the Director of Consumer Affairs, who will police the legislation when enacted, has suggested that his office will draw up guidelines in conjunction with the travel industry on what constitutes a package. This would be helpful in the interests of greater clarity and I would welcome such an initiative.
One of the main features is that the Bill 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 that there is much 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 retailer's 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 which is already on the retailer under the Sale of Goods and Supply of Services Act.
As the legislation is a consumer protection measure, the Director of Consumer Affairs will 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.
There has also been some speculation that the new legislation will make the organiser liable for any or all the damage suffered by the consumer. This is not the case. Section 20 makes it clear that 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 case in determining the organiser's liability, if any.
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 who are excluded from the provisions of the Bill.
Following the enactment of the legislation, I will introduce 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 domestic packages as part of the general objectives of that organisation; schools or educational institutions which organise packages; religious or denominational groups which organise packages involving a pilgrimage; and packages organised by charities or benevolent institutions in pursuit of the objectives of that body
This exemption will apply to home packages only. The organisation and sale of packages abroad will continue to come within the provisions of the Transport (Tour Operators and Travel Agents) Act, 1982, whether occasional or regular.
I emphasise 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 supplier. I am satisfied 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 organiser will be able to seek legal redress from that supplier. I am satisfied that the availability of legal redress to the consumer in respect of improper performance of a contract and the penalties for non-provision of information about a package or the provision of misleading information will eliminate any cowboys seeking to operate in the travel trade. I am aware that concern has been expressed regarding the safety of Irish holidaymakers overseas. There have been causes of tragic accidents abroad in recent years resulting in injuries and the death of Irish holidaymakers. While these have, fortunately, been small in number relative to the numbers holidaying abroad, I fully understand the concerns raised.
This 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 that member state. This puts an onus on the package organiser to ensure that all accommodation which they provide for Irish holidaymakers is of an acceptably safe standard.
The Bill also places primary responsibility for the proper fulfilment of the conditions in the contract on the organiser. Should the improper performance be the fault of the supplier of services, the retailer and — or organiser can seek legal redress from that supplier. The provisions which I have outlined above will make it easier for consumers who have a problem with accommodation abroad to seek redress in an Irish court.
I note also that, in reply to a recent question in the European Parliament, the Commission indicated that it had undertaken to study the legislation in member states dealing with services linked to the installation and maintenance of appliances burning gaseous fuels. These appliances have been highlighted as a cause of concern in a number of tragic incidents over the past few years.
This brings me to the second main area covered. The Bill lays down the arrangements for the security of moneys paid over by consumers and the repatriation of consumers, if necessary, in the event of insolvency of the retailer or body providing the package.
There are two main options. A package provider who is a member of a body, such as a trade association, approved by the Minister to administer bonds may provide security by means of a bond taken out with an institution, such as a bank, authorised to issue such bonds.
Alternatively, security may be provided by means of an insurance policy taken out by the package provider or retailer in favour of the consumer. As I mentioned, transport carriers, hotels and anybody organising holiday packages will come within the definition of package organiser and will have to have security against insolvency in respect of their package travel activities.
The effect of this provision is to give to people holidaying in Ireland who are customers of Irish-based package organisers comparable protection to that which people going on holidays 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, of course, be covered by the legislation implementing the directive in those countries.
Some worries have been expressed that the implementation of this Bill will affect the prices of holidays being sold. I would like to stress that any increase in the price of package holidays will be minimal as a result of these measures. 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 in the levels of liability already carried under the Sale of Goods and Supply of Services Act.
There may be a small increase in holiday prices in the first year but, as the travel trade industry is a highly competitive business, I anticipate that the usual market forces will bring prices down again very quickly. Indeed, the added benefits and security which the consumer will enjoy will more than compensate for any small increase in prices in the short term.
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.
As I mentioned in my introductory comments, there is a third element to the Bill. I am taking this 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. Before turning to these amendments I would like to outline the reasons for enactment of and the philosophy underlying this Act.
Deputies 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 had been introduced by the Irish Travel Agents Association and 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 back-up travellers protection fund to be raised by contributions from tour operators and to be used where individual bonds proved inadequate; and a system of licensing to control 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, as a major objective also, the imposition of certain rigours and disciplines designed to put the trade on a proper footing and in this way to seek to prevent failures. These disciplines related to the financial affairs, business and organisational resources and general fitness of applicants to hold travel agents and tour operators 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.
Overall, 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 refunds enable the customer, if they so wish, to make alternative holiday arrangements. 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 provide added protection to the consumer.
I propose to amend a number of the definitions in the Act of 1982 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. Carriers have been informed of their impending obligations under this Act.
In summary, the principal benefits to the consumer of the Bill before the House are: 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 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 in the region of 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 personal expense. They are entitled to a safe and enjoyable holiday which runs as smoothly as possible.
Before concluding, I would like to take the opportunity to express my appreciation of the large amount of preparatory work done on this Bill by the former Minister for Transport, Energy and Communication, Deputy Brian Cowen. He was responsible for seeking and obtaining Government approval for the drafting of the text of the Bill and many of the initial consultations with the travel industry were held when he was Minister. It is only proper that his contribution be acknowledged.
I am happy to recommend this Bill to the House.