Passengers who have the right to claim reimbursement of the cost of air tickets from their tour organiser cannot also claim reimbursement from the relevant airline, the Court of Justice of the European Union (CJEU) has recently affirmed. This is the case even if the travel agent does not fulfil their legal obligation to reimburse the passengers.
Both the EU Regulation establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights as well as the EU directive on package travel, make provision for a consumer’s right to reimbursement whenever there is a cancellation of flights by the relevant airline or a termination of the package travel contract by the travel agent before the agreed date of departure. In the case of package travel, the directive also obliges member states to ensure that travel organisers established in their territory provide security for the refund of all payments made by travellers in the eventuality that the relevant services are not provided due to the organiser’s insolvency.
The facts of this case were briefly as follows. Three individuals booked return flights from the Netherlands to Corfu through a travel agency established in the Netherlands. These flights formed part of a package tour, the price of which was paid to the agency. The flights were to be operated by Aegean Airlines. A few days before the agreed departure date, the travel agency informed the three travellers that their trip had been cancelled. Aegean Airlines had decided that it was not economically viable for it to operate the flights to and from Corfu and accordingly cancelled the chartered flight. The travel agency was eventually declared insolvent and failed to reimburse the consumers the cost of their air tickets. The latter filed proceedings before the national courts of the Netherlands, which ordered Aegean Airlines to pay them compensation for the cancellation of their flight, in accordance with the Regulation on passenger rights.
However, the same court did not give a ruling on their claim for reimbursement of the cost of the air tickets. Instead, it filed a preliminary reference before the CJEU requesting guidance on whether a passenger who, in terms of the directive on package travel, has the right to hold his/her tour organiser liable for reimbursement of the cost of his/her air ticket, can also, in terms of the EU Regulation on passenger rights, claim reimbursement of the cost of the said ticket from the air carrier.
The CJEU affirmed that since the directive on package travel itself makes provision for a right to reimbursement, a passenger, whose flight forms part of a package tour, cannot claim reimbursement from the relevant air carrier of the cost of their ticket, in terms of the Regulation on passenger rights.
The travel agency was eventually declared insolvent and failed to reimburse the consumers the cost of their air tickets
The right to reimbursement of the cost of the ticket, provided for by both the Regulation and the directive, are not cumulative. If they were, the Court argued, the passengers concerned would receive unjustified overcompensation, to the detriment of the operating air carrier, which would be assuming part of the liability of the tour organiser towards its clients.
The Court observed that this conclusion holds even where the tour organiser is financially incapable of reimbursing the cost of the ticket and has not taken any measures to guarantee that reimbursement. The directive itself caters for a bankruptcy scenario by providing that tour organisers must give evidence of security for the refund of money paid by clients, in the event of insolvency. From their end, member states must ensure that such an obligation is transposed properly in national law and passengers are provided with an effective guarantee of the refund of all money paid in the event of the travel organiser’s insolvency.
This obligation on the part of travel organisers to provide security for refund of monies paid by clients, has been enshrined into national law by the Package Travel Insolvency Fund Regulations. These Regulations set up an insolvency fund to provide security for the refund of payments made by travellers to travel agents, in the eventuality that the latter go bankrupt and cannot honour their obligations towards their clients. All package travel organisers contribute towards this fund.
The EU’s consumer acquis ensures the utmost protection for consumers whatever the industry they might be dealing with. It is only full awareness of such rights which guarantees effective remedies being attained by consumers from the correct source, without jeopardising the equilibrium of the industries concerned.
Mariosa Vella Cardona M’Jur, LL.D., is a freelance legal consultant specialising in European law as well as competition law, consumer law, data protection law and intellectual property law. She is also a visiting examiner at the University of Malta.
mariosa@vellacardona.com