France I Commission approves €1.5 billion French scheme to support protection against the insolvency of travel organisers

The European Commission has approved, under EU State aid rules, a €1.5 billion French scheme to support insurers that cover travel organisers’ insolvency. The aim of the scheme is to preserve the protection of travellers in the event of insolvency of a travel organiser.

The French measure

France notified to the Commission its plans to set up a State guarantee fund with a budget of €1.5 billion (the ‘Fund’). The Fund will cover insurers and other guarantors in the event of insolvencies of travel organisers.

The scheme is aimed at ensuring an adequate insolvency insurance that is sufficient to (i) refund travellers for any payment for services that were not provided because of the organiser’s insolvency, and (ii) finance the travellers’ repatriation if needed. Such protection of travellers is required under the EU Package Travel Directive.

Under the scheme, insurers will pass-on 75% of their premiums to the Fund, which in turn would cover 75% of the potential losses, up to the overall maximum amount of €1.5 billion. In addition, insurers will be compensated for the operating costs of providing the insolvency protection.

The measure is open to all insurers and other guarantors that offer insolvency protection to travel organisers. In order to benefit from the scheme, insurers and other guarantors must be legally authorised to operate in France and must provide insolvency protection to travel organisers registered with the French tourism development agency. The scheme will run until 31 December 2023.

The Commission’s assessment

The Commission assessed the measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which enables Member States to support the development of certain economic activities under to certain conditions.

The Commission found that:

  • The measure facilitates the development of certain economic activities, in particular the provision of insolvency insurance to travel organisers, which insurers would not carry out at all or not to the same extent in the absence of the public support. Moreover, as the French tourism sector has been severely impacted by the coronavirus pandemic and is now affected by the current crisis, it is important to ensure its access to insurance.
  • The measure is necessary and appropriate to ensure consumers are reimbursed in the event of insolvency of travel organisers. In addition, the scheme is necessary to address a market failure, namely the limited number of insurers and other guarantors active in the market for the provision of insolvency insurance to travel organisers. The measure is also proportionate as it is limited to the minimum necessary.
  • The measure has sufficient safeguards to avoid undue negative effects on competition and trade in the EU. The measure is open to all insurers that offer insolvency protection to travel organisers and it is limited in time.

On this basis, the Commission approved the French scheme under EU State aid rules.

Background

Under the EU Package Travel Directive, applicable in the Member States as of July 2018, travel organisers are required to ensure that travellers will be reimbursed any payment for services that were not provided, either fully or in part, because of the organiser’s insolvency. Insurers are also required to finance, where appropriate, the travellers’ repatriation.

These rules apply to combinations of at least two types of travel services (transport, accommodation, car rental or other services, for example guided tours) including:

  • packages, such as  ready-made holidays from a tour operator as well as now also customised selection of components by the traveller bought from a single online or offline point of sale; and
  • linked travel arrangements, for instance, when  the traveller purchases travel services at one point of sale, but through separate booking processes, or, after having booked one travel service on one website, is invited to book another service on a different website, provided that the second booking is made within 24 hours.

The non-confidential version of today’s decision will be made available under the case number SA.104022 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

Article Source



About the Mediterranean Observer

The Mediterranean Observer is a news portal dedicated to travel tourism, and hospitality in the Mediterranean region. This portal is managed by the Mediterranean Tourism Foundation, based in the Mediterranean country of Malta.


CONTACT US




Newsletter