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Insolvency protection for package travels

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Your rights as consumer

You have been looking forward to a nice holiday for a long time, but then one of the companies involved becomes insolvent. This is a shock for many consumers. Can I still travel? Do I have to pay a certain part again? Do I get all the money back? Or have I also lost my savings?

These questions depend heavily on the kind of travel contract you have. Is it an individual trip where flight ticket, accommodation, rental car, activities on site were booked separately from each other with the respective service provider?

Or were at least two of these services arranged together for the same trip? You received separate invoices, but the booking was made at the same time or within a very tight timeframe. In this case, you may be dealing with so-called linked travel arrangements. The prerequisites for this are explained in this article: The new package travel law

The new package travel law (PRG) has enhanced which booking types fall under the term package travel. Details can be found in this article. In principle, it is a combination of at least two travel services for a total price. You have only one contract partner for this package, namely the tour operator.

When do I have to pay how much?

The Austrian package travel regulation (PRV) applies to package tours and related travel arrangements. According to this, no payment may be demanded from you more than eleven months before the planned end of the trip. Thereafter the down payment can amount to up to 20 percent. An Austrian tour operator or travel agent can request more than 20 percent only a maximum of 20 days before departure.

Caution: If you pay more than 20 percent of the tour price to Austrian tour operators or travel agencies more than 20 days before the start of the tour, the exceeding amount may not be covered in the event of insolvency.

What insolvency protection do I have with package tours?

With a package tour, you are protected against the insolvency of the tour operator. If the package tour cannot take place, you will get your money back. 

If you do not want to forgo your desired holiday, you would probably have to pay again directly to the providers of the travel services (hotel, etc.) and afterwards try to get the money back via the insolvency insurance of the tour operator. If the later payment to the provider of the service (e.g. hotel) was higher than the price within the scope of the package tour, one has probably had bad luck regarding the difference. To get this damage compensated by the tour operator is probably not possible due to his insolvency. Only the original payments to the tour operator are covered by the insolvency insurance in accordance with the PRV.

If you are already at your holiday destination at the time of the tour operator's insolvency, you must be transported home without additional costs, given that the passenger transport was part of the package tour.

If, for example, not the tour operator but the airline booked as part of the package goes bankrupt, the tour operator must transfer you to another airline. If the selected hotel no longer exists, you are entitled to a different, equivalent accommodation.

What insolvency protection do I have with linked travel arrangements?

With the new category of linked travel arrangements, you are protected against the insolvency of the intermediary with whom you booked. The classic case is likely to be that where the agent is a travel agency where you booked the linked travel services provided by other companies (e.g. airline, hotel, etc.).

If the intermediary has not yet forwarded payments received for the travel services to the airline, car rental company, hotel, etc., but then becomes insolvent, these companies will probably demand the outstanding payment from you again. If you pay in order to go on holiday, you can recover the original payment to the intermediary from the latter's insolvency protection agent.

With linked travel arrangements, the insolvency of the airline, the car rental company, the hotel etc. is not covered in such a case. If the agent has already forwarded your payment to the airline, car rental company, accommodation etc., your money for the respective service will be lost in the worst case and you will not receive any compensation from the travel agency.

If the intermediary of linked travel arrangements also provides a service himself (e.g. a railway company through which you have also booked a concert ticket), you would be protected against the insolvency of the railway company, but not against the insolvency of the concert organizer.

What insolvency protection do I have for individual trips?

If, for example, you have booked a flight, train or bus ticket with the respective transport company, a hotel room with the hotel or a rental car with a car rental company, or only one of these services through a travel agency, then unfortunately according to the law you have no insolvency insurance.

Neither a transport company, nor an accommodation company or a rental car company is legally obliged to insure itself in the event of its own insolvency. Therefore, in this case, customers cannot rely on receiving back the full amount paid.

With the bankruptcy of Air Berlin and Fly Niki in 2017, many consumers unfortunately had to make this bitter realization.

So is it safer to book a flight through a travel agency in case the airline goes bankrupt?

In the case of a package tour, the insolvency of the airline can usually be of no concern to you. If it is no longer possible for you to be taken to your holiday destination by airline A, the package tour operator must take you to your destination by airline B.

Buchen Sie einen Flug und eine andere Reiseleistung, wie etwa ein Hotel oder einen Mietwagen getrennt voneinander, aber als verbundene Reiseleistung (siehe Definition oben), dann gilt folgendes:

If you book a flight and another travel service, such as a hotel or a rental car, separately, but as linked travel arrangements (see definition above), the following applies:

  1. Example: You go to the travel agency, select, for example, flight and hotel separately, receive an invoice and pay to the travel agency. Before the travel agency has forwarded your money, the travel agency becomes insolvent. In practice, the airline and hotel will unfortunately require you to pay again. However, the amounts you paid to the travel agency will be returned to you via its insolvency insurance.
  2. Example: You go to the travel agency, select, for example, flight and hotel separately, receive an invoice and pay to the travel agency. If the travel agency has already forwarded your money and the airline or hotel becomes insolvent, you are not covered. This means that neither the airline / hotel nor the travel agency will reimburse you for the entire cost of the flight ticket / room.
  3. Example: As above, you book flights and hotels in a travel agency as linked travel arrangements. The travel agency has not yet forwarded your money. Then the airline or hotel becomes insolvent. In our opinion, you have unfortunately also been unlucky in this case, as the insolvency administrator of the airline / hotel may demand the amount that you paid for the ticket / hotel room to the travel agency from the travel agency. As your money should end up at the airline / hotel.
  4. Example: You book the flight ticket directly with the airline and the airline arranges a hotel room for you for the trip. The intermediary here is therefore the airline. If the airline becomes insolvent, you would have to get the money back for the flight ticket. If the hotel becomes insolvent, however, the money for the room is gone.

Unfortunately, airlines will probably be wary of letting this constellation develop in practice.

If you book only a flight ticket through a travel agency, this does not bring more security than if you book directly with the respective airline. The travel agency is only an intermediary, so it only forwards your booking and your money to the airline.

Insolvencies of package tour operators 2021

In the EU, there is the Package Travel Directive (Directive 2015/2302) which was implemented in Austria in the Package Travel Act and the Package Travel Ordinance. These laws were not amended by the Pandemic Regulations and therefore it is still the case that a tour operator needs cover in case it cannot provide its services as a result of insolvency.

For package tour operators, however, it was more difficult to find insurance to cover the risk for 2021 due to the Corona pandemic - especially because a major insurer withdrew at the end of 2020. As a transitional solution, there is the possibility for organisers in 2021 to take out insolvency protection within the framework of a guarantee contract via the Österreichische Hotel- und Tourismusbank GmbH (ÖHT).

In summary, this means that there is still insolvency protection for consumers if a package tour has been or is booked. If a deposit has not yet been paid for a trip you have already booked and is now being claimed, we advise you to be attentive. If there is now a new insurer (e.g. ÖHT), we assume that outstanding deposits may only be demanded in the amount of 20%. More may only be demanded 20 days before the start of the trip.
If you are asked to pay more, we advise you to be careful and to clarify exactly what the conditions of the insolvency insurer of your package tour operator are and how high the percentage is that is covered in case of an emergency.

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Travelling during the pandemic

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