The travel industry was one of the first industries to be affected by COVID-19. Further, the travel industry is expected to be one of the industries that will be affected for a long time. The Danish COVID-19 scheme for travel providers introduced in March 2020 has been criticized by the travel industry, mainly due to the joint liability amongst the travel providers. As a reaction to the criticism, a new political agreement on changing the Danish Travel Guarantee scheme was reached on 12 May 2020.
On 6 April 2020 a Danish Travel Guarantee scheme on extraordinary situations entered into force. The original scheme covered package travels that had been cancelled during the period covered by the Ministry of Foreign Affairs travel guide (the Ministry of Foreign Affairs has advised against travelling to different countries from individual dates) up to and including 13 April 2020. Later, this period was extended to 10 May 2020 and it is expected to be further extended.
Danish political parties have on 12 May 2020 agreed on certain amendments to the Danish Travel Guarantee scheme. As a result, an amendment to the Danish Travel Guarantee Fund Law was passed on 14 May 2020. The amendment introduces an individual repayment system, the possibility of reimbursement for interrupted travels and clarification of the effects of insurance.
Further, the parties to the political agreement indicated that they want to work towards a temporary voucher arrangement in EU in order to ensure liquidity and flexibility for the travel providers.
The details on the amendment to the Danish Travel Guarantee scheme and the political agreement are further described below.
Under the Travel Guarantee Fund scheme introduced in March 2020, the state guarantee granted thereunder must be repaid collectively by all the Travel Guarantee Fund’s members as a contribution determined on the basis of the travel provider’s turnover regardless of the amount the member has drawn on the state guarantee.
This reimbursement model has been amended to an individual model so that each travel provider is only liable for its own use of the state guarantee and the contribution is determined by the individual travel provider’s use of the fund. In respect of cancelled travels, the new model applies for travels that should have commenced from 14 April 2020.
Cancelled travels during the period from the Ministry of Foreign Affairs travel guide up to and including 13 April 2020 will be subject to the rules under the previous scheme. Accordingly, joint liability applies to cancelled travels in this period. To reduce the extent of the joint liability and to ensure that travel providers do not leave the Danish Travel Guarantee scheme in favor of similar schemes in other countries, the Travel Guarantee Fund will receive an extra subsidy of DKK 600 million under the political agreement as of 12 May 2020. It is currently estimated that the deduction of the state guarantee for this period will be around DKK 700-850 million. Accordingly, the extra subsidy should cover most of the drawing from the state guarantee in the first period up to and including 13 April 2020. The subsidy of DKK 600 million will have to be approved by the European Commission under the state aid rules.
The scope of the Travel Guarantee scheme has been extended to not only cover cancelled travels but also cover the many travels that has been interrupted by COVID-19. In addition, the travel providers can receive reimbursement for extra costs related to repatriation, reimbursement for the costumer’s lost holidays, and proportionate reduction of the price for the interrupted travels that the travel providers are obliged to grant to the costumer under the Danish Package Travel Law.
All repayments of reimbursement related to interrupted travels will be a contribution based on the individual travel provider’s use of the fund.
Part of the travel industry has taken out an extended liability insurance in order for the insurance to cover exceptional situations like COVID-19. In case the travel provider’s extended liability insurance covers any costs that are subject to reimbursement under the Travel Guarantee scheme, the insurance supersedes the reimbursement from the fund for extraordinary situations.
The insurance companies often pay the insurance amount by the end of the year. To improve liquidity of the travel providers, the Travel Guarantee Fund will reimburse the travel providers and take over the travel provider’s claim against the insurance company.
In acknowledgment of the long-term impact of COVID-19, the parties to the political agreement on supporting the travel industry stated that they want to introduce a temporary voucher arrangement in the EU. The purpose is to provide travel providers with more liquidity and flexibility. Therefore, the parties propose that the travel providers shall have the opportunity to grant the costumers a voucher that is valid for 18 months after which the travel providers automatically shall repay the costumer. However, the costumer will have the right to request repayment after 12 months. In the event of a travel provider’s bankruptcy, the Travel Guarantee Fund will reimburse the vouchers to the costumer.
As the obligation to repay the consumers derives from the EU Package Travel Directive, it is a prerequisite that a voucher scheme, which deviates from the repayment obligation, is adopted in the EU.