By approving amendments to the regulation on the procedures for the preparation and provision of package and related travel services, as well as the rights and obligations of service providers and travellers, at its meeting of November 22 the government decided to improve the regulatory framework regarding the rights and obligations of providers of package and related travel services, tourism agents and travellers ensuring clear and proportional rules for the amount of security of the tour operator and providers of related travel services, as well as providing opportunities for the Consumer Rights Protection Centre (hereinafter referred to as CRPC) both to request the necessary information for surveillance and to react if non-conformities with the requirements of regulatory enactments have been determined.
If more stringent rules are imposed on the operation of providers of package and related travel services, as well as if the mandate of the CRPC is extended, the risks that travellers might not get their money back would reduce.
In assessing the current situation in the sector of package and related travel service providers, as well as in discussing the current issues with the Association of Latvian Travel Agents and Operators ALTA (hereinafter referred to as ALTA), its members and largest representatives of the sector, together with amendments to the regulation, the rights and obligations of CRPC have been clarified, evaluating the issuance of a special permit (licence) to a travel agent or tourism operator, suspension or cancellation thereof, as well as deficiencies in the definitions of rights and obligations were eliminated. Taking into account the volatile market situation, the regulation also expands the possibilities of CRPC to receive data from entrepreneurs to fully evaluate their financial stability and compliance of their activities with regulatory enactments.
To ensure that financially sound businesses operate in the sector, to mitigate the potential risks of insolvency of companies and to ensure that companies meet their obligations towards travellers, the amendments to the regulation impose additional requirements on existing and new travel agents, operators and providers of related tourism services. In addition, in case of liquidity problems of a tour operator or related travel service provider, the CRPC was provided the right to request the travel agent to reimburse all advance payments paid by or on behalf of the traveller for cancelled package or related travel services, which have not been transferred by the travel agent to the tour operator or provider of related travel services, not later than within one month.
The amendments also clarify the level of security for tour operators and providers of related travel services. To ensure that the amount of the security is able to cover all obligations towards travellers, if necessary, the minimum security amount is determined based on market prices. In addition, a new minimum security has been defined for service providers organising charter flights, as well as the nature of security has been defined more precisely, providing that the amount of security shall in any event be not less than the amount of advance payments made by or on behalf of travellers for package or related travel services received by the tour operator or the provider of related travel services under all contracts entered into and not yet executed.
At the same time, it should be emphasised that if the CRPC states that the security of a tour operator who has a valid special permit (licence) and security, or a provider of related travel services who has valid security, is not sufficient to fully cover all payments made by or on behalf of the traveller for a non-organised package travel service or part thereof, the CRPC has the right to request the remaining part of the security from the state budget emergency funds. It is important to add that the request for additional funds from the state budget is the ultimate solution when all other possibilities have been exhausted, including within the framework of insolvency proceedings. At the same time, it should be noted that the Cabinet of Ministers is entitled to reject the request for these funds from the state budget.
The Regulation provides for a transitional period until 1 July 2023 to give undertakings time to apply their security in accordance with the amended requirements (receiving a new or additional insurance contract or bank guarantee, if necessary), as well as until 1 January 2024 to obtain greater financial stability while recovering from the consequences of the COVID-19 pandemic. The new requirements regarding the amount of security and liquidity indicators without a transitional period will apply to new undertakings wishing to register in the database and obtain a licence after 1 January 2023.