Germany launches €750 million fund to protect holidaymakers

Germany has launched a multi-million euro fund to protect package holidaymakers.

The European Commission has approved, under EU State aid rules, a €750 million German scheme in the form of a State guarantee for loans that may be taken out by the Travel Insolvency Fund to reimburse travellers in case of insolvency of package travel organisers.

“The package travel industry has been hit hard by the coronavirus outbreak. In order to ensure that consumers are protected at all times, this €750 million German State guarantee scheme ensures that sufficient support is available to refund consumers for travel services cancelled due to the pandemic, in case package travel organisers become insolvent,” said Executive Vice-President Margrethe Vestager, in charge of competition policy.

“We continue working in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules,” she added.

Under the Package Travel Directive, package travel organisers are required to ensure that travellers will be reimbursed for sums they have already paid for services, which were not ultimately provided, either fully or in part, because of insolvency of the organiser. For this purpose, Germany will set up the Travel Insolvency Fund, financed by contributions from package travel organisers, which will be operational as of November 1 2021.

Germany notified to the Commission a €750 million State guarantee to ensure that sufficient resources are available for the refund of consumers for cancelled travel services, in cases where package travel organisers become insolvent and available assets in the Fund are insufficient to cover the consumer refunds.

Under the scheme, the aid will take the form of a State guarantee on future loans that may be taken out by the Fund in case of insolvency of participating package travel organisers. The aid will cover 100% of the loan amounts, on condition that the overall amount guaranteed does not exceed the target capital of €750 million minus the assets of the Fund and the collaterals provided by the package travel organisers.

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