Travel Guarantees

The Travel Guarantees Act
Anyone who arranges or sells travel arrangements regulated in the Travel Guarantees Act (1972:204) must, prior to selling or marketing these arrangements, lodge security with the Swedish Legal, Financial and Administrative Services Agency. The purpose of the Act is to protect travellers if a travel arrangement is cancelled or interrupted, usually because the operator has gone bankrupt.

The amount guaranteed can be used to recompense the costs of any advance payment, full payment, value of the benefits which were included in the travel arrangement and possible repatriation costs. If for some reason the arrangement is not completed, the guarantee can be used to reimburse the affected travellers. The obligation itself to lodge security is considered to contribute to the goal that only operators with sufficient means to protect their customers will actually venture into the travel business.

Travel arrangements for which security must be lodged under the Act
The Act applies to anyone who sells or markets the following travel arrangements:

• package tours
• transport in conjunction with package tours
• travel arrangements consisting of separate transport and accommodation services that together bear a substantial resemblance to a package tour
• travel arrangements that consist of transport and an educational visit involving accommodation with a host-family, even if this accommodation is free of charge

The obligation to lodge security for package tours applies regardless of whether the tours are sold to private persons, companies or other legal entities. For the other three travel arrangements falling under the jurisdiction of the Travel Guarantees Act, the obligation to lodge security only applies when these arrangements are sold to private persons.

The purchase of a single service is not covered by the Travel Guarantees Act. Airlines, hotels or others who only sell one service do not have to lodge security under the Act.

Organizer, retailer or other operator
An organizer is a person or an operator who, other than occasionally, organizes package tours and sells or markets them directly, or through a retailer. A retailer is a person or an operator who sells or markets package tours put together by an organizer. A retailer does not arrange any packages. However, a retailer who, when selling or marketing package tours arranged by an organizer, adds extra services to the package, becomes the organizer of the entire package. A retailer who sells or markets package tours arranged by an organizer not registered in Sweden must lodge security in the same way as an organizer.

Organizers and retailers are defined by the Act on Package Tours, in which package tours are regulated. However, the Travel Guarantees Act applies to not only package tours but also to three other forms of travel arrangements, as stated above. Anyone selling or marketing these arrangements must also lodge security, even though they are neither an organizer nor retailer.

The amount secured in the guarantee
The Legal, Financial and Administrative Services Agency determines the amount of the security individually for each operator, based on the operator's own declaration of the extent of its business. Under the Travel Guarantees Act, every operator is obliged to submit accurate figures. Failure to do so can lead to monetary penalties or prosecution.

The amount that must be lodged is based on the sales revenues of the operator regarding those parts of the business for which security must be lodged. The following factors affect the calculation of the amount of the security:

• the number of passengers every month
• the price of the travel arrangements
• advance payments and cancellation fees
• how long before departure payment must be made
• repatriation costs (standard figures)

The economic responsibility of an operator is calculated on a monthly basis. The amount needed for any specific month is determined by aggregating the income for that month, any advance payments for future travel arrangements not yet fully paid and the costs for the passengers who have to be repatriated. The sum is increased by 10% and then rounded off. All operators must lodge security that is valid until further notice to cover at least six months of a year. If there are peak periods for which this security is inadequate it must be supplemented to cover these periods.

How to proceed
An operator must submit its declaration using the forms found on the Agency's website at www.kammarkollegiet.se. Most operators declare once a year, but some more often. The documents required are the application form ("Anmälan om planerad reseverksamhet för prövning enligt resegarantilagen"), the budget form ("Budget") and copies of marketing material (i.e. brochures or other materials). If the operator has already lodged security, the follow-up form ("Budgetuppföljning") must also be submitted with the actual results of the last season. The follow-up form must be signed by an authorized accountant if the operator is a limited company.

The Agency will then determine the amounts to be secured and notify the operator, which must then contact its bank, insurance company or credit market company to have this institution arrange the security. The forms for the guarantees can be found at www.kammarkollegiet.se. The security must consist of an undertaking to pay issued by any of these institutions: the operator cannot pay the amount directly to the Agency.

Legislation

Travel Guarantees Act
Council Directive 90/314/EEC

Information

Instructions for banks and insurance companies
Standard form for guarantee until further notice
Standard form for guarantee for limited periods

Travel guarantees in other countries

Reisegarantifondet in Norway
Rejsegarantifonden in Denmark
Consumer Agency in Finland
UK Civil Aviation Authority

Page maintained by: Elin Thorp
Latest update September 28, 2009.

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