Travel guarantees

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.

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 under Contact & Documents. Most operators declare once a year, but some more often. The documents required are the application form ("Anmälan"), 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 under Contact & Documents. 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.