Consumer Protection in the Travel Services Industry: With Focus on Retailers and the Efficient Protection Level

Caroline Rytter Larsen & Sofie Dybdal Andersen

Student thesis: Master thesis

Abstract

This thesis investigates the legal rights and protection of consumers in the travel services industry with a focus on the retailer’s liability and the qualification of the different traders, in order to achieve an efficient legal position. Initially, the consumer protection definition is introduced, and the concept of a high level of consumer protection is defined and explained. In the legal analysis, a scenario is presented where a consumer can either buy travel services, including flight tickets or package travels from, 1) an airline company, 2), a travel organiser, 3) a retailer. The distinction between the different traders in the travel industry is necessary to define the liable party, in case of breach or lack of conformity. Furthermore, whether the regulation in the travel services industry serves the purpose of a high level of consumer protection is considered. It is found that depending on the scenario, different traders are liable and the regulation serves the overall purpose of a high level of consumer protection. In the economic analysis, firstly, the consequences the retailer liability has on the travel services market are analysed. Secondly, the transaction costs of the market’s parties (the retailer, the other suppliers and the consumer) are analysed, from a microeconomic and positive law & economic perspective. Cooter & Ulen’s transaction cost model is applied to estimate the factors that determine the parties’ different transaction costs levels in the light of Williamson’s approach. Thirdly, to show the effects on the market, the parties’ transaction costs are analysed using microeconomic models. It is concluded that, to achieve an efficient market, the liability should be allocated to the party with the lowest transaction costs and that the retailer has the highest transaction costs of a liability. Finally, the legal and economic issues are combined in an integrated normative law and economic perspective. The result of an efficient market allocation and the legal perspectives of the liability is analysed to find the efficient legal position of a high level of consumer protection. It is concluded that in order to achieve an efficient legal position concerning the level of consumer protection, it is necessary to compensate the retailer if this intermediary should be liable in the future. To achieve a Kaldor-Hicks efficient solution, the consumer should sometimes be liable and there should be an upper limit for the high level of consumer protection.

EducationsMSc in Commercial Law, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2017
Number of pages128
SupervisorsKim Østergaard & Kalle Rose