European Commission approves €200 million Danish loan in support of the Travel Guarantee Fund for travel cancellations due to coronavirus outbreak
The European Commission has found a Danish State loan facility of up to DKK 1.5 billion (approx. €200 million) in support of the Travel Guarantee Fund (“Rejsegarantifonden”) to be in line with EU State aid rules. The loan was approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19 March 2020.
Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The entire EU economy is experiencing a serious disturbance due to the coronavirus outbreak, and the travel and tourism industries are particularly hard hit. The €200 million Danish State loan in support of the Travel Guarantee Fund approved today ensures that liquidity remains available to travel organisers. This will allow them to settle quickly and efficiently travellers’ claims following travel disruptions linked to the coronavirus outbreak. We will continue to work in close cooperation with Member States to tackle the economic effects of the outbreak”.
The Danish support measure
Denmark notified to the Commission an aid measure in the form of a State loan under the Temporary Framework. The loan aims to support the Travel Guarantee Fund, which provides reimbursement to travellers in case of travel cancellations. In particular, the measure covers travel packages that were cancelled due to the exceptional circumstances caused by the coronavirus outbreak and the subsequent travel restrictions imposed by the Danish Government.
The loan aims (i) to ensure that sufficient liquidity remains available for travel organisers to counter the damage inflicted in the package travel market, (ii) to preserve the continuity of economic activity during and after the coronavirus outbreak, and (iii) to ensure the quickest possible settlement of related refunds or reimbursements to travellers. The measure has a total budget of DKK 1.5 billion (approx. €200 million).
The Commission found that the Danish measure is in line with the conditions set out in the Temporary Framework. In particular, the loan amount is designed to cover the Fund’s liquidity needs for the foreseeable future. The loan contract will be signed until the end of this year and the maturity of the loan will be 6 years. Furthermore, Denmark will ensure that the loan to the Fund will be fully dedicated to the reimbursement of cancelled package travel contracts due to the coronavirus outbreak. The measure will thus provide certainty to affected consumers whose trips were disrupted during the pandemic.
The Commission therefore concluded that the measure will contribute to managing the economic impact of the coronavirus outbreak in Denmark. It is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the measures under EU State aid rules.