Tuesday 5 May 2020 4:29 pm

Travel industry calls on government to extend refund payment timetable

The UK’s leading travel association has called on the government to extend the time period in which holiday firms must refund customers or risk “huge job losses”.

Under current rules, travel firms are legally obliged to refund customers within 14 days, a timeline that ABTA chief Mark Tanzer described as “impossible” in the current circumstances.

Read more: Coronavirus: Thwarted holidaymakers seeking £7bn in refunds

Package holiday firms have been overrun by demands for refunds from customers who have had holidays cancelled due to coronavirus, but in many cases simply do not have the money to pay everyone back within the current time limit.

Last month consumer advice group Which? Said that the UK’s twenty biggest airlines and holiday firms owed a combined £7bn in refund payouts.

“At the moment it is just impossible for many companies to meet that timetable and it would be very helpful if the government recognised that”, Tanzer told City A.M.:

“Companies are living on borrowed time really because there are no bookings coming and calls for refunds are going to grow as we move into the summer”.

Tanzer said that failure to extend the timetable would not only see huge job losses for travel firms, but also the taxpayer picking up the refunds bill through the ATOL protection scheme.

Instead, the government should follow the example of other European countries and change the rules to allow firms more time to pay refunds.

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Because such firms often act as intermediaries, passing customers’ money on to airlines and accommodation providers, their own cash reserves are often very limited.

ABTA have also called on the Civil Aviation Authority to “unequivocally state” that they will protect refund credit notes to give customers confidence that they will be protected even in the event of the company failing.

If not, Tanzer said, it will take customers “many, many months” to get their money back through the ATOL scheme.

The scheme’s operators are still processing claims from the collapse of Thomas Cook last September. 

Many travel companies are offering customers refund credit notes with which to rebook holidays, a scheme that Tanzer said could help the industry in its recovery:

“The more people who take advantage of rebooking the quicker the recovery for the travel industry will be”.

If not, he said, the industry risks missing out on the next summer holiday season, as well as the coming one. 

Read more: Coronavirus: Tour operator Tui cancels holidays until mid-May

A government spokesperson said: “Companies have a legal obligation to ensure their consumers are fairly compensated. We are keeping the situation under review and looking at options to support businesses and consumers through this difficult period.

“We continue to engage with the travel sector and consumer advocacy bodies to assess the impact of cancellations made in light of the Covid-19 outbreak.”