Travel giant Tui UK will refund all package holidays cancelled due to the coronavirus by the end of the month, the UK’s competition watchdog announced this morning.
The Competition and Markets Authority (CMA) had launched an investigation into the firm after receiving thousands of complaints from customers who had not been refunded.
Under consumer protection laws, package holidays firms must pay back refunds for cancelled holidays within 14 days.
Due to the impact of the pandemic, many operators had been unable to make the payments within the allotted time due to the risk of going out of business.
Tui UK will also contact all customers who have accepted a refund credit note instead of a cash refund to offer them the latter instead.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the payouts would leave the firm “clearly out of pocket”.
‘’TUI is facing a perfect storm of a dramatic fall in demand for winter holidays and a scramble from thousands of consumers desperate to get a refund on spring and summer cancellations”, she said.
“The travel company has now promised to clear a backlog of refunds by the end of the month following an investigation by the UK’s competition authority.
“That’s clearly left TUI seriously out of pocket, given that the company already suffered a €1.1bn loss in the second quarter of this year.”
Shares in the firm fell 6.6 per cent today.
The refund commitments apply to all of Tui UK’s different businesses that offer package holidays, including First Choice, First Choice Holidays, Marella Cruises, Crystal Ski, Crystal, Tui Scene, Tui Lakes & Mountains and Skytours.
From now on the company will be required to regularly update the CMA as to the progress of its refunds.
The CMA said it had written to hundreds of similar businesses reminding them of the need to pay back refunds within the appropriate time frame.
Chief executive Andrea Coscelli said:”It’s absolutely essential that people have trust and confidence when booking package holidays and know that if a cancellation is necessary as a result of coronavirus, businesses will give them a full, prompt refund.
“The CMA’s action ensures that Tui UK customers will get their refunds by the end of the month.”
A Tui spokeswoman said: “We remain sorry that holiday refunds took longer to process during the height of Covid-19.
“The volume of cancellations and customer contacts was unprecedented and at a time when retail stores, contact centres and offices were closed because of the nationwide lockdown.”
Rory Boland, travel editor of consumer group Which?, said: “This is positive news for Tui UK customers and should mean there is light at the end of the tunnel for thousands of people who have been struggling to get refunds.
“However, there are many package holiday firms still breaking the law, forcing customers to accept refund credit notes and delaying refunds, so the CMA must be ready to take enforcement action against any firms that are failing to meet their legal obligations.
“This action stands in sharp contrast to the situation with flight refunds, where airlines have disregarded warnings from the CAA, which has shown itself to be unable to take effective action. Consumers need a strong aviation regulator with real powers to hold airlines to account.”