LoveHolidays has agreed to refund more than £18 million for holidays cancelled due to Covid-19 following an investigation by the Competition and Markets Authority (CMA).
The money owed by Loveholidays is for the flight portion of package bookings which the company told consumers it would not refund unless it was, in turn, refunded by airlines.
The refunds will bring LoveHolidays into line with Abta policy on refunds for cancellations when the Foreign Office advises against all but essential travel to a destination. The about-turn comes after LoveHolidays quit Abta rather than comply in the summer.
Fellow OTA On the Beach quit Abta over the same issue in September.
The issue was brought into sharp relief when Spain was removed from the UK travel corridors list in July and the Foreign Office advised against travel to the country, but airlines continued to operate flights.
Abta instructed its members to cancel packages to Spain and refund customers who wanted a cash repayment, but several industry lawyers pointed out the Package Travel Regulations (PTRs) make no reference to cancellations due to Foreign Office advice.
The CMA said it had received “hundreds of complaints” from consumers awaiting refunds from LoveHolidays.
In a statement confirming LoveHolidays’ agreement to comply with the CMA’s view on refunds, the authority noted: “When customers contacted LoveHolidays to request a refund for a cancelled holiday, they were told they would only receive money back for their flights once the firm had received refunds from the respective airlines.”
The CMA insisted: “Under the PTRs, online travel agents are legally bound to refund customers for package holidays cancelled due to coronavirus, regardless of whether or not the agent has received money back from suppliers.”
It noted: “LoveHolidays has now signed formal commitments – undertakings – that ensure these customers receive all their money back.
“In total, over £18 million will be refunded to 44,000 LoveHolidays customers. So far £7 million has been refunded to 20,000 customers.”
The CMA said it had accepted a LoveHolidays commitment to repay customers in full by March 2021, with refunds to be made in two parts.
Refunds for accommodation and transfers for holidays cancelled before November 1 should be paid by December 31. Refunds of flights cancelled up to August 24 should be paid by the end of February and flights cancelled up to October 31 should be paid by the end of March.
Cancellations from January 1 onwards are to be paid within 14 days.
LoveHolidays has agreed to provide the CMA with regular reports on the progress of repayments.
The CMA said it “is prepared to take the company to court” if it fails to repay customers on time.
CMA chief executive Andrea Coscelli said: “Travel agents have a legal responsibility to make prompt refunds to customers whose holidays have been cancelled due to coronavirus.
“Our action means LoveHoliday’s customers now have certainty over when they will receive their money back.”
Coscelli said: “We’re continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action.”
A spokesperson for LoveHolidays said: “We’re pleased to have reached agreement with the CMA.
“The pandemic has brought unprecedented disruption to the entire tourism sector and we appreciate the CMA’s acknowledgement of the extraordinary pressures faced by package holiday companies this year.
“We have been working tirelessly since March to ensure our customers receive their money and have refunded more than £205 million owed to over 180,000 customers.
“And as noted by the CMA, since signing the undertakings we have made significant progress in the payment of these refunds.”
The spokesperson added: “Despite the severe challenges caused by Covid-19, we are already refunding all hotel and transfer elements of cancelled bookings within 14 days of the cancelled departure date.
“We appreciate the efforts of providers who have worked with us to help customers in this difficult time. Whilst we’ve made significant progress, there is clearly more to do, especially on airline refunds.
“We have so far processed 90% of all airline refunds owed to our customers and are working hard to secure the remaining refunds. But we do not hold the money customers pay for their flights – that money is transferred to the airline when customers make their booking.”
The CMA has previously secured refund commitments from Lastminute, Virgin Holidays and Tui UK, and from accommodation providers Sykes Cottages and Vacation Rentals.