The European Commission has approved a €400 million loan scheme by the Dutch government to support travel companies paying refunds on package holidays cancelled due to Covid-19.

Announcing the approval, EC executive vice-president Margrethe Vestager said: “Many consumers have had their package travel cancelled and received vouchers in exchange, which could not be used given the prolonged coronavirus crisis.

“This €400 million Dutch loan scheme will enable companies providing package travel and linked travel arrangements in the Netherlands to refund consumers the value of such vouchers in cash.”

The money can only be used to refund consumers for vouchers for cancelled bookings protected under package travel regulations.

Companies will be eligible for a loan covering up to 80% of the value of outstanding vouchers, up to a maximum of €50 million.

However, travel companies in financial difficulty before the beginning of 2020 will not be eligible for the loans.

Vestager said: “We continue working in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”

The EC ruled the scheme to be in line with the conditions set out in its Temporary Framework on state aid.

Travel Weekly has previously reported on the failure to apply package travel rules on refunds consistently around Europe during the pandemic.

Klaus Siebert of German law firm Engels Siebert Rechtsanwalte reported in February that most German consumers were rejecting vouchers for cancelled bookings.

Siebert told an International Travel Law Network (ITLN) conference: “The voucher system is not working in Germany. People are claiming like hell – 80% are not accepting vouchers and claiming full refunds. It’s a crazy situation. The courts accept a four, five, six-month delay.”

He warned: “We are already at four or five re-bookings with the same voucher. Is that money still secured by the insurer and the government? Definitely not.”

In Portugal, the government tried to aid tour operators by temporarily changing the regulations, but the EU ordered a halt.

Rita Pereira of Portuguese law firm Edge told the conference: “Portugal passed a law saying travel agents and tour operators should offer vouchers for cancelled trips [valid] to December 31 2021 and customers could only apply for a refund from January 2022, unless they became unemployed.”

However, she said: “Portugal was pressured by the EU and cancelled the law. [Yet] tour operators say [customers with] holidays cancelled while the law [was in place] still need to wait. It’s a big mess.”

Michael Wukoschitz of Austrian law firm KWC said: “Tour operators tried to convince travellers to accept vouchers, offering additional benefits.”

But Stephanie Fressard of French law firm Armand Chat said: “There is no guarantee in France that you will be reimbursed [for vouchers].”

In the UK, refund credit notes for cancelled package holidays are guaranteed by the Civil Aviation Authority and by the government until September 30 this year.

The deadline for issuing refund credit notes for cancellations due to Covid-19 was this week extended by the CAA to the end of April.