Coronavirus: Abta warns of ‘mass failures’ if refund rules enforced

A government decision on suspending refund rules for Atol bookings is expected by the end of this week following a further meeting between Abta, the CAA and Departments of Transport (DfT) and Business (BEIS).

Abta is seeking a suspension of the legal requirement to refund consumers in full within 14 days of cancellation as it threatens many businesses with insolvency following the cancellation of millions of bookings.

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The association wants temporary changes to the Package Travel Regulations’ (PTRs) which stipulate the refund rules, pointing out these “were not designed to cope with an industry-wide collapse”.

Abta and the CAA have been urging the DfT and BEIS to act for at least a fortnight since the advent of wholesale travel restrictions.

The association took the matter into its own hands late last Friday (March 20), advising members to delay refunds and issue ‘refund credit notes’ on Atol-protected bookings, initially up to July 31.

Media reports on Monday suggested transport secretary Grant Shapps was poised to relax the rules on refunds in line with Abta’s request following a meeting last Thursday.

However, consumer association Which? hit out at a “backdoor bailout” of the industry, saying a change to the law would be “unacceptable”. It argued consumers might choose to accept a credit note but should not lose the right to claim a refund.

This followed European Commission guidance on March 19 encouraging consumers to accept credit notes as long as they are allowed to seek a refund later.

Abta has warned the Departments for Transport (DfT) and Business (BEIS) that enforcement of the PTRs “would result in mass failures”.

It pointed out this would lead to long delays in refunds, meaning: “Consumers will not see their money any quicker by enforcement.”

The association wants refund credits allowed in place of cash refunds “with all protections carried forward” and the 14-day payment window extended to four months.

It has also told ministers that tour operators should not be responsible for refunds not covered by suppliers, arguing that where suppliers can’t or won’t refund “there needs to be an emergency government consumer hardship fund to fulfil payments”.

Some travel firms have issued holiday vouchers to consumers in place of refunding cash. However, vouchers would not be financially protected if the firm subsequently went bust.

In guidance to members, Abta advised: “Refund Credit Notes must be issued within 14 days of the date of cancellation of the original booking and must be redeemed against a future booking or exchanged for a cash refund by July 31.

“The Refund Credit Note must not include any other value offered as a rebooking incentive or other offer [and] must expressly identify the original booking reference.”

Abta confirmed the extension of its own scheme of financial protection to cover refund credit notes, stressing “the important distinction” between these and ‘vouchers’.

It also confirmed an extension of the March bond-renewal process to April 28, in line with the CAA’s extension of the Atol-renewal process announced a day earlier, and suspension of Abta’s Single Payment System (SPS) which processes member payments and refunds.

An industry source said: “A relaxation of the 14-day rule would be excellent.”

It’s understood that the CAA and officials at the DfT support the relaxation, but it is BEIS and business secretary Alok Sharma who oversee the PTRs. The DfT is responsible for the Atol Regulations.

Regardless of whether the BEIS and the DfT relax the rules, Abta will advise members the delayed refunds are protected provided businesses stick to issuing ‘refund credit notes’ tied to an Atol booking.

Abta has also asked the government to insist airlines return to refunding customers or their agents for cancelled flights as part of any bail-out of carriers.

It said: “Government-funded assistance should be directed as a priority to the payment of refunds to trade intermediaries and the consumer.”

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