Chris Roche, former chief commercial officer of leading OTAs Travel Republic and Love Holidays, now founder and chief executive of fast-growing specialist travel firm The Adventure People, puts the case for changing the rules on refunds to save travel companies
As many of us face the biggest challenge of our working lives, we have to find a way of helping customers and ensuring our business survives.
The proposed extension of the Package Travel Regulations (PTRs) refund rules offers a lifeline to hundreds of businesses and we should be working together as an industry to campaign for this.
Customers will still get a refund, and it gives the industry breathing space to be able to offer this without collapsing entirely.
In the meantime, offering credit notes to the customer as a temporary measure is a good idea.
Existential risks
These changes are not existential risks to the industry. The airlines, tour operators and suppliers not refunding are.
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I would guess that when legislators devised the PTRs they did not ask the question ‘what if the global travel industry ceases to exist for three to six months globally?’
Black Swan event
That would have been absurd. The enter stage right, The Black Swan event. The rules are not fit for purpose in the current circumstance.
Companies should be refunding – I think we can all agree it is the right thing to do, and long term not doing so will seriously impact consumer’s trust in our industry.
In these unprecedented circumstances most companies cannot refund and therefore we need to be pragmatic and find solutions.
Which is precisely why the PTR extension is so important.
All the proposed amendment is doing is buying companies time to refinance and find cash which allows them to refund.
This is the best chance that companies have to actually be able to offer refunds without going bankrupt themselves.
Of course, this has a huge impact on travel agencies, most of which are small, hardworking businesses.
They play by the rules their suppliers set out, paying them on time, typically well before departure date.
Now, when they need the cash back, the suppliers cannot refund because they’ve already spent the customers’ money before the service has been delivered.
In many cases this is breaking the law.
Insolvency risk
Many suppliers cannot refund otherwise they will become insolvent themselves, so they are moving the pressure of refunds back to agents, and it is now agents who run the higher risk of failure.
If the PTRs are amended then we increase the chances of full customer refunds. Without a change many customers will never see their cash again.
Those in our industry that are challenging the temporary amendments are reckless. Do they wish to see the collapse of hundreds of travel businesses and livelihoods lost?
Many small and medium sized businesses cannot afford to refund, and these won’t be the beneficiaries of government bailouts either.
Abta and the CAA are doing their very best in very challenging circumstances but after the crisis passes questions need to be asked of all travel regulatory bodies.
The big item to tackle is airlines. They will get bailouts. Large tour operators will also receive bailouts.
Those suppliers who are not refunding?
Their time will come, but for now I believe we really need to stand together to both save the travel industry as we know it and give customers the best possible chance of securing refunds even if it is not immediate.