Consumer association Which? has reiterated calls on the government to take action now to prevent travel companies failing rather than waiting and be left with the job of refunding customers.
In a special Travel Weekly Webcast, Rory Boland, travel editor for Which?, joined Alistair Rowland, Abta chairman and chief retail officer for specialist businesses at Midcounties Co-operative.
Boland said, under the package travel regulations (PTRs), government is “on the hook” for several billions of pounds of cancelled holidays which are protected by Atol if companies fail.
“Our view is, and I’m sure the view of the industry is, that it would be better if it got involved now and saved the many viable companies that are struggling at the moment, rather than continuing to wait and ending up having to pay [customers] later anyway,” he said.
Boland said Which? was right to reflect the anger and frustration of thousands of customers, many of whom he claimed had been “bulldozed” into accepting credit vouchers.
And he said clarity from government that refund credit notes are 100% fully protected would help encourage people to defer their refund which would give the industry time to process claims.
Refunds credit notes
“If we could get government to come out and say definitely, 100%, these refund credit notes are protected you would get more holidaymakers willing to accept that.
“At the start of this crisis there was a huge amount of goodwill towards the travel industry, particularly holiday companies, because people have often had a fantastic experience with a company and have been loyal to that company.
“But there will be a portion of people who continue to want a cash refund, may very well require a cash refund, and that option has to be retained.
“If we can get a portion of people to rebook and a portion of people who are comfortable taking that government backed refund credit note, that helps consumers and it helps the industry.
“And hopefully that then allows the industry the headroom to issue those customers who want the cash refund with that refund. That is really crucial for us.”
Boland said it would have been better if Abta had gone to government to ask for help rather than ask consumers to “effectively loan their money” for a period.
And he said Which? believes refund credit notes are the wrong decision for consumers and the industry and that many operators, particularly the big ones, are using Abta language in giving consumers incorrect legal advice that breaches PTRs.
Rowland conceded a number of operators are taking what they want to read from the Abta guidance and “making that fit”, which he said was “unhelpful” and the association needs to control that.
But he confirmed, despite the absence of any official statement from Atol regulator the CAA over the protection refund credit notes offer, they do fall within the scope of the current PTRs.
“It’s within the terms of Atol that the principle of the delayed refund is absolutely listed as part of the original sale protection.
“In the event of a failure, the organiser has to process a refund or has to ensure performance and if there’s a failure of the organiser or anybody in that chain the Air Travel Trust Fund will refund the consumer.
‘CAA should speak out on refunds’
“One of Abta’s big asks is for the CAA to actually come out publicly, but whether they do or they don’t the refund credit note is protected within Abta guidance for non-air packages and Atol bonds
“It’s within the T&Cs that in any event, including a failure event, that original sale continues to be protected.”
Rowland said, six weeks into lockdown, there had been many false starts in terms of expectations that the industry will hear something from government.
“It does feel like a Mexican standoff between airlines and government at the top of the food chain.
“And frankly, if the CAA stood up and managed the EU261 right of airlines and airlines were processing refunds, the rest of the food chain would act naturally. It’s not in anybody’s interest to not process refunds to consumers that want them.
“But actually, that’s the position that we’re in because…the process has got to take its course and it’s got to start with the airlines processing refunds more rigorously to allow the Atol process, the repackaging with air, to be able to start refunding.
“So, if government could do anything to help they would be ensuring that airlines operate properly because they’ve got the cash for the air that they’re not going to perform.”
Note: Following the webcast, Rory Boland confirmed that the £7 billion figure referred to in relation to the size of the travel industry was based on a sum quoted by Abta inclusive of the package holiday and flight-only markets.