Coronavirus: Consumer refunds latest advice

The Package Travel Regulations require customers be refunded on cancelled bookings within 14 days. This could force some businesses into administration, which helps no one.

Companies need to make judgements on refunds based on their liquidity (available cash) and business needs.

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Some appear to have no problem paying refunds at present. Others could go under very quickly.

Here is my view on some of the questions raised:

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A: Obviously, a tour operator or supplier wouldn't pay commission twice – once for making the sale and again to repay the customer.

It is the organiser or supplier of travel arrangements who are required to refund. Agents are liable only for packages they organised or packages put together by an organiser based outside the EU which does not or cannot refund.

I would be telling clients something along the lines of: "The refund is due from the organiser and I will find out what is happening and get back.

"But given the extraordinary circumstances and the fact that everything is cancelled, this may take longer than it normally would.

"All travel businesses are awaiting confirmation from the government on what to do to ensure everyone gets their money back.”

A: The PTRs are clear: "The [travel] organiser must reimburse any payments made not later than 14 days after the package travel contract is terminated.”

So it is not legal to refuse a refund, but perfectly correct not to pay for 14 days which may give time for clarification on how to delay paying refunds to avoid insolvency.

In practice, many companies are delaying paying out by offering credit notes in place of refunds.

A: There was no confirmation as of Thursday (March 19). Abta is leading discussions with the Departments of Business (BEIS) and Transport (DfT) on this, along with the CAA.

We hope there will be news soon, if not tomorrow then by early next week.

A: This highlights a grey area of the PTRs. A cruise is a package since it combines transport and accommodation, so the PTRs apply.

But lawyers disagree whether when a flight is added to a cruise it creates a second or ‘double' package, or the flight constitutes a separate travel service.

This is not spelled out in the regulations and there is no case law as yet. The CAA view is that a flight added to a cruise would create a second package. The view of most industry lawyers, including those at Abta, is that it would not.

Ultimately, these views will be tested in court. For now, there is no hard answer. Companies should do the best they can for clients – understanding that this includes not going bust.

A: To clarify, Travel Republic is issuing credit notes for accommodation-only bookings and attraction ticket-only bookings, as well as for package holiday bookings. For fight only, it is telling customers to speak to their airline or travel insurer to obtain a refund. The information is all on its website.

The PTRs do not apply to single bookings of flights, accommodation or attractions. But issuing a credit note for a package booking does not comply with the PTRs.

It is not the only company doing this. That is one reason why Abta is in urgent talks with the DfT and BEIS on a legal work-around of the 14-day rule on refunds.

A: This is the reason for the hold-up in confirming a switch to deferred refunds and the reason for Abta's meeting with government today.

The aim is to find a way legally for the Air Travel Trust (ATT) fund to pay out to consumers on ‘delayed refunds' in the event of insolvency.

A: The tour operators concerned no doubt fear insolvency if they pay full refunds. Clients also no doubt will contact card providers for refunds, resulting in chargebacks.

However, this will take some days or weeks and clarification on Atol refunds can be expected before then.

The government gave aid and funding guarantees to business totalling £350 billion this week. The details have yet to be worked through but the aim is to limit the financial pressures threatening every business with insolvency.

Some sort of package for airlines is likely before the weekend after Treasury and transport officials met the airlines yesterday.

The Atol scheme, agents and tour operators are the subject of talks today.

By next week, many of these questions could be answered. Others will arise. We have weeks or months of this uncertainty ahead.