Consumer entitlement to full refunds for package holidays where Foreign Office advice against travel leads to cancellation but flights still operate remains confused.

The Competition and Markets Authority (CMA) insists consumers are entitled to full refunds in these circumstances under the Package Travel Regulations (PTRs) and says it has undertakings from Loveholidays and that commit the companies to pay full refunds.

But the online travel agencies (OTAs) and some industry lawyers disagree.

According to the CMA, the companies undertook to refund customers in full for cancelled package bookings regardless of whether the flights went ahead.

Travel Weekly understands that where a package holiday is cancelled, customers should receive refunds in full, including the costs of flights that went ahead.

The CMA last week threatened Lastminute with legal action if it did not comply with a December undertaking to refund customers.

The regulator posted an update today to say Lastminute has now paid back the £1 million it had committed to and £7 million in total.

This followed a statement from the CMA earlier this week, saying: “We have received a response from setting out the progress made to repay customers in line with the commitments it signed.”

The CMA also urged customers still waiting for refunds to contact the OTA.

However, Travel Weekly understands the OTAs believe, and some senior industry sources confirm, the undertakings do not explicitly include refunds for the flight element of packages cancelled due to Foreign Office advice where the flight went ahead.

In practice, the OTAs continue to withhold payment unless an airline refunds the money for a flight (Travel Weekly, February 18).

Abta policy is clear that where package holidays are cancelled due to Foreign Office advice, customers must be offered full refunds regardless of whether flights operate. Loveholidays and the UK’s largest OTA On the Beach quit Abta in September because of the policy.

A Loveholidays spokesperson said: “The agreement [with the CMA] does not include refunding customers in full in all circumstances.”

CMA guidance last August noted: “If a package holiday is cancelled in light of Foreign Office advice against travel, consumers should be entitled to a full refund.”