Trade awaits impact of CAA’s refund credit note protection expiry reminder

Atol holders could face demands for more than £54 million in refunds by the end of next month.

That is the amount outstanding on Atol-protected refund credit notes (RCNs) issued for holidays cancelled due to Covid, with the Atol protection due to expire on September 30.

The CAA issued a reminder to consumers last week noting “over £54 million” worth of RCNs remained unused at the end of June. It warned those holding outstanding RCNs “risk losing money if a company goes bust after September 30” and advised “either make a booking [or] request a refund” before the end of September.

The amount outstanding is down from £85 million at the end of March, but has fallen by less so far this summer than it did over the winter – when the value of unredeemed RCNs fell by £45 million – despite the strength of recovery in international travel.

It appears unlikely all remaining RCNs will be used on bookings by the end of next month.

Alan Bowen, legal advisor to the Association of Atol Companies, said: “It’s a lot of money. You’d have thought people would have made bookings by now. There is only eight weeks; I’m not sure they will be used. There is very little capacity in the market.”

However, it is the Atol protection of the RCN which expires on September 30. A consumer could choose to redeem an RCN by booking after September 30 and the holiday would be Atol-protected.

A CAA spokesperson confirmed: “Any new Atol-protected booking using a credit note [after September 30] would be Atol-protected.” The CAA also confirmed a new booking for more than the RCN amount “would be protected”.

Either make a booking [or] request a refund

Yet Bowen noted being told by the CAA that “anything booked with a voucher after September will not be protected” and said: “It’s not clear. We need confirmation.”

Asked if it was concerned that consumers may seek up to £54 million worth of refunds next month, the CAA noted: “Consumers have always had the right to request a refund.”

On the Beach chief executive Simon Cooper urged the CAA to ensure companies remind clients of the deadline. He said: “We’re relying on people holding RCNs to read the CAA’s warnings in the media. The majority won’t. I’m urging anyone who has an RCN to call their travel provider and ask for a full refund.”

In fact, the CAA is poised to write to Atol holders requesting they remind customers with RCNs to make a booking or seek a refund and will issue a further reminder to consumers in September.

Abta director of membership and financial protection Rachel Jordan said: “Abta would encourage any customers with unused Atol-protected RCNs to rebook as soon as possible and before the end of September to avoid losing the protection provided.”

RCNs played a vital role in protecting many travel firms from bankruptcy in the first months of the pandemic, although the CAA and Department for Transport only confirmed Atol protection of RCNs four months into the crisis. The scheme was subsequently extended to apply to RCNs issued from March 10, 2020, to December 19, 2021.

MoreAbta urges RCN-holders to book before Atol protection expires

On the Beach says CAA ‘must force firms to remind clients about RCNs’

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