ABTA tells Government it should refund holidays to save companies from collapse

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Chief tells ministers, if you want customers to be refunded immediately, you pay

The travel association ABTA has pleaded with the Government to relax rules on package holiday refunds, warning that if it doesn’t, tour operators will go bust.

ABTA chief Mark Tanzer told the Commons Transport Select Committee today that if the Government won’t relax the rules to give holiday companies more than 14 days to refund customers for holidays cancelled due to the Covid-19 pandemic, it should pay the refunds itself.

Mr Tanzer said: “The way to save travel companies and jobs is for the Government to intervene directly to say: “We will repay those refunds where the company can’t pay it. The company will survive, so the refund can be repaid to the Government.

“If the Government walks away from this altogether, that would not go well. People whose businesses have been running for 20 to 30 years are on the point of closing down. We are not crying wolf. I’m very fearful that this will not only damage the sector but the recovery will take a very long time. It’s in nobody’s interest [for travel companies to fail].”

ABTA has caused outrage amongst holidaymakers by telling members that they could issue Refund Credit Notes instead of cash refunds where they didn’t have the money to pay immediate refunds.

Of particular concern is that the Civil Aviation Authority, which provides financial protection for holidays, has never confirmed ABTA’s claim that Refund Credit Notes will have the same protection as holidays, leaving holidaymakers understandably concerned that if a travel company goes bust, they’ll be left holding a worthless piece of paper.

Mr Tanzer told Transport Committee chairman Huw Merriman that it had had verbal confirmation from the Civil Aviation Authority that the Refund Credit Notes are financially protection. He added: “It’s really important that the CAA come out and say that explicitly. We believe it’s the case, legal advice says it’s the case. For whatever reason, the CAA hasn’t come out and said that. That means customers aren’t sure. They’re not sure whether or not these deferred refunds really aren’t protected.

“You asked what Government should do. The first thing they should do, through the CAA and ATOL is to say: ‘Yes, we are standing behind these deferred refunds,’ because it is in everybody’s interest that people have confidence in that scheme.”

In the meantime, given the lack of confirmation on the validity of Refund Credit Notes and unless the Government responds to ABTA’s call for action, there certainly still seems to be a risk in accepting these as an alternative to cash refunds.

Whilst ABTA is warning that clients insisting on cash refunds will push some companies over the edge, there’s a risk some of these companies won’t survive anyway due to volume of cancellations and uncertainty about when travel will resume.

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