Abta was locked in talks with the CAA on immediate financial relief for firms on Tuesday as the government unveiled unprecedented measures to support business but advised against overseas travel.
The talks focused on relaxing requirements to refund customers within 14 days of cancellation, which threaten to put many firms out of business. The aim is to replace cash refunds with credit notes.
But confirmation of the switch was not expected till later this week with protection of consumers’ cash if companies still go bust proving a sticking point, heightening concern across the sector.
Leading accountant Chris Photi of White Hart Associates said: “The law says you need to refund consumers within 14 days, but half of Europe has tweaked the law so companies don’t repay but give a voucher. It’s about cash conservation. If firms don’t have to repay cash, they won’t have to put themselves into insolvency. They need this now.”
The Foreign Office advised against all non-essential travel on Tuesday, initially for 30 days, while the government guaranteed £330 billion in loans “to businesses small and large”.
Chancellor Rishi Sunak also extended the Business Interruption Loan Scheme for smaller businesses announced last week and said Bank of England funds would be available to large businesses from the start of next week. Sunak also introduced a business rates ‘holiday’ for the rest of the year for the retail sector.
Alistair Rowland of Midcounties Co-operative said: “We now know anything in the next 30 days will be cancelled. We need to know about refunds because no one is getting money from anyone.” He added: “The notion of a credit note is a good one.”
Alan Bowen, advisor to the Association of Atol Companies, stressed the urgency saying: “There will be failures very quickly.”
Abta laid out the action it’s seeking on Monday, urging: “The 14-day window for refund payments be removed” and “refund credits” be allowed as an alternative to cash refunds.
The CAA was poised to postpone the March Atol-renewal deadline on Monday, a move Abta described as “helpful”, and CAA chief executive Richard Moriarty acknowledged: “The threat to the survival of businesses is real. We’re doing all we can to help . . . as well as being clear about expectations on consumer rights.”
A senior industry source confirmed: “The Treasury and Departments of Business (BEIS), Transport (DfT) and Culture (DCMS) are involved in talks. The Treasury is leading [on support for business] but BEIS and DCMS are our way into that discussion.”
The source identified two other areas of talks with ministers, saying: “We need insurers to come back in [with cover] for people rebooking beyond the crisis window, and Foreign Office advice [to] get to something more nuanced.”
Aito chairman Derek Moore highlighted the uncertainty, saying: “A lot of small businesses don’t know where to turn.” Travel Network Group chief executive Gary Lewis agreed: “We’ve never seen the likes of this. There will be a huge amount of pain and people concerned about their jobs.”
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