Lusso managing director James Weaver implores the UK government to change the refund rules around the Package Travel Regulations before it’s too late
On Friday evening I wrote to the CAA and Abta in an urgent plea to resolve the impossible situation that airlines, tour operators, agents and clients find themselves in. I know the CAA and Abta are doing all they can at the moment and have requested all travel companies to write to their MP to provide clarity and attempt to align all in the supply chain with immediate effect. I also urge all travel companies to do so.
The position we tour operators are in is almost impossible and relentless, it’s like a run on the banks and we are extremely sympathetic to the anxiety and fear among clients as to the security of their funds while confusion reigns.
We have run a well-structured and profitable business for the past 10 years, segregating client monies, carrying cash reserves, mitigating risk wherever possible and adhering to best practice. The widespread shutdown of the world in wave after wave of travel restrictions and then the current FCO advisory statement against all but essential international travel for 30 days has meant for our small tour operator that hundreds of bookings cannot go ahead. I cannot begin to imagine what it is has been like at larger operators this past week.
This change in FCO status was a monumental game changer and a tidal wave of demands claiming rights of refund under the Package Travel Regulations burst forth. The legislation is flawed when the supply chain is not aligned and has never been tested on a scale like this. It is simply impossible to refund clients under the current legislation on such a widespread basis when the majority of airlines simply refuse to refund cash.
I could not be more proud of my team who have been relentless in trying to rebook as many affected bookings as possible. Our travel agent partners have been truly incredible as well under such difficult circumstances. The airlines have been changing policies by the hour this week and most will simply will not refund tour operators offering only credit notes or rebooking policies in favour of the client.
Some clients simply will not accept this believing the PTRs apply and will not seek an insurance claim despite the advisory statements from all of the trade bodies advising them to do so. The client loss can be mitigated as long as there is an immediate suspension and alteration of the PTR right to cash refund and a redefinition of what form it takes.
Airline credits are being offered and this refund can be passed to the consumer as long as a voucher/credit system is implemented with the right caveats around it. If the PTRs are enforced and clients are due cash refunds all of this airline refund credit is dead and useless as it is not applicable to the business but the client only.
This issue is seriously jeopardising the viability of tour operators and agents alike as the CAA has not been working to liquidity tests that foresee this scenario and operators and agents simply do not carry the cash reserves to deal with this.
What seemed a manageable task is now perilous unless this is resolved urgently and aligns all of the stakeholders in the distribution chain. I implore the government to look at this immediately as the system needs to marry with what the airlines are offering.
Many other EU countries have rushed through emergency amendments to the Package Travel Regulations – why can’t we do this as quickly? I also implore Abta and the CAA to put out a joint definitive statement that can be used to assist agents and operators to reassure clients until a clear direction is given. The shouting/crying/verbal abuse being experienced throughout tour operators and agencies is simply becoming unbearable for many at a time where the government is urging for compassion and unity throughout the nation.
Should this not be resolved and cash refunds mandated to be upheld, the cash refund process is also fraught with issues as it relies upon the premise that travel agents have the liquidity to pass this through to the client.
Having run such a prudent business I can only imagine the cash pressures that some operators and agents are experiencing at the moment. The whole system seems to have simply broken down as so many good companies will not survive if the existing PTRs are enforced when there is no recovery from the airlines.
The solution will work with the right regulatory and legal amendments. If the clients are required to take the refund credit where cash recovery is not possible it will work itself through the system minimising client loss, reducing insurance claims and relieving liquidity pressure overnight, thus saving many travel businesses, livelihoods and the protection of this industry which is an important strategic asset to the UK economy.
We can only hope that a solution is found quickly for the sake of our amazing industry.
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