Agents and operators are demanding airlines issue them with cash refunds so they can reimburse customers for cancelled package holidays.

Multiple firms acting as principal in package bookings have reported airlines offering credit notes instead of cash, meaning Atol holders can only offer partial refunds to customers.

Sandra Colbourne, owner of tailor-made specialist Charter Travel, said: “We are expected to refund the whole package but we’re not getting the money back from some airlines or other suppliers. How can we refund our clients a £10,000 holiday when £5,000 of it is airline tickets in the form of a voucher?”


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She added: “The Package Travel Regulations were not devised to cope with a worldwide pandemic and shutdown like this, but because they are there, clients are naturally demanding a full refund.

“The airlines are not refunding us – they are following their own rules – but the long and short of it is that if flights are suspended or non-operational, they should refund the fare [to agents and operators].”

Colbourne called on the UK Civil Aviation Authority [CAA] to “communicate this to airlines”, adding: “This problem that we’re in is being driven by airlines. These PTRs are designed for failed tour operators – we are very much alive. You can’t penalise tour operators like us who are left having to foot the bill.”

Tour operator Newmarket Holidays said it was experiencing similar issues, from budget carriers and some scheduled airlines – although it said British Airways and Virgin Atlantic had been more accommodating in giving cash refunds.

Finance director Marc Vincent suggested a “fair compromise” would be for airlines to give cash refunds to Atol holding companies acting as the principal and credit notes to direct customers.

Scheduled carriers, he said, could issue cash refunds via GDSs and low-cost airlines could do so by setting up small teams to deal with bookings made through systems such as Paxport.

Abta has suggested a credit note scheme for package customer in place of cash refunds, which would be fully protected if the Atol holder went bust. A government decision on a relaxation of the Package Travel Regulations is expected next week.

Airline association Iata is yet to respond to Travel Weekly’s request for comment, but has called for regulators to permit airlines the use of vouchers instead of refunds, “as has been allowed for some tour operators”, which it says would give airlines “breathing space to repair cash flows”.