Abta has written to the government again seeking urgent action on changes to the Package Travel Regulations.

The association has accused ministers of “dragging their feet” over the issue of customer refunds, putting travel businesses “on the brink” of collapse.

The trade body has been lobbying for a suspension of the legal requirement to refund consumers within 14 days of cancellation.

Chief executive Mark Tanzer said package travel rules were never designed for the scale of crisis the industry faces and warned customers with cancelled holidays will face lengthy delays in getting any money back if travel firms are forced into bankruptcy.

France, Belgium, Denmark, Italy have introduced changes to EU refund rules.

Abta said it has written to government ministers again this week, including the office of the Prime Minister, to urge “immediate action to prevent catastrophic damage to the UK travel industry, and widespread consumer detriment”.

“The global pandemic has put enormous financial strain on tour operators and travel agents, with businesses seeing a collapse in sales while facing immediate repatriation costs and refund demands for cancelled holidays on a scale that is unmanageable in the short term,” Tanzer said.

“These businesses are themselves waiting for refunds from hotels and airlines and without this money, they simply do not have the cash to provide refunds to customers within 14 days.

“Existing regulations are entirely unsuited to deal with this situation. We want to avoid the scenario of normally successful travel businesses employing tens of thousands of people facing bankruptcy, resulting in holidaymakers having to wait many months for refunds through Government financial protection schemes.

“We are proposing some simple, temporary changes to regulations to buy more time for companies to keep trading, while ensuring customer rights are protected. Many European countries, including France, Belgium, Denmark and Italy, have already announced similar regulatory changes to preserve their travel industries and protect customers.”

Abta has proposed temporary amendments to the Package Travel Regulations which include: extending the 14-day window for refund payments to a four-month period; the government confirms the ongoing protection of refund credits; and where suppliers (e.g. hotels or airlines) cannot or will not refund tour operators, there should be an emergency government consumer hardship fund to help fulfil refund payments.

The association has also called on the government to take enforcement action against airlines who flout the law by withholding refunds for flights which have been cancelled.

Tim Alderslade, chief executive of industry body Airlines UK, said: “Airlines are facing unprecedented challenges keeping vital routes open to repatriate stranded British travellers and transport critical supplies as part of cargo operations.

“Airlines are complying with the guidelines published by the CAA but are facing a longer than usual volume of claims to get through and the current restrictions imposed nationally mean they are not able to bring in additional staff to deal with them. We are thankful to passengers for their continued patience.”

Consumer champion Which? has already said that the money of thousands of holidaymakers must not be used as a “backdoor bailout” of the travel industry.

Rory Boland, editor of consumer magazine Which? Travel, commented today: “The travel industry has been dealt a serious blow by the coronavirus crisis, so it is vital that the government considers all options to support the industry and help it through this challenging period.

“However, if taxpayers’ money is to be used to sustain the industry, it is essential that businesses do right by their customers – particularly more vulnerable ones who may urgently need their money back.

“The government should confirm how it intends to support the travel industry through the outbreak, however it must ensure that the needs of consumers, many who will be in difficult financial situations, are not an afterthought.”