Abta chief executive Mark Tanzer has said travel companies should not be denying customers their right to a refund, but he called for more time to be able to give refunds.

Travel firms have come under intense criticism in the media from groups like consumer watchdog Which? for not refunding cash to customers whose holidays have been cancelled.

Under Package Travel Regulations firms are legally obliged to refund customers within 14 days, but Abta has said many firms simply don’t have the cash and need more time.

It is calling on the government to change the PTRs so that the time limit on refunds if extended to the end of July and credit notes are given the same legal underpinning to protect customer rights.

However, the UK government has still to act, unlike in many EU countries which have already changed their version of the PTRs to help travel companies survive the collapse in revenues caused by the COVID-19 crisis.

Speaking to BBC Breakfast this morning Tanzer said firms “do owe the customer a refund, and the customer has to have that right and we will make sure Abta members follow that rule.

“What we are asking for is more time to be able to give the refund. So there’s two strands here. Some companies are absolutely denying those rights altogether and we completely refute that.

“We will take action against our members and we will look for the Department of Business to take action against other companies.

“What we’re trying to do in the middle ground where people are asking for more time is to bring some order to that so these refund credit notes which our members are offering are clearly attached to the original booking, they have the date, the customers are fully protected, so if the company does fail Abta is protecting that or the Atol scheme, and at the end of it if the customer hasn’t taken a holiday they get their cash back.”

Although the CAA, which operates the Atol scheme, and the Department of Transport, are understood to be supportive of Abta’s stance the Department of Businesses is said to be the block to any change in the PTR’s due to concerns about the impact on consumer rights.

However, travel companies have warned that if the rules are strictly enforced this could lead to mass failures leaving customers with a much more protracted and complex process to recoup their money.

Tanzer told the BBC the refund rules needed to be relaxed in extraordinary circumstances “when not only are all the destinations closed so there are multiple claims for refunds, but there is no new business coming in to fund those”.

He added: “Travel companies are essentially intermediaries. What we do is we take the customers’ money and we pass it on to the airlines and the hotels. They’re not sitting on bags of cash.

“To pay refunds they have to get those monies back. And the 14-day window just isn’t really deliverable for most travel companies.”