Government confirmation that refund credit notes for cancelled holidays will retain insolvency protection is expected by the end of this week, allowing the CAA to issue guidance at last.
But sources confirm the government will balk at changing package travel rules to make credit notes a lawful substitute for cash refunds, required within 14 days under the Package Travel Regulations (PTRs).
A Sunday Telegraph report that the sector is in line for a £4 billion government ‘lifeline’ to fund consumer refunds raised the pressure but has been dismissed as “ludicrous” by senior industry sources as operators and agents struggle to make repayments and consumer anger grows.
Consumer publication Which? added to the pressure on Wednesday when it accused “the UK’s 20 biggest travel operators and airlines of openly breaking the law on refunds” and argued: “Credit notes may prove worthless.”
In fact, Abta has guaranteed refund credit notes against insolvency and confirmed Atol-protected bookings will also remain protected.
One source told Travel Weekly: “There may be clarity on this issue in the coming days which would allow the CAA to expand on what is acceptable in terms of refund credit notes. People understand the industry is vulnerable and nobody wants to push businesses over.”
A second, senior source said: “We’re not expecting any change to regulations because of lobbying by consumer groups. The government will simply say ‘If you accept a refund credit note, we will pick up the tab if the company becomes insolvent’.”
The same source described the idea of a £4 billion guarantee – understood to be an estimate of the total liability of the industry – as “one for the birds”.
A third industry source said: “How could the system ever cope with that sort of number? It’s a silly number – a highly theoretical worst case. In reality, you’re never going to lose every company.”
However, the source said the Telegraph report had “added to the pressure, to the number of calls from customers, making it even more difficult to deal with consumer expectations”.
Abta chief executive Mark Tanzer wrote an open letter to consumers on Tuesday explaining: “Many travel companies are unable to provide immediate cash refunds. It’s in nobody’s interests for normally healthy businesses to go under.”
Julia Lo Bue-Said, head of the Advantage Travel Partnership, said agents “are between a rock and a hard place” on refunds, but revealed Advantage members had managed to rebook 60% to 70% of cancelled bookings.
Alan Bowen, advisor to the Association of Atol Companies, said: “We’re not sitting here with pots of money. If you explain to customers, roughly 75% are taking refund credit notes. But there were two million packages booked over Easter so even if it’s only 25% seeking refunds, that is 500,000.
“The government is not going to change the PTRs. We just have to live with it. But it would be very helpful if the CAA could say refund credit notes are protected.”
