A ten-point plan is being proposed by consumer group Which? to “maintain trust” in the travel industry as the row over refunds for cancelled holidays and flights escalates.

It was put forward today as the organisation claimed in new research that the UK’s 20 biggest operators and airlines are delaying refunds for cancelled trips or removing refund rights for consumers.

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Up to £7 billion in payments made by customers – many who may also be struggling financially due to the impact of the coronavirus pandemic – are believed to be affected.

Which? warned that consumer confidence in the travel sector could be permanently damaged without “swift and tangible” government action.

The practical measures in the plan include protecting consumers’ legal right to cash refunds, extending Foreign Office travel warnings to a definitive date, establishing a temporary government travel guarantee fund, and ensuring travel insurance terms and conditions are more transparent.

Which? said it recognises the travel industry is under huge strain, and would encourage holidaymakers to rebook if it suits their circumstances – but ministers must first provide clarity about how customer money will be protected in these circumstances.

The government must now work with regulators and the industry to implement the measures to ensure that passengers who are unable to travel due to the coronavirus crisis are not left out of pocket, that the damage caused to the sector so far is not permanent, and that consumer faith in the industry is restored.

Which? Travel editor Rory Boland said: “We have been inundated with messages from desperate travellers, some who are thousands of pounds out of pocket as a result of cancellations and have no idea if or when they’ll see their money again.

“We do not want to see the industry suffer further as a result of this outbreak, but it cannot be on consumers to prop up airlines and travel firms, especially when so many will be in difficult financial situations of their own.

“The government must urgently set out how it will support travel firms and airlines to ensure they can meet their legal obligations to refund customers for cancelled travel plans – and avoid permanent damage to trust and confidence in the travel industry.”

The Which? ten-point plan:

Government and regulator

The statutory 14-day refund period for package holidays should be temporarily extended to a maximum of one month, and all credit notes/vouchers must be insolvency protected.
This will provide industry with additional flexibility to manage its workload and cash flow while also giving consumers confidence that they will get their money back should their provider collapse.

A temporary government Travel Guarantee Fund should be established.
This will provide funding to support travel companies which, as a result of coronavirus cancellations, are unable to fulfil their responsibilities to holidaymakers under the Package Travel and Linked Travel Arrangements regulations.

Airlines must be supported throughout the outbreak and effectively held to account when failing to offer and issue refunds for cancelled flights.
The Government and Civil Aviation Authority should take action where necessary to ensure refunds, both directly to passengers and to travel agents and tour operators, are honoured.

All Foreign Office travel warnings should be extended to a definitive date.
This will ensure that travellers have clarity around refunds, rebooking or claiming on insurance. These dates can be reviewed if needed.

Airlines and holiday providers

All consumers who are currently eligible to receive a refund must be offered a cash refund when their flight or holiday is cancelled.
Valid refund requests must be honoured and repaid within the applicable statutory period, via a simple, clear and easily accessible process.

A credit note/voucher may be offered as an alternative but not sole option when a flight or holiday is cancelled. These vouchers must also be time-limited, with a full refund provided at the end of the term, with terms and conditions clearly and proactively communicated.
This will guarantee that consumers will get their money back should they not want to re-book one of the holidays on offer within the prescribed period.

Insurance providers

Travel insurance terms and conditions should be more clear and transparent, with customers signposted to relevant parts of their insurance policy booklets. This will make it easier for policyholders to know if they are covered and will help customers to find out what they need to know as quickly as possible, providing specific answers to their questions.

Time-limits on making claims should be relaxed.
This will help customers who are struggling to get in touch or communicate with travel companies as a result of the pandemic.

Insurers should extend existing travel insurance policies, where relevant, to ensure the customer remains protected when stranded abroad.
This will help those who cannot get home because of government-issued advice or restrictions on travel imposed by governments (i.e. through no fault of their own).

Insurance providers must work more closely with the travel industry and the government to ensure that all information given to consumers about how and when to claim is clear and consistent.
This will stop people from being passed between providers and ensure they know who to contact when, for example, seeking reimbursement from their provider before turning to their insurer.