Abta chief Mark Tanzer appealed today for the government to relax the time limit on refunds for cancelled holidays or step in to finance the payments before “a lot of travel companies fail”.

Tanzer, Abta chief executive, also called on the Civil Aviation Authority (CAA) to state publicly that refund credit notes for Atol bookings are financially protected.

He told MPs on Parliament’s Transport Select Committee: “Businesses which have been running for 20-30 years are on the verge of closing down.

MoreAbta ‘has shown leadership’, says chief executive

Travel industry must do “all we can to preserve customer confidence”

“People are working 18-hour days to try to keep thousands in jobs. I’m very fearful and the recovery won’t be for a long time.”

He warned: “If people lose confidence in refund credit notes and there is a drive for cash you will see a lot of travel companies fail.”

Tanzer told MPs: “The first thing the government should say is ‘We’re standing behind these deferred refunds’.”

“We asked the government to relax the 14-day window [for paying refunds].

“If the government does not want to move the 14-day window – and I understand why it’s difficult – then an alternative option is for it to intervene directly so refunds can be paid, so companies can survive and customers get their money.”

Tanzer explained: “When the government advised against all travel in mid-March that triggered a total shutdown and meant refunds have to be paid.

“One of the things making it very difficult for tour operators to refund customers is that the money hasn’t come back to them from the airlines.”

In the first days of the shutdown, Tanzer said: “We saw all sorts of behaviour from companies. Some said ‘We’re not issuing a refund’. Some issued a partial refund. Some issued vouchers.

“Abta stepped into that to give some order. We recognised our members have to give a refund but we also recognised companies are at risk of failing.

“We issued guidance on the issue of refund credit notes that have an expiry date and are financially protected so customers will still get their money back if a company fails. That was to try to give some confidence.”

He said: “The majority of these bookings are covered by Atol. We had many conversations with the Civil Aviation Authority [CAA] early on and arrived at the conclusion that the refund credit notes are protected by Atol. We want the CAA to come out and say that.”

Tanzer insisted: “We never said refunds are not due because they are. The right to a cash refund is still there. Travellers should talk to their travel company, if they want a refund, about when a refund can be paid.

But he warned: “Our estimate of the prepayments [owed] is £4.5 billion. These numbers are not small. It will knock over a lot of travel companies.”

Journalist Simon Calder told the select committee: “There is controversy in the industry over refund credit notes and some clarity from the government would be welcome.”

But Calder told the MPs: “I’m not convinced of the need for a bailout of airlines. I’m not sure state aid would serve the consumer well.”

He said he had been “frankly appalled” by airlines’ failure to provide cash refunds for cancelled flights, saying: “I’m owed money by a whole range of providers.

And he complained: “There is an awful lot of trading by travel companies that goes on using customers’ cash.”


Webcast: Mark Tanzer speaks to Travel Weekly’s Ian Taylor