The European Commission has issued its clearest endorsement to date of travel organisers and airlines issuing credit notes or vouchers in place of cash refunds to consumers.

The EC issued a series of recommendations on restarting travel and tourism today, including on the issue of credit notes or vouchers offered to passengers as an alternative to reimbursement for cancelled package holidays and flights.

The Commission urged governments to guarantee financial protection against insolvency for the vouchers and consumer organisations to support their use.

The recommendations apply both to refunds under the European Package Travel Directive (PTD), which underpins the UK’s Package Travel Regulations (PTRs), and EU Regulation 261 on air passenger rights.

The EC notes passengers are entitled to a refund within 14 days of cancellation under the PTD and to an airline refund within seven days of a cancelled flight.

But it states: “The numerous cancellations entailed by the Covid-19 pandemic have led to an unsustainable cash-flow and revenue situation for the transport and travel sectors.

“The liquidity problems of organisers are exacerbated by the fact that they have to reimburse the full price of the package to the traveller while they do not themselves always receive reimbursement of prepaid services that form part of the package.

“This can result in an unfair sharing of the burden among operators in the travel eco-system.”

The EC warns: “If organisers or carriers become insolvent, there is a risk that many travellers and passengers would not receive any refund at all.”

It therefore urges that vouchers issued “as an alternative to reimbursement in money” be made “more attractive” to “increase their acceptance by passengers and travellers”.

The EC recommends vouchers be protected against insolvency, be “subject to the passenger’s or traveller’s voluntary acceptance”, have a minimum validity period of 12 months and that carriers and organisers “automatically reimburse the amount of the voucher to the passenger or traveller at the latest 14 days after the end of its validity, if the voucher has not been redeemed”.

It suggests airlines and travel organisers “could consider making vouchers refundable earlier than 12 months after the issuance of the voucher if the traveller requests”.

To promote its recommendations on vouchers, the EC urges: “Consumer and passenger organisations should encourage travellers and passengers to accept, instead of reimbursement in money, vouchers that present the characteristics, and benefit from the insolvency protection, described in this Recommendation.”

The EC also urges “business, consumer and passenger organisations, and . . . national enforcement bodies [to] cooperate towards its implementation”.

In the UK, travel association Abta has pressed the government to confirm insolvency protection for refund credit notes for weeks.

But Which? Travel, the consumer association representing UK travellers, has consistently lobbied against industry demands for the government to relax rules on cash refunds.