Four months after mass cancellations of package holidays began, the government has finally confirmed that passengers accepting a “refund credit note” will be financially protected.
All holiday companies were obliged to cancel overseas package holidays from 18 March onwards. The previous day, the foreign secretary had warned against all but essential travel anywhere abroad, as the coronavirus pandemic spread around the world.
In unprecedented circumstances, many travel firms were unable to meet their obligations under the Package Travel Regulations to make full cash refunds within two weeks of the cancellation.
They were advised by Abta, the travel trade association, to issue “refund credit notes” – vouchers that can be used to book another holiday with the same company at a later date, or redeemed for cash by a certain date.
Many consumers were concerned that the refund credit note was not covered by Atol protection, which ensures a full refund if the travel firm fails before the holiday takes place.
Now the Department for Transport (DfT) has finally confirmed that the refund credit note, if properly drafted, carries the same protection as the original holiday booking.
The Civil Aviation Authority (CAA), which administers the Atol scheme for the DfT, said that refund credit notes issued between 10 March and 30 September this year will be covered until 30 September 2021.
Disappointed holidaymakers will still be entitled to a refund if they prefer.
Paul Smith, consumer director at the CAA, said: “This news provides much-needed clarity for consumers, who should now feel confident that their money is secure if they have chosen to accept a refund credit note for their cancelled Atol-protected booking.”
The transport secretary, Grant Shapps, said: “We want to send a clear message to passengers that they can book their summer holidays with confidence, which is why we’re stepping in to protect refund credit notes issued as a result of Covid-19 cancellations.”
A spokesperson for Abta said: “The move will particularly help tour operators that have not been able to immediately refund customers for cancelled package holidays because they have had to wait for money back from airlines and other suppliers.
“We now need the government to listen to industry calls for tailored support to protect businesses and jobs until its recovery can properly take effect.”
The UK’s largest independent travel agent group, the Advantage Travel Partnership, welcomed what it described as a “long-awaited announcement”.
The chief executive, Julia Lo Bue-Said, said: “Even as the world begins to slowly reopen its doors, travel anywhere will remain an uncertain and complex experience, so it is vital that consumers can start to plan a holiday in the full knowledge they are protected if they cannot travel due to Covid-19 related issues.”
Martin Lewis, founder of MoneySavingExpert.com, said: “This is a key travel intervention we’ve been calling for.
“The fact the government will now effectively underwrite refund credit notes gives a solid bedrock of security for customers willing to take them.
“Of course it’s not right for everyone, many desperately need a refund. My hope is this more solid halfway house for some will enable firms to more swiftly pay out full refunds for others.
“The pandemic has been devastating for the travel industry and travellers.”