ABTA acts to calm industry fears on refunds

ABTA has issued guidance to members to ensure that where they’re offering credits to customers instead of alternative holidays or cash refunds their money continues to be ATOL-protected.

The travel association has held urgent talks with the Government asking it to relax the Package Travel Regulations and allow travel companies more time to refund customers for cancelled bookings – and it has written again today to warn ministers that if they don’t act, it could have ‘catastrophic’ consequences.

While the Government has yet to respond, sources close to the talks expect a decision to be made this week, and it could be announced as early as today.

In the meantime, ABTA is advising members that where they’re unable to issue cash refunds to clients within the 14-day period required under the terms of the Package Travel Regulations, they offer ‘refund credits’ that can be used to rebook or cashed in at a later date.

However, some agents – and customers – have expressed doubts that the credits won’t be ATOL-protected and they’re concerned that some ABTA members are telling customers that the Package Travel Regulations have already been changed to allow them to deny cash refunds and issue credit or vouchers, which, they say, must be used to rebook within a fixed period of time.

An ABTA spokesman said the travel association’s guidance is clear that while customers are still entitled to cash refunds, where companies offer credit instead, this will be ATOL or ABTA protected.

"A Refund Credit Note will have the financial protection of the original booking, and is for a fixed period of time, so that at the end of this time the customer will have the option to either get another holiday or a cash refund," he said.

"The use of Refund Credit Notes will help customers to get another holiday or a cash refund and they will help travel businesses, many of whom have not received money back from airlines and hotels, to keep trading. 

"They will help to prevent the worst possible scenario of a customer’s  travel provider going out of business and having to wait many months for a refund."

While the Civil Aviation Authority has not confirmed that refund credits will be ATOL-protected, ABTA is pointing to  section 4.2 of the Air Travel Trust policy, which states: "The ATT may make a payment to a consumer who was promised, but did not receive, a full or partial refund from the failed ATOL holder (for example in accordance with the terms of the failed ATOL holder’s cancellation policy) prior to its failure.   

"In these circumstances the ATT may make a payment to a consumer subject to the consumer providing:

1.  satisfactory evidence to show that a refund is due;
2. satisfactory confirmation that the sum remains outstanding; and
3. a completed Outstanding Refund Statutory Declaration Form.

"ABTA’s position is the same for non ATOL packages protected by ABTA Bonding. "This is about the Refund Credit Note being evidence of the refund due. The refund itself is protected," added the spokesperson.

However, members should note that the Civil Aviation Authority guidance is clear that vouchers ‘sold’ by travel companies are not ATOL-protected.