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Published on Wednesday, October 7, 2020

Pressure mounts on CAA amid industry anxiety over refund credit notes



Pressure is growing on the Civil Aviation Authority to keep its word and swiftly clarify whether refund credit notes issued after 30 September will have ATOL protection.


As industry anxiety rises amid ongoing cancellations, the CAA yesterday said it should make an announcement next week.


But the remarks, made by ATOL Head of licencing operations Michael Budge during an Elman Wall update, are unlikely to reassure companies which, since 1 October, have been unsure if RCNs still carry ATOL protection.


In July, the CAA belatedly issued guidance stating that RCNs - introduced as a temporary measure to help the industry deal with the tsunami of refund requests - would benefit from ATOL protection up until 30 September 2021 if they were issued between 10 March and 30 September.


It was thought the CAA might provide clarification on RCNs immediately after the latest round of ATOL renewals.


However, since the 30 September cut-off, the CAA has remained silent on any extension. Its reticence to commit has sparked renewed unrest from nervous operators and agents.


Budge yesterday said discussions were being held with trustees of the Air Travel Trust with the CAA hopeful of an announcement next week.


Former ABTA Chairman and Advantage CEO John McEwan described the situation as 'messy' given the uncertainty it has created.


"In my opinion, a good solution would be for the CAA to say it will extend the validity of RCNs issued through to the end of March 2021. This would tie in with ABTA's position," he said. "There would however continue to be the same period of protection for consumers that is currently in place, that is to 30 September 2021."


"I would like to see the CAA reach an alignment with ABTA on this as it is important we get a unified approach."


McEwan said he believed RCNs should cease to be issued beyond 31 March 2021 and a run-off period of six months beyond that date for customer protection would be adequate.


"It's a very busy time at the moment for the CAA, but I would have expected a statement by now to make it clear to the industry what is happening. Let's hope we see something soon."


Sunvil Holidays' Chairman Noel Josephides said he understood the CAA was in a difficult position, but it meant people were effectively operating 'in limbo'.


"They [the CAA] know they need to help, but they are reluctant to do it. Either they want to help us survive or they don't. The feeling in the industry is that the government couldn't care less," he said.


"Nobody can understand how a decision on this couldn't have been taken four weeks ago. The situation hasn't changed. Now in theory we can't issue anything. I think vouchers will be issued which can't be backed legally. It's a risk, but people are desperate."


Josephides welcomed yesterday's remarks by the CAA but said firms were already 'desperate' and needed certainty immediately.


The danger is that operators, in their desperation, may start issuing vouchers that do not safeguard the public.


"When Boris Jonhson said we would be in this for another six months, it froze the market," he said, "Bookings dried up and holidays are being cancelled. Operators are getting desperate so we need clarity on the RCNs." 


Clarity should have been provided prior to the end of September, according to AITO head of commercial Bharat Gadhoke.


"The resounding silence from the CAA helps no one," he said. "It should have been addressed before 30 September as it was becoming more obvious that the travel industry had not regained any lost ground once travel resumed.


"In fact, changes to travel corridors at short notice eroded any confidence consumers had in connection with going on their summer break."


But not everyone is convinced that RCNs are the way forward.


Writing in TravelMole, Travel Counsellors founder David Speakman insisted 'they are not the solution'.


"They've allowed the issue to go unresolved and left companies on the brink of bankruptcy," he wrote. "Consumers should not be providing credit to the travel industry, for this reason RCNs were a mistake.

"The industry must come together to ensure that customer money is protected until their holidays have been delivered. It's fundamental and non-negotiable.

"It's been mooted that RCNs could be a permanent feature of travel refunds, I also understand that the virus can affect the mental capacity of many to think straight."


By TravelMole reporters

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