No matter what you’ve been told by your travel agent or tour operator, if your holiday has been cancelled due to the coronavirus pandemic, you’re legally entitled to a cash refund within 14 days. No ifs, no buts.
The law has not been changed, as some travel companies are claiming, you do not have to accept a voucher instead, and if they point you towards ABTA’s new guidance that says it’s okay to receive a Refund Credit Note rather than cash, remember that you are entitled to refuse and insist on good old English pounds instead.
So why are hundreds of travel companies, including otherwise reputable outfits like TUI and many others, blatantly breaking the law and refusing to give us our money back within 14 days?
The simple answer is that many of them don’t actually have enough money to refund all the tens of thousands of cancelled holidays.
Why ever not?
For several reasons, actually.
First of all, some airlines are dragging their feet in refunding both tour operators and travel agents. Funnily enough, they’ve been much faster refunding customers who have booked direct than refunding their travel industry partners. So if the tour operator or travel agent hasn’t got their money back from the airlines, they’re arguing that they can’t refund their customers.
Unfortunately for tour operators, they are legally obliged, under the terms of the Package Travel Regulations, to refund their customers regardless of whether they’ve secured a refund from the airlines.
However, many travel companies, including some big household names, are genuinely fighting for their own survival right now. This is because typically a tour operator doesn’t make any money in the winter, in fact many of them make huge losses – and the bigger the company, the more money they lose. Even the most successful tour operators only make a profit in the summer, with July and August being by far the most profitable months.
Let’s look at TUI, Europe’s biggest holiday company, as an example. During the first three months of 2020 it made a whopping €78 million pre-tax loss. That doesn’t mean it’s a rubbish company because prior to the coronavirus it was on course to make an annual profit of €850 million to €1.05 billion, but this just goes to show how heavily dependent tour operators are on the summer season.
So no summer holidays = no profits for the majority of them.
As it’s looking highly likely that the entire summer season will be cancelled this year, some tour operators are unlikely to make it through to next year. They simply won’t be able to afford to pay their staff, rents and other fixed costs without the profits they expected to make in the summer. In other words, they need your money now to pay wages, rents and other fixed costs until the bookings start flooding back in.
Even those companies that can afford to give you your money back say they can’t do so immediately because of the sheer volume of refunds they’re having to process. Also bear in mind that many have staff working from home, which means communication is taking longer than usual. Many travel companies have taken advantage of the Government’s Job Retention Scheme and furloughed the majority of their staff so that 80% of their wages will be covered by the Treasury until the end of June. Under the terms of the scheme, staff aren’t allowed to work, even to process refunds.
Some companies are telling customers they can’t refund holidays because they’ve already used their money to pay for their hotel and flight, but this article shows that this might be a somewhat bogus argument.
Another reason travel companies aren’t issuing cash refunds, even when they might be in a position to do so, is that the travel trade association ABTA has more or less given them permission not to do so.
It’s issued new guidance to its members, which includes the vast majority of the biggest tour operators, telling them that it’s okay to issue Refund Credit Notes instead. These are a sort of IOU with a promise to pay any time up to March 2021.
ABTA still says that where customers insist on cash refunds these should be forthcoming, but instead many companies have taken the guidance as permission to avoid issuing any immediate refunds.
Does this mean that it’s okay for holiday companies to refuse refunds?
No, it doesn’t. ABTA is a trade association, not a governing body and travel companies still have to abide by the law, which hasn’t changed.
That said, you can’t get blood out of a stone and if the tour operator hasn’t got cash in the bank to refund you, well, they’re not going to refund you.
So what should you do if your holiday company is refusing to refund you?
Fortunately, you have several options and this article explains how to go about getting your money back, but before you do anything, it’s important to check exactly who has your money and who to pursue for a refund, as explained here.
It’s worth noting that not all travel companies are refusing refunds and the consumer champion Which? has found numerous examples of firms that are giving customers their money back.
Here’s a list of those that it’s been told of so far:
Adventure Creators (Pyrenees specialists)
Journey Latin America
Much Better Adventures
Have you been refused a cash refund by your holiday company, or do you want to give a shout out to a company that’s given good service? Let us know, we’d love to hear from you!