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SHOULD TRAVEL COMPANIES BE PROVIDING REFUNDS ON HOLIDAY CANCELLATIONS DUE TO COVID-19?

Danny Callaghan from the Latin American Travel Association (LATA) addresses the topic.

The travel industry was one of the industries to be impacted most rapidly and heavily by the Coronavirus crisis.  Since the FCO advised against all but essential travel worldwide, travel ground to a halt almost overnight with travel companies then scrabbling to repatriate passengers overseas.

Since then, customers are being forced to cancel or postpone their holidays and according to the Package Travel Regulations, travel companies have a duty to provide refunds within a 14-day period. LATA, as well as other travel industry bodies such as ABTA (see ABTA’s Save Future Travel campaign) are asking the UK Government to temporarily amend this regulation. A petition was launched by LATA to address the topic.

Danny Callaghan, clarifies why LATA is backing this initiative and what this means for the customer;

What is LATA asking the government to do?

LATA, in line with many in the travel industry, is asking the UK Government to make some temporary changes to the Package Travel Regulations, the laws that the UK travel trade operate under and which govern amongst other things, customers’ rights.

The Package Travel Regulations (PTRs) require that any company that sells package holidays to consumers issues a refund within 14 days if the holiday can’t go ahead. In normal times, this is entirely reasonable and works with no problems. One of the problems of the PTRs is that they only govern the obligation of the company actually making the sale to the customer, and not other companies in the supply chain.

For example, if a customer buys a holiday from a tour operator, who then purchases airline tickets, accommodation and ground arrangements on behalf of the customer, the airline, hotel and local operator are not obliged to issue refunds within the 14 days, meaning that the tour operator has to front the full refund, and wait for the other parties to refund them.

In normal operation, this is an irritant rather than a problem, because the operator is still trading and will have the cash to support that refund.

The current situation is entirely different. The global travel industry has come to a sudden and complete stop, a situation that nobody had ever envisaged, and which the industry, like all industries, was simply unprepared for.

Tour operators are not only having to give refunds on all upcoming trips, they are also not taking many new bookings to support their cash flow. Because other companies in the supply chain just don’t have the liquidity to allow them to make immediate refunds back to the operators, those operators are faced with a legal obligation to make refunds that they just don’t have the cash to support.

LATA is asking the government to relax those rules temporarily, so that operators have longer to give the refunds in a set period of time, and have the flexibility to delay refunds on aspects of the holiday that they have already paid out on, and are waiting for the cash to return from.

In some instances, the operator may only be offered credit notes or airline vouchers rather than cash, and will never get the money back.

What will happen if the government doesn’t temporarily change the PTRs?

Put simply, many companies will be faced with a stark choice – break the law by not making the required refunds, or fall into bankruptcy.

We would prefer that tour operators are able to stay in business, and have the time and the flexibility to work with customers to reschedule their trip or refund them when practical. If we allow the operators to fail, it will needlessly cost thousands of jobs.

Doesn’t LATA think customers have a right to a refund?

We are very clear that anyone that pays for a holiday should either go on that holiday or get a refund. What we are looking for is some short-term, temporary flexibility, to save businesses, save jobs and, ultimately, save the travel industry.

The simple fact is that if companies have to continue sticking to the PTRs, many of them will go out of business. That doesn’t help the customer, as they will then have to look to schemes such as ATOL to recover their money, which will take months. When Thomas Cook failed, it took many months for those refunds to be issued by ATOL because of the scale of the failure. If we see wholesale failure of the travel industry, it could take years for those refunds to be issued.

Does this mean that the travel industry is not really resilient enough?

No, the travel industry is well run, and employs dedicated, passionate people who love to share amazing experiences with customers. It is a well-regulated industry and is generally successful and resilient.

However, this is a completely unique situation. The industry has been through highs and lows over the years, as has the rest of the economy, but this complete standstill is something that is so far outside of the norm that there is no set of rules or historical precedent to apply.

There are many perfectly viable companies, that employ many thousands of people, that are suddenly on the brink.

If the situation is that precarious, surely I need to get my refund as soon as possible to protect myself?

Thanks to the PTRs, your money is protected. To legally sell a package holiday in the UK, it must be protected, so ultimately your money is safe. However, the paradox is that if your refund request contributes to a company going out of business, you will have to apply to ATOL for a refund, and that could take a long time to come.

Would it help if I asked my credit card company for a refund instead?

No, this doesn’t help because the credit card company will just deduct the money straight out of the tour operator’s bank account, leading to exactly the same problems.

There must be a better alternative to changing the refund regulations?

There is no simple answer to the current situation, and no way to ensure that everyone’s needs are deal with here and now. The best we can hope for is to make the best of a bad situation, minimising the negative impact (or sharing it, if you like) so that we can come through this crisis, so that travel companies, airlines, hotels, etc. are still in business and that we can all enjoy a well-deserved holiday once the COVID-19 problems have been overcome.

What can I do to help?

The best thing you can do is reschedule your holiday if you are in a position to do so. This allows the operator to just defer your bookings on airlines, hotels and ground arrangements without losing too much money. They are still likely to be out of pocket if they have paid any taxes or things like national park permits, but that is a much smaller problem than large-scale refunds. If you are unable to do so due to your own personal circumstances, you are of course entitled to cancel your holiday.

Our aim is to illustrate the issue at hand so that customers are aware of how the travel industry works and outline why your travel company may not be in a position to provide a refund within the period outlined in the PTRs.

The EU has already provided guidance to the EU Package Travel Directive to this effect and governments in countries including France, Italy, Belgium, Spain, Germany, The Netherlands, Denmark and Greece have already changed their own laws to reflect this guidance.

 

-Ends-

LATA supports ABTA’s Save Future Travel campaign.

Visit https://savefuturetravel.co.uk/ or to sign or view LATA’s petition, visit https://petition.parliament.uk/petitions/305746

Danny Callaghan is the general manager of the Latin American Travel Association (LATA), a membership organisation promoting sustainable travel to Latin America.

www.lata.travel

To arrange an interview with Danny Callaghan or for more information, please email latapr@wearelotus.co.uk

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