A short guide to cancelled trips: refunds, rebooking and your rights

Travel operators and airlines have come under fire for offering credit — or nothing at all — rather than refund consumers for bookings rendered unviable due to Covid-19. Yet some argue mass refunds would bankrupt many businesses. Is it better to rebook?

Saturday, May 30, 2020,
By Sarah Barrell
Is it better to refund or rebook, and what are your rights as a consumer?

Is it better to refund or rebook, and what are your rights as a consumer?

Photograph by Getty Images

A long time ago in a reality far, far away — or in other words, early March this year — travel-related hashtags started making the rounds on social media. ‘Postpone don’t cancel’, ‘rebook don’t refund’, ‘defer don’t drop’ were variations on the clarion call from champions of industry, as country by country the world started shutting down, and people began assessing the likelihood of imminent trips being able to go ahead. 

It was a sentiment that, at the time, had some traction with consumers keen to support businesses and communities at their chosen destinations (and even keener to keep the faith that a holiday was still within their grasp). But as borders closed and airlines began bulk-cancelling flights, it became apparent that coronavirus’s impact would be more severe and long-lasting than originally thought, and so people started seeking refunds in earnest. But it quickly became clear that those refunds were not being made available, with claims forms frequently difficult to source and customer service numbers often unobtainable. In fact, some passengers stuck abroad and urgently needing to return home soon found that even rebooking was an option that came at extortionate price.

Fast forward three months, and Flybe, Virgin Australia and Avianca have, variously, gone into administration or filed for bankruptcy, while many other carriers find themselves on the brink of collapse. The likes of British Airways, Norwegian, Ryanair and Virgin Atlantic are making thousands redundant and British Airways is threatening to withdraw services from Gatwick airport indefinitely. Tour operators are heading in the same direction, with the notable recent demise of Specialist Leisure Group, owner of travel companies including Shearings, Wallace Arnold Travel, Bay Hotels, Coast and Country, and Country Living.

“Since the UK entered lockdown in March, Which? has heard from thousands of passengers who’ve had their trips cancelled and been left without their money as airlines and holiday operators continue to delay or simply deny them their refunds on a massive scale,” says Rory Boland, editor of Which? Travel. “We know the industry is under an immense amount of pressure as a result of the pandemic, and do not want to see it suffer further. But it cannot be on consumers to prop up airlines and travel firms through this period as companies openly break the law and effectively use customer money as an interest-free loan, especially when so many people waiting for their money will be in difficult financial situations of their own.”

“Consumers are entitled to a refund — it’s the law, which hasn’t changed during Covid-19,” says Kane Pirie, founder of VIVID Travel and managing director of the Right to Refund campaign. “2020 has been brutal [for VIVID Travel], with massive cash outflows, which were only possible with additional finance from me as the main shareholder. Many other owner-managed tour operators have also done the right thing: followed the law and refunded customers. Several larger tour operators could refund but are refusing to do so. Covid-19 will soon be history but nobody forgets being denied access to their own money.”

The companies who get this right will have invested well in their futures. “By taking a personalised approach, we’ve avoided mass cancellations as our well-travelled team has spoken to each client to talk through their options,” says Derek Jones, UK chief executive of DER Touristik, parent company of a number of big tour operators, including Kuoni. A vocal advocate of industry unity rather than refund campaigns, Jones says: “People want a holiday to look forward to and there’s still clearly an appetite for travel. With a compassionate approach, we’ve managed to persuade the majority of our customers to rebook to a future date in 2021; around 60% have moved their trip to next year rather than cancel.”

But are those new bookings safe? “Travel companies are pumping Refund Credit Notes into the market but are they protected by ATOL [Air Travel Organiser's Licence]?” asks Kane Pirie. Predictions of zombie travel companies staggering into 2021 taking bookings, then falling insolvent just as those new bookings or credit notes become redeemable are legion, and the precarious state of the airline industry leaves much on a knife edge. 

“Profits are only made when planes are in the air, so the global groundings have delivered a body blow to the airline sector,” says Paul Charles, CEO of The PC Agency travel consultancy and former Virgin Atlantic communications director. “Some 60% of the global passenger fleet is grounded, and against this backdrop, airlines are desperate to conserve their cash, if they had much cash at all. Customer services teams are overwhelmed due to the sheer volume of enquiries and the lack of resources due to team members being ill or furloughed. It leaves consumers facing a dilemma — demand a refund and risk contributing to the airline going bankrupt — potentially not getting the cash for many weeks, if at all — or take a voucher, sometimes with a bonus of 10% or more as an incentive, and hope the airline survives long enough to provide a flight at a future date. These are truly turbulent times for the industry. Sadly, only the financially fittest will survive.”

With the UK and French governments recently announcing quarantine measures for incoming passengers, rebooking looks like an even less attractive proposition. “Despite this,” says Rory Boland, “the government has yet to step in with any support for the industry.” Which? was among several consumer rights groups to lobby the government’s Competition and Markets Authority to investigate companies breaking law on holiday refunds, a campaign that has seen recent success.

“Which? wants to see the regulator come down strongly on any airlines found to be systemically denying or delaying refunds for cancelled flights and holidays,” says Boland. “And for the government to urgently set out how it will support the industry, allow airlines and holiday operators to refund passengers, and restore trust in the sector.”

Your rights
1.
If an EU airline cancels your trip, you’re entitled to a refund or a rebooking. You don’t have to accept credit or vouchers. Outside the EU, it may depend on the terms and conditions of your carrier or travel agent.
2. Package holidaymakers whose trips are cancelled are currently entitled to a full refund within two weeks.
3. If you cancel your trip due to disclination to travel, it’s not a given that your travel company will refund you. Wait until it cancels the trip, then rebook, or ask for a refund.
4. If your company doesn’t cancel, and the UK Foreign and Commonwealth Office (FCO) is still advising against all but essential travel, if you bought travel insurance before coronavirus became a 'known event' on 13 March 2020 your policy may cover you for cancellation.
5. You may be able to claim money back from purchases made on credit cards via section 75 of the Consumer Credit Act, and even some debit cards via the ‘chargeback’ scheme. Like insurance claims, this is usually only successful if you can prove that your travel provider is refusing to refund, or it’s gone out of business.

The reality
1.
Many companies are pushing customers to accept credit notes. These may have an expiration date that make them impractical, or lack ATOL protection or equivalent, should the company go bust.
2. Package Holiday customers whose trips are cancelled are finding that securing refunds within the stipulated twoweek time frame — or indeed at all — is proving impossible. Potential changes to Package Travel Regulations may see that time further extended and see credit notes and vouchers taking the place of refunds.
3. Determined to travel? With the FCO still advising against all but essential travel at the time of writing, new travel insurance policies are currently hard to come by, and those that cover cancellation and disruption due to the coronavirus are virtually impossible to find.

More information 
gov.uk/foreign-travel-advice
caa.co.uk/atol-protection
abta.com/tips-and-advice
which.co.uk/l/travel

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