07 Apr

ABTA urges Government to act now on holiday refunds to save jobs and protect billions of pounds of taxpayers’ money

Following a week where many national governments across Europe have acted to introduce temporary changes to rules that govern holiday refunds, ABTA – The Travel Association is urging the UK Government to do the same, to stop travel businesses being pushed into bankruptcy and the UK taxpayer picking up an estimated £4.5billion bill for customer refunds.

The UK travel industry employs more than 500,000 people directly and indirectly across the country and government measures to contain the pandemic have brought international and domestic travel to a standstill.

Holiday bookings have dried up, while travel agents and tour operators are being asked to provide cash refunds on a mass scale, within a 14 day period. Many are simply unable to do this as they are still awaiting refunds from airlines and hotels that have closed as a result of the pandemic.
ABTA has asked the Government to implement temporary amendments to regulations to protect both businesses and consumers. Strengthening the regulatory basis and extending the window for refund credit notes, as a short-term alternative to cash refunds, would provide businesses with vital breathing space, whilst ensuring all consumer protections are carried forward. ABTA also sees it is a vital step to support consumer confidence in the industry. 

While the changes would involve a delay for consumers in receiving their money back or booking a replacement holiday arrangement, ABTA argues the alternative scenario is mass travel company failures. The Association highlights that this would result in customers waiting even longer to receive their money, as well as a far worse financial outcome for the Government, which acts as the financial backer for the UK’s main ATOL scheme of holiday protection. 

Mark Tanzer, ABTA Chief Executive, says, “We know the Government has a lot to manage with the current crisis, but its failure to make these temporary changes to refund rules defies logic and is leaving the consumer in no-man’s land. 

“The rules around 14-day refunds were never designed for the mass cancellation of holidays, which we’re now seeing as result of Government measures to contain the pandemic.     
“It’s in nobody’s interests for normally healthy, viable businesses to be pushed into bankruptcy. Hundreds of thousands of jobs are at risk and the UK taxpayer will have to foot the bill for customer refunds if there is an industry-wide collapse of travel businesses.

“It’s important to reiterate, this is about supporting businesses through an entirely unforeseeable and short-term cashflow crunch - customers will not lose their right to a refund, and their money is not at risk.

“The changes we have asked for are reasonable, as has been shown by similar action being taken by governments in other countries.” 

ABTA first called for urgent Government intervention to take action around refunds and other measures several weeks ago. Since then, the Association has held discussions with and written to relevant Government departments and the Prime Minister multiple times. The Government has yet to act.  
Governments throughout Europe, including France, Italy, Belgium, Spain, Germany, The Netherlands and Denmark have already made temporary changes to regulations on refunds, and to provide additional guidance to consumers. 

To assist its call to Government action, ABTA has launched a campaign to encourage colleagues in the travel and tourism industry and anyone who supports the sector to ‘Save Future Travel’.

ABTA is asking supporters to visit www.savefuturetravel.co.uk to email their local MP and highlight the industry’s asks. Supporters are also being urged to contact their local MPs and Government Ministers through social media using #savefuturetravel. 

Notes to editors:

ABTA carried out research with a sample of Members representing a significant market share of our membership, in order to determine the value of consumer prepayments taken by travel organisers as travel restrictions came into force at the beginning of the Covid-19 crisis. We used the responses from that to model the picture for the membership as a whole and determined from that the likely value of those prepayments. This indicated a value in relation to protected packages of around £4.5 bn, the vast majority of which are flight packages and therefore protected by ATOL. If other travel services, including flight only arrangements are factored in, the value increases to between £6bn and £7bn.