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More than £1bn in holiday refunds still outstanding

Emma Lunn
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Emma Lunn

Holiday firms still have hold of more than £1bn of consumers’ cash for holidays cancelled since the beginning of the coronavirus outbreak, according to Which?

More than £8bn worth of package holidays have been cancelled since the beginning of lockdown in March.

Which? found that more than four in 10 cancelled holidays took longer than a month to refund, despite the legal time limit of 14 days.

Worse still, refunds for one in five (21%) holidays where a cash refund was requested were still outstanding at the beginning of October.

Which? surveyed more than 7,500 people who have had a package holiday cancelled as a result of the pandemic. It found the average cancelled holiday cost £1,784.

What are the rules?

Under the Package Travel Regulations 2018, if a package holiday is cancelled by the provider, the customer is legally entitled to a full refund within 14 days.

A package holiday is a booking comprising at least two types of travel or travel-related services made through the same source, most commonly flights and accommodation.

About 9.4 million people are estimated to have had a package holiday cancelled by their operator since the pandemic began in March.

Refund delays

The backlog of refunds for cancellations caused by the coronavirus pandemic meant that the majority of operators struggled to refund within the legal time limit, with customer service lines overwhelmed by travellers trying to contact them to ask about their refunds.

Some package providers reported delays in receiving refunds back from airlines, many of which continue to break the law on refunds.

This has meant package holiday operators have often only been able to process partial refunds for some customers.

But while some companies have managed to get on top of the backlog caused by these delays, several other major providers have continued to leave passengers out of pocket. Which? is still receiving huge numbers of complaints from customers waiting for refunds.

The average amount of time spent contacting package holiday companies about cancelled trips was about 15.5 hours.

For more than four in 10 (43%) of the cancelled holidays reported to Which?, customers said they waited longer than a month to get their money back.

Teletext Holidays has been one of the worst offenders with customers’ emails ignored and some debit card chargebacks disputed.

Confidence in the travel industry

During the summer, the Competition and Markets Authority (CMA) launched an investigation into package travel companies’ handling of cancellations and refunds.

Following pressure from Which? and the CMA, Tui agreed to refund all customers by 30 September.

The regulator also recently confirmed that Virgin Holidays has committed to processing refunds for all holidays cancelled up to the end of October by 20 November.

Nearly four in 10 (37%) people who have had a package holiday cancelled by their provider since the beginning of the outbreak said the experience has had a negative impact on their confidence in the travel industry.

Which? is calling on the government to outline how it will support the travel industry through the rest of the pandemic.

It is urging the government to introduce a travel guarantee fund to support package holiday providers that are struggling to fulfil their legal obligations to refund customers. The consumer group is also calling for the government to conduct a review of passenger protections following the coronavirus outbreak.

Which? says that while the CMA has already secured commitments to process refunds from some companies, it is clear that some firms are not improving their practices of their own volition.

It says the competition regulator must continue to closely monitor operators and secure further undertakings from those that flout the law, to prevent trust in travel being damaged any further.

Which?’s advice to anyone looking to book a future holiday is to consider booking a package over a flight-only booking, to ensure they have greater legal protections if they cannot travel because of coronavirus.

Rory Boland, editor of Which? Travel, said: “Since Which? first highlighted the issue of holiday companies delaying or denying refunds for holidays cancelled due to coronavirus, some operators have continued to flout the law and the sums of money being illegally withheld from holidaymakers are staggering.

“It’s simply unacceptable that some of the UK’s largest operators are still getting away with breaking the law, but without meaningful intervention from the government and the regulators in this space, many people will struggle to get their money back.

“The CMA must take firm action against any operators that are continuing to drag their feet on refunding holidaymakers, and the government must urgently set out how it will support travel companies in fulfilling their legal obligations to passengers.”