In July 2020, the Civil Aviation Authority (CAA) announced that passengers who accept refund credit notes for cancelled ATOL protected holidays would be financially protected if the firm were to go bust.

The protection applied to those notes issued between 10 March 2020 and 19 December 2021.

But now the CAA has said that if a travel company goes bust after 30 September 2022, travellers with refund credit notes will not be covered by the ATOL scheme, meaning they risk losing their money.

In total, £85m remains unspent on these refund credit notes and as such, the CAA is urging people to redeem them as soon as possible by either:

• Booking a holiday using the refund credit note. If it’s a flight inclusive package holiday booking, the trip will be ATOL protected.
• Requesting a refund. This can be made from the travel company.

Michael Budge, head of ATOL at the UK CAA, said: “Millions of holidaymakers have missed out on travel over the past two years, with many being offered refund credit notes during the pandemic. As demand for travel continues to grow again, we want to make sure consumers are making the most of the financial protection available to them.

“If you have a refund credit note, make an ATOL protected booking or request a refund well before 30 September 2022 to avoid putting your money at risk.”

ATOL is a protection scheme afforded to holidaymakers with flight-based bookings which refunds, repatriates and reimburses travellers if the company fails.

Under the terms of the Package Travel Regulations 2018, if a holiday is cancelled, holidaymakers have the right to a cash refund within 14 days. The regulations state that refund credit notes shouldn’t be automatically sent to customers requesting cash as a strategy to delay payments.

But over the course of the pandemic, holiday companies were trying to persuade customers to accept refund credit notes for cancelled trips in a bid to preserve cash. But the problem is that notes become worthless if the company issuing them later fell into administration.