Abta has demanded the government suspend the travel industry’s refund rules or face “catastrophic damage to the UK travel industry, and widespread consumer detriment”.
The travel industry body said that while other European countries have all changed EU refund rules, the UK government’s lack of action will send many good travel businesses over the edge.
Hundreds of thousands of holidays have had to be cancelled in recent weeks but Abta said tour operators do not have the money to refund customers within the existing 14-day time period.
In recent days the Guardian has been inundated by holidaymakers complaining that they can’t get a refund from their tour operator after their trip was cancelled. Some have spent in excess of £10,000 but instead of a refund they are only being offered an unwanted change of dates.
Abta’s chief executive, Mark Tanzer, has called on the government to allow firms four months to process payments.
“The global pandemic has put enormous financial strain on tour operators and travel agents on a scale that is unmanageable in the short term. These businesses are themselves waiting for refunds from hotels and airlines and, without this money, they simply do not have the cash to provide refunds to customers. We want to avoid the scenario of normally successful travel businesses employing tens of thousands of people facing bankruptcy.
“We are proposing some simple, temporary changes to regulations to buy more time for companies to keep trading, while ensuring customer rights are protected. Many European countries, including France, Belgium, Denmark and Italy, have already announced similar regulatory changes to preserve their travel industries and protect customers,” he said.
He also called on the government to take strong enforcement action against the airlines that have flouted the law by withholding refunds following the cancellation of flights.
A widespread failure among travel firms would leave affected passengers having to apply to the Atol compensation scheme, which is still recovering from Thomas Cook’s collapse.
The National Audit Office warned earlier this month that the government would have to pick up the bill for any future collapses. More than £480m was paid out to repatriate and refund holidaymakers hit by the Thomas Cook collapse.
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