MPs call for stronger consumer protection on holiday refunds

‘Passenger confidence, dented by unnecessarily difficult refund processes, must be rebuilt,’ says transport committee chair

Havana holiday? Cuba is one of many destinations for which disappointed travellers are seeking refunds (Simon Calder)

“We were due to fly to Cuba on 20 May. Obviously, due to the pandemic our holiday was cancelled. We have been offered just £300 of the £1,600 it cost.”

The experience of Mark Hibbs is similar to hundreds of other readers who have contacted The Independent after their travel plans were wrecked by the coronavirus pandemic.

While the Package Travel Regulations make it clear that full cash refunds should be paid within two weeks of cancellation, many companies say they cannot meet this deadline.

Virgin Holidays is telling customers: “With our teams working from home, and reduced availability and infrastructure, working through refunds is taking longer than usual.

“All refunds will be paid within a maximum of 120 days.”

That is over than eight times longer than the law requires.

Ryanair has warned that flight refunds will take months rather than the seven days stipulated under EU air passenger rights rules.

Many airlines are refusing to pay cash refunds as the law requires, instead providing only vouchers for future travel.

Now MPs are demanding government action to strengthen consumer protection.

A new Transport Select Committee report, “The impact of the coronavirus pandemic on the aviation sector”, demands a “swift review” of the powers of the Civil Aviation Authority (CAA).

The MPs say: “We note the CAA’s concerns that the exercise of its current powers in relation to refunds can be difficult and take too long.

“They are also unable to impose financial penalties on operators who do not meet their obligations, unlike other regulators in the transport sector.”

The Conservative chair of the committee, Huw Merriman, said: “Passenger confidence in airlines and travel operators, dented by unnecessarily difficult refund processes, must be rebuilt.

“We recommend the government considers whether new protections for passengers should be introduced ahead of future pandemics or other extraordinary circumstances.”

The MPs also question why the UK did not follow other European countries in imposing more realistic deadlines for refunds.

The report says: “We have some sympathy with the view that the legal time limits for refunds should have been extended in the current circumstances, as occurred in some EU countries.

“In responding to this report, the department should clarify why an extension to the legal deadlines for issuing refunds was not implemented in the UK.”

The committee also asked the government to provide reassurance to passengers by setting out clearly the circumstances under which a Refund Credit Note or a voucher issued by an airline is protected by the Atol scheme”. Atol is a financial protection scheme operated by the Civil Aviation Authority.

Refund Credit Notes are effectively “super vouchers” that are exchangeable for cash after a certain date.

Mark Tanzer, chief executive of Abta, the travel trade association, was one of the witnesses. He said: “Abta has been calling for this all along, and we look forward to the CAA giving a statement to make it abundantly clear that Refund Credit Notes evidence the financial protection of refunds that relate to package holidays under the Atol scheme.”

Simon Calder was called as a witness from The Independent to give evidence to the Transport Select Committee’s enquiry on aviation.