On The Beach cheers airline refund probe to help rebuild battered trust

The online travel agent is calling for all firms to ring-fence customer money to ensure refunds can be paid.

Cockleshell Bay beach in St Kitts (PA Archive)

Holiday firm On The Beach has welcomed investigations into airlines for failing to offer customers flight refunds as it warned that Britain’s travel industry needs to repair its tarnished reputation.

Chief executive Simon Cooper said more regulatory scrutiny is necessary to help rebuild customer confidence in a sector that is battling against ongoing restrictions and uncertainty in the pandemic.

It comes after the Competition and Markets Authority (CMA) revealed last week that it is investigating British Airways and Ryanair over whether they breached consumer laws by not offering refunds for flights that were operating but customers could not take due to the pandemic.

Mr Cooper said it is vital that firms rebuild customer confidence “at a time when it is needed most”, with agents hoping to secure advance bookings for next year.

If the industry does not treat its customers properly it will struggle to rebuild confidence

Simon Cooper, On The Beach

He told the PA news agency: “This industry has not done a good job of refunding customers and have damaged that trust.

“If the industry does not treat its customers properly it will struggle to rebuild confidence.”

The firm holds customer money in a trust account, totalling £24.1 million at the end of March, and pledges to refund customers in cash before it receives money back from airlines.

Its results revealed £11.8 million was owed by airlines as at March 31.

Mr Cooper said other firms should also move to ring-fence customer money.

“It is pleasing to see increased regulatory scrutiny on the travel sector and I would like to see this taken one step further with other travel companies establishing trust accounts, similar to ours, so that all customer monies are ringfenced and can be immediately returned should their holiday be cancelled,” he said.

The comments came as On The Beach revealed that it slumped to a £9.5 million half-year loss after seeing revenues crash by nearly 80% due to international travel restrictions.

The online travel agent said underlying revenues plunged 77% to £12 million in the six months to March 31, from £52.8 million a year earlier, due to cancellations and lower bookings during lockdown.

This saw it swing into the red from underlying pre-tax profits of £2.3 million a year earlier.

The firm stopped selling holidays before September 1 once the traffic light system for international travel was announced in early May due to the potential for disruption and cancellations, instead focusing on future selling seasons.

It said booking volumes for summer 2022 remain low, but are “significantly ahead of normal trading patterns, partially due to the early release of flights for next year by most major airlines”.

Mr Cooper said travel demand is unlikely to recover significantly until at least 2022.

“Whilst this recovery is likely to take some time and the consumer environment will continue to be challenging, the differentiating features of our business model, combined with the actions taken during the pandemic, position us very strongly for successful and sustained growth as we move out of this extended period of disruption,” he said.

The group is hoping to grow market share as rivals suffer from another heavily disrupted peak summer season due to the pandemic.

On The Beach was forced to tap investors for cash last year, raising £65.1 million through a share placing.