Tour firms cleared on cancellation fees

There was a rare ray of good news for Britain's beleaguered travel companies yesterday when the competition watchdog ruled they had not been imposing over-zealous cancellation charges.

The Office of Fair Trading, which has spent the past two years investigating the matter, said the cancellation charges levied by the big four tour operators from 1998 to 2001 were "not shown to be unfair".

The watchdog said: "The income generated from cancellation charges in the period examined does not appear disproportionate to the overall losses the operators incurred from cancelled holidays and flights." However, the OFT promised to take action in the future against any cancellation charges it deemed to be unfair.

The investigation centred on charges imposed by Airtours – since re-christened MyTravel – First Choice, Thomas Cook and Thomson Holidays at various times between winter 1998/1999 and winter 2000/2001. The OFT said the charges imposed on holidaymakers "appear to represent no more than a genuine estimate of the companies' losses overall".

The inquiry also found that some customers were unaware of the rules often imposed by holiday companies, which can involve losing deposits or incurring cancellation charges if a holiday booking is cancelled.

John Vickers, the OFT chairman, urged consumers to be more vigilant in reading the small print. "In their quest for holidays that offer the best value for money, consumers should be sure to understand the implications of cancelling along with other elements of the deals on offer."

The holiday companies welcomed the ruling. Chris Mottershead, managing director of TUI UK, which owns Thomson, said: "The uncertainty caused by this investigation, has been a distraction."