The issue was thrown into confusion on Wednesday (13 May) with the emergence of a coronavirus bulletin from government-backed advice service Business Companion, dated 7 May.
The bulletin stated that while the Package Travel Regulations (PTRs) continued to apply, RCNs – which carry protection via Atol legislation – were "another increasingly popular alternative and will be financially protected in the event of future failed travel plans".
This guidance, seen by TTG, was withdrawn and updated on Wednesday afternoon with the word "will" being replaced by "may", while the government department responsible for the PTRs said the regulations applied "unchanged".
However, the Business Companion website nonetheless stresses the Competition and Marketing Authority’s (CMA) stance that "credits, rebooking and rescheduling may be offered as an alternative to a refund, but a refund should still be an option that is just as clearly and easily available". It also points businesses towards Abta’s coronavirus guidance, including its advice on deferred refunds.
Abta has been lobbying the Department for Business, Energy and Industrial Strategy (Beis) for several months to act on a concession from the European Commission allowing member states to relax their interpretations of the EU Package Travel Directive owing to the cash flow implications of the coronavirus crisis and find "flexible solutions".
The association believes that forcing businesses to refund in the absence of cash already paid to suppliers, such as hotels and airlines, would force many travel companies out of business.
"We have sought urgent government help to ensure the rules around refunds are fit for purpose in the current situation and to help Abta provide practical and workable guidance to members and customers," says Abta in its coronavirus advice, adding that in the absence of government intervention, its RCN regime sought to "provide some order to a chaotic situation".
Abta says RCNs, offered and processed in accordance with its guidance, will be protected even in the absence of an explicit concession from Beis. The CAA is understood to be aligned with Abta on this.
The association issued an updated statement on Wednesday afternoon, which read: “The Atol scheme payment policy states deferred bookings for Atol protected holidays – in other words, credit refunds – are financially protected. The package travel regulation rules do not need to be changed for this to be the case.
"Abta absolutely endorses the need for these refund credits to be documented and processed properly, that is why we’ve provided clear guidance to our members on this.”
Aito, meanwhile, cast further light on the genesis of the guidance, telling TTG it received a Business Companion bulletin, dated 23 April, containing the same advice on refunds as the 7 May bulletin from a "third party" shortly after 5.30pm on 5 May. The bulletin carries the Beis logo, and that of the Chartered Trading Standards Institute.
“That such an important message can have been left to Trading Standards to disseminate in the small print of one of its publications, sent to Aito via a third party last week while dated two weeks before, is simply and wholly inexcusable when the entire travel industry has been seeking clarification on the vital topic of RCNs for the past several months," said Aito’s executive director Martyn Sumners.
“It’s pretty unbelievable the travel industry’s key contacts in Trading Standards didn’t think a simple phone call to draw our attention to it would have been useful, to say the least."
Sumners said both Abta and Aito had been supplying the government "endless stats" and other information on how the refunds crisis was affecting their respective memberships, and stressed how "many people" within government were surely now aware of the "desperate need" for ministers to officially sanction RCNs.
“The industry has never asked for the Package Travel Regulations to be changed, just that they be relaxed – as recommended by the European Union, and as actioned by 12 of our European neighbours to assist their travel industries in this nightmare situation we all find ourselves," Sumners continued.
He said it both "saddened and enraged" the association that government had failed to answer "such simple but vital questions over the past two months", yet seemingly – or unknowingly – sanctioned text in a Trading Standards publication "that would have assisted the travel industry considerably in its dealings with increasingly anxious members of the public".
"Our staff have been shouted at by anxious consumers and our members left hanging out to dry by the inaction of government on this front," said Sumners.
“The quote on page one of this Beis-sponsored publication, that ’these unprecedented times have so far shown that pragmatism, communication and trust have important roles to play when the strict application of legislation may not be appropriate’, needs to be carved into the desks of all Beis ministers and to pop up daily on their computer screens as an aide memoire.
“Aito hopes that Beis will remember, going forward, its own words of wisdom about communication and trust having important roles to play.”