The industry has long been calling for explicit clarification from government on the protection offered to RCNs for holidays cancelled as a result of Covid-19, but it has not been forthcoming. 

Today (18 July), the DfT said in a statement that the government’s “move to protect refund credit notes” would ensure passengers who choose them are covered for cancellations as a result of coronavirus, even if their travel provider collapses.

It is hoped this will boost consumer trust in the aviation and travel sector.

Transport secretary Grant Shapps said: “We want to send a clear message to passengers that they can book their summer holidays with confidence, which is why we’re stepping in to protect refund credit notes issued as a result of Covid-19 cancellations. 

“This is not only good news for anyone looking to get away for a break in the sun, but also for the aviation and travel sector which has been hit hard by the pandemic.” 

Mark Tanzer, chief executive of Abta, which has long been calling for such clarification, welcomed the announcement, with a spokesperson for the association adding: “The move will particularly help tour operators that have not been able to immediately refund customers for cancelled package holidays because they have had to wait for money back from airlines and other suppliers.

“We now need the government to listen to industry calls for tailored support to protect businesses and jobs until its recovery can properly take effect.”
 
The CAA clarified RCNs would benefit from Atol protection up until 30 September 2021 if they have been issued between 10 March 2020 and 30 September 2020 for an Atol-protected booking that has been cancelled due to Covid-19.
 
It said while offering consumers a refund credit note is “acceptable”, travel companies must offer a cash refund at the same time. If the consumer chooses a refund credit note, they should have the option to convert it to a cash refund at any point and must do so before 30 September 2021. 
 
Paul Smith, consumer director at the UK Civil Aviation Authority, said: “This news provides much-needed clarity for consumers, who should now feel confident that their money is secure if they have chosen to accept a refund credit note for their cancelled Atol-protected booking.

“We have contacted Atol holders to advise them of their responsibilities.”

Martin Lewis, founder of MoneySavingExpert.com, added: “This is a key travel intervention we’ve been calling for. It’s far from a cure-all, but Atol is a statutory scheme and the fact the government will now effectively underwrite its refund credit notes gives a solid bedrock of security for customers willing to take them.”