Abta chief Mark Tanzer has urged the government to see sense, grasp the fact that many travel firms are already sidestepping their refund obligations under the Package Travel Regulations (PTRs) – and swiftly amend the rules to save businesses.
The association is urging the government to allow travel sellers to offer temporary credit notes in lieu of refunds to guard against a slew of failures as businesses run out of cash.
Tanzer told TTG’s virtual Keep Your Business Alive seminar on Thursday (9 April) the horse had already bolted: "The fact is, whether they like it or not, companies are issuing deferred refunds in credit notes so in a way it’s [about] recognising the fact of the situation," he said.
Abta’s proposal "maintains the principles" of the PTRs, the UK’s interpretation of the EU Package Travel Directive, but gives businesses longer to pay, said Tanzer.
However, he said the government department responsible for the PTRs had so far proved unwilling to "move away unilaterally" from the European legislation.
Kemp Little partner Farina Azam said travel companies "will fail" if they are forced to give out refunds in 14 days, or even within a month, under the PTRs for trips cancelled as a result of Covid-19.
"The message isn’t that companies aren’t going to give a refund," said Azam. "It’s that they can’t refund within 14 days. There seems to be this feeling [from consumers] that travel companies are holding onto their money. Maybe there needs to be more of a message that it’s because these companies don’t have the money – communication is key when talking to customers about why they are having to wait for refunds."
Abta is campaigning for the law to be temporarily amended to allow travel sellers to issue protected credit notes instead of immediate refunds, which can be exchanged at a later date for a full refund. Several European countries have relaxed their regimes to allow this following guidance from the European Commission, but the UK government is yet to move on the issue.
“Whatever the regulations were designed for, they weren’t designed for this situation," said Tanzer, who stressed consumers would likely be in an even worse position if travel companies were allowed to fail.
"By the time people put in claims to Atol or Abta, it will take just as long as deferred credit arrangements," he said.
"The CAA is still dealing with claims from Thomas Cook in September. If you have a large-scale wipeout or number of failures in the travel sector, it’s going to take consumers a long time to get their money back through that route.
"It’s much better we keep companies alive in the meantime, ready for when the recovery comes."
Azam said while she understood Abta’s objectives, from a legal perspective, nothing had changed. "As a lawyer, we are sat back to some extent watching companies not comply with the regulation. I think all you can do is advise on what the legal position is. I understand the commercial side of it, but ultimately, the law is what the law is.”
Tanzer added that despite the government’s failure to act so far, the next objective was to tackle the issue of different firms being able to make cash refunds at different dates further down the line, and how long credit notes are protected under each company’s bonding arrangements. "Some people might need until September or January," he said. "The important thing is either the Atol scheme or Abta bond underpins this."
Abta is working to a preliminary 31 July date, but is hoping to eventually push this back to 31 March 2021 as more travel companies renew their bonding arrangements, with the process having already been brought into line with the CAA’s decision to extend the end of March spring Atol renewal window by a month.
"As the bond renewals are done, we will be able to extend that [31 July] to March next year so people will have a bond in place so they can go to the customer and say your refund credit is protected."
Phil Nuttall, managing director of The Travel Village Group, who also took part in the panel discussion, said transparency was agents’ greatest asset during unprecedented events such as the Covid-19 pandemic.
“We have been working hard with the customers," he said. "It’s about having that emotional relationship with the customers, talking to them and explaining the situation.
"Actually, we have been doing really well in getting customers to rebook for 2021 – that’s worked really well for us.”