Government will protect holiday ‘reimbursement assets’ – Which one? News


Update – October 23, 2020 – The Civil Aviation Authority has extended refund credit note protection for canceled holidays through December 31, 2020. The CAA, which operates the Atol scheme, says vouchers must be exchanged for a new reservation or refunded before September 30, 2021 .

Holidaymakers who accept refund credit notes (RCNs) issued for packages canceled up to September 30, 2020 will be reimbursed if the travel company collapses later, the government has confirmed.

Transport Secretary Grant Shapps said the government was stepping in to protect RCNs issued by travel companies for millions of canceled holidays due to the coronavirus pandemic.

This means that if a travel agency goes bankrupt, those left with credit scores will be reimbursed under the travel industry’s Atol scheme, which is run by the Civil Aviation Authority (CAA) and supported by the government.

Since the start of the crisis, which one? has asked the government to confirm whether RCNs are financially secured, but so far have refused to say one way or the other, forcing us to warn holidaymakers against accepting them.

But confirming that credit notes have the same financial protection as package holidays removes the risk that customers will accept a credit note, if they consider it the best option for them.

Find more unbiased travel and coronavirus advice, award-winning investigations, plus legal advice on holiday refunds and canceled flights with Which? Travel

Refund credit notes should not be imposed on customers

If you have already accepted or plan to accept an RCN issued from March 10 to September 30 for a package holiday including flights, this is now covered by the Atol scheme until September 30, 2021. Flights sold separately do not are not protected.

However, RCNs cannot be imposed on holidaymakers. Under the terms of the Package Travel Regulations 2018, you are still entitled to a cash refund within 14 days of cancellation and credit notes should not be automatically sent to customers requesting cash as a policy to delay payments.

The CAA says customers are ‘is entitled to a cash refund and must be offered this option at the same time as a refund credit or rebooking’.

He added: “We have contacted the Atol holders to inform them of their responsibilities.”

A customer has the right to exchange a credit note for cash, which they must do by September 30, 2021, unless it is used to make a new booking. This should be clearly stated on the credit note itself.

Advantages and Disadvantages of Refund Credit Notes

Consumers can now be sure that their money is protected if they decide to support their tour operator by accepting an RCN, only to have it go bankrupt later.

Some tour operators even offer up to 25% more than the original cost of the booking to entice vacationers to accept credit notes instead of cash. However, if a travel agency goes bankrupt before you book, you will only get back the amount you paid.

Travel association Abta says credit scores give businesses some breathing room while protecting consumers’ money. If forced to issue immediate cash refunds, Abta says some businesses will collapse and as a result customers will face a long wait for CAA refunds.

However, an RCN limits your ability to shop when you’re ready to book another stay, albeit temporarily. Although you have the right to exchange the credit note for cash at any time, you could miss out on a better deal with another travel agency while waiting for your refund.

Which? found that two of the biggest tour operators, Jet2holidays and Tui, have announced price increases for the 2021 summer holidays far beyond any incentive to change bookings.

What should a refund credit note look like?

You should always ensure that what you are offered is an RCN that retains the financial protection of your original reservation.

The CAA advises that all RCNs should include your original booking details and reference number and, most importantly, the travel agency’s Atol expiry date. It must be used to book another stay or redeemed for cash by September 30, 2021, otherwise it will not be protected.

The credit note should be equal to the amount you paid for your holiday minus any refund you have already received. It should not include any incentive for rebooking, which should be documented separately as it is not protected.

Refund credit notes are not transferable to another person and this should be clearly stated on the credit note itself, the CAA says. Where travel agencies allow customers to pass credit notes to friends or family, the CAA says they are “likely” to still be covered by the Atol program, but if a travel agency does bankruptcy, she should fully investigate the ownership of the credit notes, which could delay repayment.

Flight-only bookings are not protected

Only credits issued for flight-based packages are covered by the Atol scheme. Vouchers issued for flights sold separately or issued directly by the airlines are not.

It’s because the tour operators are required to contribute £2.50 for each package holiday customer to the Air Travel Trust Fund and it is this money that is used by the CAA to reimburse or repatriate holidaymakers when a company does bankruptcy. The fund, which was nearly wiped out by the collapse of Thomas Cook last year, is guaranteed by the government.

However, there is no similar regime to protect passengers purchasing scheduled flights, whether purchased directly from an airline or from an agent.


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