It is clear that the Covid-19 pandemic is due to cause disruption for some time to come, especially in relation to travel abroad. The Foreign and Commonwealth Office (“FCO”) has updated its travel advice to reflect this and is now advising British people against all non-essential travel worldwide for an indefinite period. This creates confusion and uncertainty for both travellers and holiday providers alike, as it is unclear how far into the future it applies. This blog post provides an update to our previous article.

Cash refunds, refund credit notes and vouchers

Under the Package Travel and Linked Travel Arrangements Regulations 2018 (“the Regulations”), the starting point is that travellers are entitled to a refund within 14 days for any payments made for a package holiday if the holiday is cancelled by either the holiday provider or the traveller. For further information on cancellation rights under the Regulations click here.

Due to Covid-19, huge numbers of holidays have been cancelled at once, which has the potential to create cash flow issues for holiday providers due to the sheer volume of requests for refunds. Some holiday providers are therefore issuing Refund Credit Notes (“RCN”) or a holiday voucher in the first instance to give travellers some flexibility when re-booking. There is, however, no obligation to accept one of these alternatives.

By way of example, Ryanair, who initially told travellers they would be issuing refunds, has instead issued holiday vouchers to be used on a future Ryanair flight. Ryanair has told travellers who do not want to utilise the holiday voucher that they can reapply for a refund and the request will be placed in a queue until the Covid-19 emergency has passed.

Similarly, TUI has confirmed holidays are now cancelled up until 11 June 2020 and is issuing RCNs for travellers, which can be used to book another trip taking place before the end of October 2021. For package holiday customers, TUI is also providing an additional credit note worth up to 20 per cent of a customer’s booking to encourage the rebooking of holidays. However, if travellers want a cash refund, TUI is dealing with requests but has warned travellers that call centres will be very busy. As with many travel companies in the changing environment, TUI provides regular updates through its website.

Additionally, some organisations such as ABTA / ATOL are encouraging travellers to accept the vouchers if possible, because the effect on the industry of issuing cash refunds may very well be extremely substantial.

Refund credit notes

It is important to distinguish between a RCN and a holiday voucher, as they provide different legal rights and protection.

A RCN entitles travellers to rebook a holiday at a future date or receive a cash refund at the expiry date of the note. It also retains the financial protection under ATOL / ABTA schemes if this was included in the original booking. This means that, should the holiday provider become insolvent, the traveller will be financially protected and will be able to claim the full amount paid for the holiday through ATOL / ABTA.

RCNs should include the following:

• An expiry date, which is the date until which the traveller’s money is protected.
• The value of the RCN which must be equal in value to the amount the traveller paid for the original booking.
• The original booking details and reference.

Travellers should retain all previous booking documentation, including booking confirmations, ATOL / ABTA certificates where appropriate and proofs of payment, when accepting a RCN.

Holiday vouchers

In contrast, if the original booking did not include ATOL / ABTA protection, a holiday voucher may be issued.  It is important that, if the original booking was not protected by ATOL / ABTA, the holiday voucher is likewise not financially protected, which leaves travellers at risk of losing the money they paid for the holiday should the travel provider collapse.

Other avenues to consider

Due to the volumes of queries, some travellers have been unable to get in touch with their travel provider on the telephone or through online chat systems.

In such scenarios, travellers may wish to check the length of time they have to claim a refund from their travel provider. This is because some travel providers allow at least 12 months to make a claim for a refund. It is therefore advisable to check the travel provider’s contract terms and conditions to see whether this applies to the holiday. This may provide temporary reassurance to travellers until they can speak directly to their travel provider to request a refund.

Future proposals

The European Commission (“EC”) has already acknowledged the scale of the challenge facing the European travel industry in light of the COVID‐19 pandemic. The EC has subsequently issued guidance intended to provide some flexibility around the implementation of the Regulations, including encouraging travellers to accept RCNs which can be used for a cash refund at a later date or used towards a new booking.

So far, several EU member states including France, Belgium, Denmark and Italy, have relaxed the refund rules in their local legislation. In France, for example, holiday providers must propose alternative holidays of an equivalent standard and a RCN valid for 18 months, which, if not used in full by the end of that period, is reimbursed by way of cash refund.

In the UK, the Civil Aviation Authority and ABTA / ATOL have issued guidance on the application of the Regulations, reflecting the EC’s guidance and supporting the RCN concept. However, no laws have yet been formally changed by the government.  It therefore remains to be seen whether the UK adopts a similar approach to the above EU member states in regards to the Regulations.

To discuss any problems you are experiencing with cancelled holidays, please contact our experienced dispute resolution & commercial litigation solicitors on 01202 786340 or email online.enquiries@la-law.com.