//ABTA: Action needed to save travel companies

ABTA: Action needed to save travel companies

ABTA has written to the Prime Minister to urge the Government to take immediate action to prevent the collapse of UK travel companies that will result in tens of thousands of job losses, add significant delays to customer refunds and lead to long-term damage to the UK holiday market.

The UK Government has announced measures to support airlines and airports but they have not acted on urgent calls from tour operators and travel agents who at the same time as seeing their bookings wiped out are faced with having to refund thousands of customers for cancelled holidays, as a result of the coronavirus outbreak.

ABTA chief executive Mark Tanzer said: “We’re running out of time, people are losing their jobs right now and some companies will be facing bankruptcy if nothing is done.  If that happens on a significant scale then the financial protection schemes for holidays will be placed under immense pressure and there will be considerable delays in customers recovering their money. The Government has said they will do “whatever it takes” but we need much quicker and more decisive action.”  

Household-name tour operators and travel agents as well as SMEs up and down the UK are already laying off staff or asking them to take unpaid leave, as well as introducing big salary cuts in a sector where the average pay is already much lower than the national average. 

Following the changes in FCO advice in recent weeks, culminating in a complete travel advisory ban announced this week, thousands of customers are entitled to refunds for their cancelled holidays.  However, most travel businesses have not received money back from their suppliers and many are unable to pay cash refunds immediately.  The travel industry is urgently seeking Government backing for a number of measures to relax the regulations to ensure customer’s money is protected, while giving travel businesses more refund options.   

The industry is also calling for immediate cash injections to business, either as direct Government support for salaries or as underwritten loans, or both.

The European Commission this week relaxed its guidance around the Package Travel Regulations, encouraging customers to accept credit notes that are financially protected, and other European countries are following this lead and changing their regulations.  

ABTA’s key asks:

1. Financial liquidity

The Government needs to take immediate action to: 

  • implement a mechanism through which direct funding to maintain employment can be channelled to employers
  • enable the provision of Government underwritten loans to businesses of all sizes, with the access mechanisms for these loans made clear, and allow immediate deferment of HMRC payments for a period of six months
  • temporarily suspend Air Passenger Duty

2. Temporary changes to the Package Travel Regulations

While we are not seeking to remove the consumer’s right to a refund, we believe that consumers will not see their money any quicker by enforcement of the current regulations. We are asking for the following changes to be implemented to protect both businesses and consumers:  

  • That refund credits should be allowed as an acceptable and enforceable alternative to immediate cash refunds, with all protections carried forward as part of a ‘Refund Credit Note’. 
  • That the 14-day window for refund payments should be extended to a 4-month period.
  • That tour operators should not be responsible for providing refunds if these costs are not covered by the suppliers. Where those suppliers cannot or will not refund, there needs to be an emergency Government consumer hardship fund to fulfil refund payments.