£1BN worth of refunds are being 'illegally withheld' by holiday firms

Over £1BILLION worth of refunds are being illegally withheld by package holiday firms, says Which? – with one in five still waiting to receive the money they’re owed

  • Which? said more than £8bn worth of package holidays have been cancelled
  • Around 9.4million people have lost a trip since coronavirus hit the UK 
  • There are suspicions holiday firms simply do not have the cash to make refunds 

Package holiday firms have been accused of illegally withholding £1billion in refunds to families whose holidays were cancelled due to the pandemic.

Around 9.4million people have lost a trip since coronavirus hit the UK – and the figure will rise again with a new lockdown and government ban on foreign holidays.

However, many of the firms involved are delaying making refunds or trying to fob people off with vouchers or the option to re-book, say consumer experts Which?

Package holiday firms have been accused of illegally withholding £1billion in refunds to families whose holidays were cancelled due to the pandemic

Under the Package Travel Regulations 2018, the customer is legally entitled to a full refund within 14 days providing the holiday is cancelled by the operator.

A package holiday is a booking comprising at least two types of travel or travel-related services made through the same source, most commonly flights and accommodation.

People who book flights and accommodation separately do not have the same protection. This is bad news for customers of airlines such as Ryanair, which has refused refunds when it chooses to continue operating flights even when the government has effectively banned travel on them.

Yesterday, the airline revealed that Covid-19 restrictions slashed passenger numbers by 80 per cent in the six months to September 30, pushing it to a loss of £178million.

Controversial boss, Michael O’Leary, confirmed people who have paid for flights through November would not get their money back, saying: ‘If a flight is operating then no, we will not be offering refunds.

Around 9.4million people have lost a trip since coronavirus hit the UK

‘But what customers can avail of is our change facility and we’ve waived the change fee so if they have booking in November they can change it and move it to December or January if needs be. But there won’t be refunds on flights that are operating and travelling.’

Which? said more than £8billion worth of package holidays are estimated to have been cancelled since the beginning of the coronavirus outbreak, with just over £1billion outstanding in refunds.

A survey of more than 7,500 who have had a package holiday cancelled found one in five who have asked for a refund were still waiting for their money at the beginning of October. The average figure was around £1,784.

During the summer, the Competition and Markets Authority (CMA) launched an investigation into package travel companies’ handling of cancellations and refunds.

Subsequently, travel giant Tui agreed to refund all customers by September 30. Subsequently, Virgin Holidays committed to processing refunds for all holidays cancelled up to the end of October by November 20.

There are suspicions that the holiday firms simply do not have the cash to make refunds. In some cases, this is because airlines have been slow to hand back money for cancelled flights.

Which? is calling on the government to outline how it will support the travel industry through the rest of the pandemic, and is urging it to introduce a travel guarantee fund to support package holiday providers that are struggling to fulfil their legal obligations to pay refunds.

Which? ‘s advice to anyone looking to book a future holiday is to use a provider with a good record on refunds. It also suggests people consider booking a package, rather than a flight alone, to ensure they have greater legal protections if they cannot travel because of coronavirus.

Editor of Which? Travel, Rory Boland, said: ‘Since Which? first highlighted the issue of holiday companies delaying or denying refunds for holidays cancelled due to coronavirus, some operators have continued to flout the law and the sums of money being illegally withheld from holidaymakers are staggering.

‘It’s simply unacceptable that some of the UK’s largest operators are still getting away with breaking the law, but without meaningful intervention from the government and the regulators in this space, many people will struggle to get their money back.

‘The CMA must take firm action against any operators that are continuing to drag their feet on refunding holidaymakers, and the government must urgently set out how it will support travel companies in fulfilling their legal obligations to passengers.’

The CMA said: ‘Following our action, thousands of people have received money back for their cancelled package holidays – with refunds totalling over £203million from Virgin Holidays alone.

‘We’ve also written to more than 100 firms setting out their obligations to consumers in relation to holiday cancellations, as well as tackling the likes of Sykes Cottages and Vacation Rentals to make sure people are properly refunded.

‘This is not an issue we’re going to walk away from. We are continuing our investigations into the package holiday sector and will consider taking further action if we find evidence that businesses have breached consumer protection law.’

The travel industry trade body, Abta, said its members have been working hard to process refunds and re-bookings.

However, it admitted: ‘Some customers are still waiting longer than normal as delayed airline refunds remain an ongoing challenge for some travel organisers and travel agents, which, combined with higher volumes of enquiries and less staff to handle them have led to delays in customers receiving refunds.’

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