£4.7bn worth of pandemic cancellation vouchers were issued during the chaos of Covid. Now issuers and industry regulators are calling time
Holidaymakers have been given official notice to use up millions of pounds’ worth of unspent credit notes, issued in the face of pandemic-related cancellations, or face losing their money.
The vouchers were issued by Atol-protected travel companies as an alternative to cash refunds during the Covid crisis, when swathes of travel plans were being cancelled at short notice.
The notes, which were designed to be used against new holidays, were underwritten by the Atol insurance scheme in case the companies issuing the vouchers went bust as a result of the extreme circumstances – a scenario that could have left millions of customers significantly out of pocket.
But now, with the peak of the crisis seemingly over, the Civil Aviation Authority (CAA), the regulatory body that runs the Atol scheme, has announced that travel firms will no longer be able to issue such vouchers after 20 December this year.
In a highly controversial move, credit notes – rather than prompt cash refunds – started to be issued to UK holidaymakers in March last year as the first lockdown was announced, in an effort to stop companies from collapsing under the weight of huge numbers of refunds being processed simultaneously.
Travellers, fearing industry bankruptcies, were horrified that they weren’t getting their money back despite the events that had forced the cancellation of their holidays being outside their control – and, in the first months of the pandemic at least, unforeseen.
By July last year, the regulator had little choice but to offer such reassurance. Men 18 months after the initial lockdown, and with subsequent national and international restrictions having been introduced and then relaxed – including the latest announcements by countries such as Austria – £131.7m worth of credit notes still haven’t been redeemed.
Etter 30 september 2022, the Atol scheme will stop picking up the bill on existing vouchers if the issuing company goes bankrupt.
Michael Budge, head of Atol, sa: “With over £130m of Atol refund credit notes yet to be redeemed, and international travel opening up again, we want to remind consumers to redeem any unused credits to make sure they do not lose out.”
derimot, the Atol protection only applies to package holidays, not to independent travellers booking transport and accommodation separately.
In June this year, the Competitions and Markets Authority (CMA) launched an investigation into airline companies over concerns that they might have broken the law by failing to offer refunds for flights when customers were not legally able to travel during lockdown. Instead of a refund, British Airways offered customers the option of vouchers or rebooking their flight, while Ryanair offered just the option to rebook.
Forrige måned, the CMA konkluderte that “a lack of clarity in the law makes it insufficiently certain that it would be able to secure refunds for customers of British Airways and Ryanair who were prevented from flying by Covid travel restrictions”.
Consumer protection law sets out that passengers are entitled to refunds when an airline cancels a flight, because the firm cannot provide its contracted services. derimot, it does not clearly cover whether people should be refunded when their flight goes ahead but they are legally prohibited from taking it.
The competition regulator concluded that the law did not provide passengers with a sufficiently clear right to a refund in these unusual circumstances to justify continuing with the case.
Andrea Coscelli, chief executive of the CMA, sa:
“We strongly believe people who are legally prevented from taking flights due to lockdown laws should be offered a full refund, and we launched this investigation in the hope that we would be able to secure a positive outcome for consumers.
"Derimot, after considering the relevant law and gathering evidence in our investigation, we have concluded that the length of time that would be required to take this case through the courts, and the uncertain outcome, can no longer justify the further expense of public money.
“Given the importance of this to many passengers who have unfairly lost out, we hope that the law in this area will be clarified.”
CMA action has already led to commitments to refund hundreds of millions of pounds to people whose holidays were cancelled due to the pandemic, including from LoveHolidays, Lastminute.com, Virgin Holidays, TUI UK, Sykes Cottages, and Vacation Rentals.
Ryanair reported to the CMA that it had repaid a small number of people, having reviewed the specifics of their cases.
But travel disruption has only been part of the chaos.
Totalt, more than £4.7bn in vouchers has been issued for cancelled holidays, live shows, sporting events and theme park visits as a result of the pandemic, according to calculations by Capital One.
Nesten 39 million people in the UK have experienced at least one cancellation since March 2020, with the average voucher valued at £508. But a third do not know when their voucher expires, and another 11 per cent don’t know if theirs expires at all.
Katy Lomax, chief experience officer at Capital One UK, sa: “The past 18 months have seen millions miss out on experiences and events all around the world. Many people will undoubtedly have forgotten about the refunds they’re owed or credit notes that are outstanding. The sums of money people have lost are not small.
“It is so important people check the small print on any vouchers received, as many will have expiry dates, which might mean missing out on rebooking or being able to use the money at a later date,”La hun til.
“Anyone who is confused or concerned should contact the company they booked through to get some clarity. As the world continues to open up, now is the time to plan and rebook where possible.”