Travel agents are offering credit notes as a way of cash conservation to tackle an overwhelming amount of cancellations due to the impact of Covid-19. It is unknown if this is under ATOL protection by the government.
Industry trade bodies such as the Association of British Travel Agents (ABTA) and the Civil Aviation Authority (CAA) are now working in lieu, having repeatedly appealed for temporary amendments to the package travel regulations.
Travel agents are under growing pressure to refund travellers within 14 days. The issue remains that many travel companies simply do not have the cash in place to offer a refund over this short period of time, potentially creating negative consumer perceptions of many travel agencies that cannot quickly offer a refund.
Travel agents are unsure of issuing credit
ATOL protection is a financial scheme that protects the majority of travel businesses across the UK, ensuring that if a company ceases operations, customer bookings will be protected.
In the current situation, many travel agents have had to solely offer credit notes to remain in operation amid the current increase in refunds. However, credit notes are now in hot dispute as travel agents remain unclear if they are offering the right information by urging customers to opt for a choice that is not necessarily protected. This, in turn, jeopardises the trust that has been built between the customer and the company.
An extension should last between 6-12 months
Currently, under the Package Travel Regulations set in place in 2018, after making a holiday cancellation, customers have a legal right to their money being refunded after a 14-day period. The regulation is now facing severe criticism as it does not incorporate the global shutdown of the travel industry.
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The industry trade body ABTA has proposed that the window of 14 days should be prolonged to four months and cash for credit notes should be protected. While a four-month period will, without doubt, offer more time for travel agents to refund, the number of operators cancelling and postponing trips up until May or June is growing. This means that there will still be no valuable income for refunding travellers, paying staff or remaining fully operational.
It is unknown how long the global pandemic will last but if the refund window was to be extended to at least 6-12 months, it will give a realistic chance for the market to slowly recover if the spread of the virus begins to slow. This will allow many travel agencies to deal with other fixed costs associated with running an agency and refunding customers in a timely manner.