More than £8 billion worth of package holidays are estimated to have been cancelled since the beginning of the coronavirus outbreak, with just over £1 billion still estimated to be outstanding in refunds, according to new research from Which?.
Millions of people have had a package holiday cancelled by their provider since the UK went into lockdown in March, with refunds for one in five (21%) holidays where a cash refund was requested still outstanding at the beginning of October.
Which? surveyed more than 7,500 people who have had a package holiday cancelled as a result of the pandemic to understand how the situation around refunds has developed since the UK first entered lockdown.
An estimated total of just over £1 billion is being illegally withheld in partial or full refunds from customers who requested their money back, with the survey suggesting the average cancelled holiday cost £1,784.
Under the Package Travel Regulations 2018, if a package holiday is cancelled by the provider, the customer is legally entitled to a full refund within 14 days. 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.
Around 9.4 million people are estimated to have had a package holiday cancelled by their operator since the pandemic hit the UK. The backlog of refunds for cancellations caused by the coronavirus pandemic meant that the majority of operators struggled to refund within the legal time limit, with customer service lines overwhelmed by travellers trying to contact them to ask about their refunds.
Some package providers reported delays in receiving refunds back from airlines, many of which – despite making commitments to the aviation regulator – continue to break the law on refunds. This has meant package holiday operators have often only been able to process partial refunds for customers.
But while some companies have managed to get on top of the backlog caused by these delays, several other major providers have continued to leave passengers out of pocket, with Which? still receiving huge numbers of complaints from customers waiting for refunds.
The average amount of time spent contacting package holiday companies about cancelled trips was around 15.5 hours. For more than four in 10 (43%) of the cancelled holidays reported to Which?, customers said they waited longer than a month to get their money back.
During the summer, the Competition and Markets Authority (CMA) launched an investigation into package travel companies’ handling of cancellations and refunds. Following pressure from Which? and the CMA, Tui agreed to refund all customers by the 30th of September. The regulator also recently confirmed that Virgin Holidays has also committed to processing refunds for all holidays cancelled up to the end of October by 20 November.
Nearly four in ten (37%) people who have had a package holiday cancelled by their provider since the beginning of the outbreak said the experience has had a negative impact on their confidence in the travel industry.
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 refund customers. It should also conduct a review of passenger protections following the coronavirus outbreak.
While the CMA has already secured commitments to process refunds from some companies, it is clear that some firms are not improving their practices of their own volition. The competition regulator must continue to closely monitor operators and secure further undertakings from those that flout the law, to prevent trust in travel being damaged any further.
Which?’s advice to anyone looking to book a future holiday is to book with a provider that can be trusted to refund their money promptly if they can’t travel, and to consider booking a package over a flight-only booking, to ensure they have greater legal protections if they cannot travel because of coronavirus.
Rory Boland, Editor of Which? Travel, 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.”