Delaying holiday refunds could turn industry into ‘bankers after the bail-out’, travel expert warns

Exclusive: ‘It’s a disgrace to tell customers they have a legal entitlement to their money but they can’t have it,’ says Kane Pirie

As the travel trade association Abta pleads for extended deadlines for holiday refunds, a senior figure in the industry has warned the move would wreck public confidence.

Kane Pirie, founder and managing director of Vivid Travel, said: “I don’t want the travel industry to be the next ‘bankers after the bail-out,’ where people don’t respect and trust us.

“We have to be serious businesspeople in a time of crisis – not panicking and saying, ‘Let’s change the law’.”

Global travel is almost at a standstill due to the coronavirus crisis. Jet2 has said it will not fly again until 17 June 2020.

The Package Travel Regulations require holiday companies that cancel bookings to refund the customer in full within 14 days of the date of cancellation – not departure.

Abta says it is impossible for many travel businesses to provide cash refunds within two weeks, as they are waiting for refunds themselves from airlines and hotels that have closed down as a result of the pandemic.

But speaking exclusively to The Independent, Mr Pirie, a former Abta board member, said: “A lot of travel companies are really short of cash. I get that. But a lot of customers are really short of cash as well. And they want their money back.

“It’s a disgrace that parts of the industry are thinking now is the time to tell customers, ‘No, I know you’ve got a legal entitlement to this money but I’m not going to give it to you’.

“I could not make those phone calls.”

Mr Pirie has refunded Vivid Travel customers from his personal funds. He said that other businesses were effectively trying to force travellers to provide interest-free loans. The proposed “refund credit notes,” he said, may not be Atol-protected.

“Try to explain to a customer that you’re not going to give them the money that you legally have to give them: ‘I’m only going to give you a voucher, you can only buy in my shop, I set the prices and if I go bust it’s not entirely clear that this is Atol-protected, but don’t worry take a voucher.’

“‘Why do you need to give me a voucher?’

“‘Because I’m really strapped for cash and might go bust’.”

Mr Pirie said businesses should instead explain to customers that the existing refund was due, and was Atol-protected, and would be paid back as soon as possible – but not within 14 days.

“Delivered in the right way, I’ll be very surprised if the public would not understand and be sympathetic to that position.

“If I start monkeying around with the law, and giving you vouchers, and undermining very important protections, what does that add to just having a conversation with your customers saying, ‘Let’s be reasonable, let’s be pragmatic’?

“Abta have advocated to their members to act in a way that’s unlawful, and then lobbied for the government to change to make their unlawful advice, lawful.

“That’s putting the cart before the horse, to put it mildly.”

A spokesperson for Abta said: “The rules around 14-day refunds were never designed for the mass cancellation of holidays, which is why we are asking for more time for travel businesses to fulfil this requirement.

“Customers will not lose their right to a refund, and their money is not at risk.

“The refund credit note is designed to take this into account and ensure customers have the right to either a cash refund or a holiday at a future date.

“We fully understand the seriousness of the situation and the anxiety and frustration caused to consumers. That is why we have engaged with government, seeking assistance and support from the outset to protect both businesses and consumers.

“Strengthening the regulatory basis and extending the window for refund credit notes, as a short-term alternative to cash refunds, provides businesses with vital breathing space, whilst ensuring all consumer protections are carried forward.

“While this unfortunately involves a delay for consumers receiving their money back or booking a replacement holiday arrangement, the alternative scenario is travel company failures and customers waiting even longer to receive their money.

“Where businesses are able to provide cash refunds immediately they are doing so.”