An investigation by Which? found that some companies are refusing to provide refunds for trips in a breach of their legal obligations, while others are providing vouchers or credit notes “which may prove to be worthless” if holiday firms collapse.
It cited industry estimates that up to £7 billion in payments made by UK customers are affected.
Which? said it found that none of the country’s 10 biggest holiday companies, including Tui and Jet2, are offering full refunds within the legal time frame, and some are refusing to provide refunds altogether.
Under EU law, travel companies must refund customers within 14 days if their package holiday is cancelled.
Which? also contacted the UK’s 10 largest airlines – including British Airways and easyJet – and claimed that none are refunding passengers according to the law.
Under the EU’s Denied Boarding Regulations, passengers are due a refund within seven days if a flight with an airline based in the UK or EU, or from an airport in the UK or EU, is cancelled.
Frustrated customers told Which? that carriers are making it almost impossible to contact them to find out if they will be refunded.
Which? has launched a 10-point plan requiring urgent action from the Government, travel companies and insurers which it claims will help the industry and protect holidaymakers.
– Extending the 14-day refund period for package holidays to one month
– A temporary Government travel guarantee fund to support firms unable to fulfil their legal obligations
– All consumers eligible to receive a refund must be offered cash
A spokesman for Airlines UK, which represents UK carriers, said its members are facing “a far longer than usual volume of refund claims to get through”.
He added that the coronavirus lockdown means firms are “not able to bring in additional staff to deal with them”, adding: “We are thankful to passengers for their continued patience.”
Trade association Abta has warned that the deluge of claims caused by the travel industry grinding to a halt means firms will collapse if they are forced to pay out immediate cash refunds.
It wants the Government to allow companies to offer credit notes as a short-term alternative.
An Abta spokeswoman said cash refunds “should be given as soon as possible” but warned that many firms are unable to provide immediate payments because they have not received money back from airlines and hotels.
ABTA has published further guidance for members and customers on holiday amendments and refunds. The move from the travel association comes as the industry continues to wait for the government to provide clarity on the issue.
ABTA has developed additional guidance for members on refund protection, including the use of refund credit notes. This guidance sets out standardised rules for refund credit notes to ensure that travellers are protected, particularly around insolvency. The guidance makes it clear what information should be included in a refund credit note. The guidance is available on the ABTA website.