Are the 'refund rules' going to change?


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There have been a substantial number of travellers affected by the Coronavirus pandemic issues and who have had their airline flights or package holidays cancelled.

As the law stands, European airlines and tour operators who have cancelled flights or holidays must give a refund; in the case of airlines within seven days and for tour operators 14 days.

These rules flow from EU Regulation 261/2004 known as EU 261, and by the Package Travel and Linked Travel Arrangement Regulations 2018, known as the Package Travel Regulations.

But in general refunds are not happening. Some carriers, including Air France, KLM and Ryanair, have indicated that passengers will have to wait  several months at least for a refund, whereas others have sought to ignore the fact that they should make a refund and simply issued a voucher instead.

Customers are becoming understandably frustrated.

The reasons for the lack of refunds are varied but much comes down to the fact that there is little spare money around in the accounts of many airlines or tour operators and particularly for tour operators they may not have received monies back from airlines or hotels themselves. 

There is, however, another potential reason for the lack of refunds being offered - many seem to be waiting to see whether the law is going to change.

In a letter signed on behalf of 12 European countries on 29th April 2020 a request was made to the European Commission asking for the Commission to suspend the law requiring airlines to offer passengers a full refund on cancelled flights and welcoming the idea of time limited vouchers as an alternative.

Belgium, Bulgaria, Cyprus, the Czech Republic, France, Greece, Ireland, Latvia, Malta, the Netherlands, Poland and Portugal all co-signed the letter urging the European Union Executive to make this change to its rules.  They say that the airlines should be allowed to offer passengers coupons or vouchers for later use rather than a cash refund. 

It is understood the Transport Ministers met (virtually) on Wednesday afternoon where potentially this issue was on the agenda.  It may be relevant to note however that the EU Transport Chief, Adina Vălean, has said before that there should be no change on the rules for refunds.

For the cash strapped tour operators ABTA is doing its best to encourage customers to discuss matters with their tour operators and see if they can book alternative holidays.  Whilst ABTA do say that the customer is entitled to a refund where they had booked a package holiday and it was cancelled they point out that these are not normal circumstances and the 14 day rule is 'simply impossible for many companies to adhere to'. 

ABTA point out on their website that in many other countries Governments have taken action to amend their travel regulations and to either allow refunds to be paid over a longer period or to allow them to be paid by a holiday voucher. 

ABTA has developed a guidance framework based on a system of what would be financially protected Refund Credit Notes (RCNs) which would preserve customers rights as set out by the Package Travel Regulations although ABTA says that it expects that members should refund customers as soon as they are able.

No-one knows whether the British Government will take steps jointly with other European countries or unilaterally with regard to the refund issue but a decision would be helpful to clarify the position for everyone.

Bronwen leads the travel tourism and insurance team and has over 30 years' experience in the travel and insurance sector.
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