Announcement of £4 billion industry ‘lifeline’ expected this week

Announcement of £4 billion industry ‘lifeline’ expected this week

A £4 billion travel industry ‘lifeline’ that would underwrite customer refund credit notes could be announced this week, according to reports.

The challenge of providing refunds for holidays that have been cancelled or delayed has become the most divisive issue in the sector during the Covid-19 pandemic.

Trade body Abta has been lobbying under its #SaveFutureTravel campaign for a change in the Package Travel Regulations (PTRs) to allow firms more time to refund and to make sure Refund Credit Notes carry the same weight of protection as the original package holidays.

But consumer anger has been mounting over firms refusing refunds or delaying processing refunds and the sector fears a wave of credit card chargebacks will lead to widespread company failures and job losses within weeks.

A counter #ItsRightToRefund campaign led by former Travel Republic managing director and VIVID Travel founder Kane Pirie supporting a limited grace period for refunds to July 31 but not a change in the law is gaining traction among consumers and some industry bosses.

Following reports of a stalemate in government after different departments disagreed about how to protect firms from failure while maintaining consumer rights, The Sunday Telegraph reports today that an announcement could be imminent.

The newspaper reported that proposals were being finalised over the weekend by transport secretary Grant Shapps, business secretary Alok Sharma and head of Atol Andy Cohen who, it was reported, has given the £4 billion lifeline “his blessing”.

The proposal would see credit notes being officially backed by government guarantee so that should companies that have issued them fail the consumer would get their money back.

The Sunday Telegraph said pleas from other sectors of business for special treatment could prove to be a sticking point, but an announcement is expected as early as this week.

Although the £4 billion scheme would not satisfy those who are demanding all customers receive a cash refund as stipulated under the PTRs, The Sunday Telegraph said it was hoped it would help enough consumers be persuaded to accept credit notes to take the pressure off the industry.

Coronavirus: Government decision on refunds expected next week

Coronavirus: Government decision on refunds expected next week

A UK government decision on whether to suspend the consumer refund rules of the Package Travel Regulations is not expected until next week.

The decision by the Department for Business (BEIS) remains in the balance following a meeting of Abta, the CAA and officials of BEIS and the Department for Transport (DfT) on Thursday.

Travel Weekly understands this is likely to have marked the final discussion on the issue.

ABTA has warned the government of “mass failures” and “an industry-wide collapse” if the PTR requirement to refund consumers for cancelled bookings within 14 days is adhered to.

A decision is urgent, not least because Tuesday, March 31 will mark 14 days since the UK Foreign Office advised against all overseas travel – triggering immediate cancellation of more than two million protected bookings.

The total value of refunds owed has not been made public, but Travel Weekly has been told “it’s a colossal number” which threatens wholesale insolvencies.

The government is aware this would deprive most consumers of early refunds and leave the DfT to pick up the bill as the CAA and Air Travel Trust (ATT) which underwrites Atol consumer financial protection is still dealing with the failure of Thomas Cook last September.

The Cook collapse cost the ATT £481 million and the government an additional £156 million, the UK’s National Audit Office revealed last week, with the final bill still to be assessed.

Abta wants a suspension of the legal requirement to refund consumers in full within 14 days of cancellation, requiring a temporary change to the PTRs.

The association and the CAA have been urging the DfT and BEIS to act for a fortnight.

Abta has partially taken the matter into its own hands, advising members to delay refunds and issue ‘refund credit notes’ on ATOL-protected bookings, initially up to July 31.

It wants BEIS, which oversees the PTRs, to make this legal and the DfT – which oversees the ATOL scheme – to confirm protection for the delayed refunds should travel businesses go bust.

Travel Weekly understands government ministers and officials are concerned delaying refunds “is not good news for consumers”.

An industry source said: “They get this [proposed refund credit note] regime will deliver refunds more quickly to people but are worried about how to explain it to consumers.”

Concern that the EU may react to a breach of European rules is also troubling officials despite Britain leaving the EU. All EU regulation remains in force until at least the end of the year.

The source suggested: “The very fact Abta is still in detailed discussions with the government on this is positive.

“Officials understand this is not the industry bleating or crying wolf, but it is a difficult decision for them. Abta is trying to pull off a balancing act.”

The source suggested: “The DfT knows Abta is not over-egging it. They saw how much flak the government took over Thomas Cook.”

The problem is also set to grow worse. The initial Foreign Office advice against all non-essential travel was for 30 days. More bookings will be cancelled as the advice period is extended, adding to the sums to be refunded.

The source said: “The pressure is going to build as time goes on. It’s a rolling problem.”

Abta has said it will stand behind the refund credit notes as a guarantor up to July 31. But for the delayed refunds to work, the DfT [through the CAA] needs to stand behind refund credit notes issued for Atol bookings.

The source noted: “It will only work if Abta and the CAA underwrite it. The CAA is in an invidious position, but it’s not in its interests to have the industry destabilised.”

If BEIS does not modify the PTRs, Abta would “have no choice” but to proceed in advising members to delay cash refunds and provide refund credit notes in their place.

Abta has also asked the government to insist airlines return to refunding customers or their agents for cancelled flights as part of any aid provided to carriers.

It said: “Government-funded assistance should be directed as a priority to the payment of refunds to trade intermediaries and the consumer.”

The CAA is responsible for enforcing the rules on airline refunds under EU Regulation 261 on air passenger rights.

The source said: “The CAA is trying to get action by the airlines by consensus first. The CAA and DfT are working with the same airlines to try to get people home and that is the priority.”

Thomas Cook ceases trading after failing to salvage rescue deal

Thomas Cook ceases trading after failing to salvage rescue deal

Travel giant Thomas Cook has collapsed after last-minute efforts to secure a rescue deal failed.

The 178-year-old business ceased trading with 600,000 overseas, including 150,000 from the UK.

The CAA is to begin the biggest-ever repatriation of UK travellers with more than 45 aircraft sourced from around the world.

German authorities face organising even bigger repatriation with up to 300,000 Germans abroad on Cook holidays.

The Thomas Cook board called in administrators after running out of options to keep the business afloat. A senior industry source said: “The board could not keep the wheels spinning. They had a legal duty.”

Thomas Cook’s failure leaves 20,000 staff, including 9,000 in the UK, out of work.

The insolvency was timed to kick in once the group’s entire fleet of aircraft was on the ground in the early hours of Monday.

The holidays of those due to fly out from today have been cancelled leaving hundreds of thousands to apply for refunds.

Chaos and confusion are expected at airports, as people turn up for cancelled services or to enquire about flights home, and at the more than 3,000 hotels used by Thomas Cook – most of which will be owed money by the group.

The group was set to be rescued in a deal worth £900 million which would have seen Fosun taking control of 75% of the company’s tour operating the business and up to 25% of its airline in exchange for a £450 million capital injection.

Debt holders and lending banks would put up the remaining £450 million in exchange for control of Thomas Cook’s airline and up to 25% of the tour operator.

The deal, which had been pushed back once, was due to be voted on by creditors and stakeholders on September 27.

But last week Thomas cook’s lending banks, led by Royal Bank of Scotland and Lloyds demanded it finds an additional £200 million in contingency funding.

This demand for “a seasonal standby facility” followed fresh advice from financial consultants working for the banks which suggested Cook risked running out of cash once more by late 2020.

Passengers will make sacrifices for in-flight Wi-Fi, finds study

Passengers have such a strong desire for in-flight Wi-Fi they are even willing to give up some of the small comforts of flying, according to study conducted by Honeywell.

Many would be happy to trade a comfortable seat for a reliable laptop connection.

The poll of more than 3,000 travellers in the US, UK, and Singapore found that travellers want access to Wi-Fi every time they fly.

Almost nine out of 10 passengers surveyed said they were willing to give something up on their flight, with one-third of US passengers saying they would give up the ability to recline their seats, and 38% saying they would give up their preferred seat.

Forty two per cent of passengers would exchange peanuts for Wi-Fi, while nearly one-quarter would pass on the drinks.

More than half (55%) percent of US passengers said they mostly use in-flight connectivity for personal reasons, and just 22% say they use it mostly for professional reasons.

Passengers from both the UK and Singapore claimed more professional and less personal use.

A total of 86% of US passengers say every flight should give them the opportunity to check Twitter, update their fantasy football line-up, or send an email to a co-worker.

But around 90% of all respondents said they are frustrated with the connectivity when they fly, Wired.com reported.

A Letter from Adolfo Perez - MD, Carnival Cruise Lines UK & Ireland

21 February 2013 Dear Valued Travel Partner, We realise many of you have been following last week's events on the Carnival Triumph and I wanted to take this opportunity to provide you with some information. Let me begin by saying that all of us at Carnival deeply regret the hardship our guests had to face during their days on board the ship. Our number one concern was to ensure the safety and welfare of our guests and crew and to get them home as soon as possible. Our shipboard and shore side teams worked tirelessly to take care of them and minimise their discomfort and inconvenience. We also focused on making sure their loved ones had a direct link to our Family Support Centre where they could obtain round the clock information on their family and friends on board. Now that all the guests are safely home, our efforts are firmly focused on the on-going investigation into the root cause of the fire and what measures we can take to ensure this does not happen again. These efforts are taking place in collaboration with the U.S. Coast Guard and other independent parties. We know, however, that preliminary investigations indicate the cause of the fire was the result of a leak in the fuel return line for the number 6 diesel generator. The safety and security of our guests remains of the utmost importance to all of us here at Carnival. All our ships are safe and secure. All of them meet, and in many areas exceed, all regulatory standards. I promise we will continue to investigate in order to understand what took place and to learn what steps we can take to improve going forward. We know that holidaymakers can choose from a vast variety of options, and that they – and you – expect a fantastic cruise holiday from us. We are very sorry that this time we did not deliver. I really value your support for Carnival Cruise Lines, and in encouraging British holidaymakers to select a cruise on our ships. We hope you will continue to do so in the future, and we will endeavour to do everything we can to make our experiences as memorable and fun as possible for your customers. Thank you again for your support. Yours sincerely, Adolfo M. Pérez Managing Director, UK and Ireland Carnival Cruise Lines © 2013 Carnival Cruise Lines

Trade concerns over latest Atol overhaul

By Ian Taylor

The government has begun moves to overhaul Atol funding, triggering fears that an end to state backing so soon after Flight-Plus reform will damage the sector.

The Department for Transport (DfT) denied any change of policy. But with the Air Travel Trust fund, which provides financial protection to holidaymakers, poised to go into credit for the first time since the 1990s, it is believed ministers want to end 
the government’s liability for a future major failure.

Moves to revise the scheme are already under way. The Civil Aviation Authority (CAA) met senior industry figures to discuss changes before Christmas and the DfT is poised to issue a ‘call for evidence’ within weeks.

This would lead to a consultation later this year, with the DfT hoping to have a new funding scheme in place by 2014.

That has led to fears all Atol holders will have to bear the cost of trust arrangements or insurance premiums on protected holidays.

The extension of Atol to Fight-Plus sales has seen more companies operating trust accounts, which hold customers’ money until they take their holidays. The problem is the impact on cashflow.

A CAA spokesman said: “We’ve always said we would review funding arrangements when the fund returns to surplus.” A DfT spokeswoman insisted: “There is no greater urgency or added pressure from us.”

However, the DfT confirmed changes could be in place by 2014.

Atol specialists expressed alarm at the prospect. Association of Atol Companies legal advisor Alan Bowen said: “We’re aware of rumours the government is looking at alternatives to the existing protection scheme. The industry would be happy if things just sat still for a while. Trust accounts are not a panacea. There have to be options for people.”

CAA confirms April 'too soon' for Atol reform

Jan 31, 2012 12:00PM GMT

The government's planned Atol reform will not be implemented in full from April, the Civil Aviation Authority has admitted.

CAA consumer protection group director Richard Jackson said the reforms would come in in April, but businesses will not be expected to fully comply until October.

He told the parliamentary transport select committee today: "It will be difficult for the industry to be ready by April because it can't move finally until the Department for Transport announces its decision.

"I will be surprised if all the changes will come in in April. There will be a sensible implementation phase. We will wait until probably October 1 for all the changes required to be made to systems."

Agents will not need individual Atols - CAA

Nov 17, 2011 08:00AM GMT

The Civil Aviation Authority says it is confident agents will not be left to apply for individual Atol licences in order to comply with the Flight-Plus regulations due to be introduced next April.

A CAA spokesman confirmed the authority is in discussions with several organisations interested in becoming approved bodies.

These would hold a Flight Plus Atol on behalf of member agencies, removing the need for businesses to go to the trouble and expense of acquiring their own licence.

The CAA publication of an Atol Reform Information Paper and draft Standard Terms this week appeared to rule out travel association Abta becoming an approved body because it is not prepared to take on the risk of members ceasing trading.

Advantage also appeared to rule out taking approved-body status in favour of offering its members franchise arrangements - although the effect of this would be the same.

The CAA spokesman said: “We are currently in discussions with several organisations which are looking at the options of becoming approved bodies and we are confident the option will be there for agents to take as an alternative to approaching us for a licence on their own.

“The idea of an approved body is to allow agents to undertake licensable business without the need, and the associated costs, of acquiring an Atol of their own in every circumstance. This has benefits for agents.”

Advantage appears to have baulked at the proposed £20,000 initial charge for being licensed as an approved body.

The spokesman said: “The cost for becoming an approved body reflects the level of due diligence the CAA has to do for firms wishing to become one.”