The government has confirmed Atol-protection of package holiday bookings extends to refund credit notes for cancellations due to Covid-19.
Transport secretary Grant Shapps confirmed the government would underwrite the protection of refund credit notes in a statement issued at midnight saying the move would “boost consumer trust in the aviation and travel sector”.
Shapps said: “We want to send a clear message to passengers that they can book their summer holidays with confidence, which is why we’re stepping in to protect refund credit notes issued as a result of Covid-19 cancellations.
“This is not only good news for anyone looking to get away for a break in the sun, but also for the aviation and travel sector which has been hit hard by the pandemic.”
Millions of holidays have been cancelled since the lock-down in travel due to Covid-19 began in March, placing huge financial stress on travel firms to refund consumers.
In a statement, the Department for Transport (DfT) said: “Passengers who accept refund credit notes for cancelled holidays as a result of Covid-19 will be protected by the Atol scheme – even if the company they have booked with later collapses.”
It added: “By providing confidence to holidaymakers that their refund credit notes are protected if they choose them over refunds, today’s move will mean customers are able to support the travel sector’s recovery from the pandemic by accepting a refund credit note.”
Business secretary Alok Sharma said: “This new protection will give consumers the confidence they need to book some time in the sun, safe in the knowledge that their money is protected no matter what.
“For those Atol-protected holidaymakers whose trips have already been cancelled, today’s reforms will give them the freedom to choose between a refund or a fully-protected refund credit note for use at a later date.”
Martin Lewis, founder of consumer website MoneySavingExpert.com, said: “This is a key travel intervention we’ve been calling for.
“It’s far from a cure-all, but Atol is a statutory scheme and the fact the government will now effectively underwrite credit refund notes gives a solid bedrock of security for customers willing to take them.
“The pandemic has been devastating for the travel industry and travellers. Taking an Atol credit refund note if you’re likely to re-book shows welcome forbearance and flexibility and the fact that, if you don’t use it, it can be exchanged for cash gives peace of mind.”
The industry and consumers have been waiting for months for government confirmation that refund credit notes for holidays cancelled due to Covid-19 are protected by Atol.
Part of the reason for the delay could be the involvement of so many government departments.
The Atol scheme is overseen by the Civil Aviation Authority (CAA) which reports to the DfT, but the Department for Business (BEIS) is responsible for the Package Travel Regulations which the Atol scheme supports.
The Air Travel Trust fund which pays Atol refunds in the event of a travel provider’s insolvency is funded by a £2.50 fee on protected bookings.
However, the fund was largely depleted by the collapse of Thomas Cook in September last year, requiring the government – and therefore the Treasury – to agree to underwrite the Atol scheme for now.
The government’s announcement noted: “Today’s action follows on from a separate series of measures introduced to support the aviation sector, including a comprehensive package of financial support incorporating loans and guarantees, tax deferrals and covering the cost of statutory sick pay.”