Bought a BA Holiday, ‘flight and hotel’ or ‘flight and car’ package? You are losing your right to a cash refund.

Links on Head for Points may pay us an affiliate commission. A list of partners is here.

The Independent reports today that the Government is about to suspend the rules which guarantee you a swift refund when you cancel a package holiday.

The article is here.

One intriguing feature of my inbox in recent weeks has been the number of people complaining about British Airways making it very difficult to get a cash refund for a flight booking.

And yet, for every five complaints I got about flight refunds, I would get one praising British Airways and saying how wonderful they were for refunding a ‘flight and car’, ‘flight and hotel’ or BA Holidays package virtually instantaneously.

This was not an act of generosity, however.

Under the 2018 Package Travel Regulations, a holiday company is legally obliged to refund your holiday in full, in cash, within 14 days of it being cancelled.  There is no leeway.

(On paper, there is also no leeway under EC261 about not refunding ‘flight only’ bookings either, but the penalties for flouting those rules are not as strict.)

The European Commission ruled on Friday that this structure no longer made sense and was likely to drive every holiday company to the wall within weeks.

Under the proposed new rules, a holiday company can now provide a voucher or a credit note for a cancelled holiday.  There is one caveat though – there must be a legally binding guarantee in place that protects the voucher if the holiday company which issued it goes bust.

According to The Independent today, the UK Government is about to announce that it will underwrite ATOL to act as ‘funder of last resort’ to credit notes issued by holiday companies.

It will agree to backstop the value of credit notes for a period of two years.  If the holiday company goes into receivership during that time, ATOL will provide a cash refund for the credit note.

The article also implies that there will be a mechanism to cash out the voucher regardless of whether the tour operator has gone bust, but this is not clearly explained.  Obviously you can’t be allowed to refund your voucher for cash immediately or there would be no benefit in putting the ruling in place.  It also makes little sense for ATOL to pay out a cash refund if the tour operator is still trading and could pay you directly.  It may be that the ‘take the cash’ option is only valid after the two years is up.  Hopefully the official announcement will provide some clarity here.

For most Head for Points readers, the effect of this will be to put ‘flight and hotel’, ‘flight and car’ or BA Holidays ticket holders into a WORSE position than people who simply have a flight booking.

Anyone with a flight only booking will remain legally entitled to a full cash refund once their flight is cancelled.

This is a reverse of the current position, where purchasers of packages were guaranteed a refund within 14 days whilst ‘flight only’ passengers have had to fight British Airways for the cash refund they are due with the website and emails actively encouraging people to accept a voucher.

You can find out more on The Independent website here.

All British Airways American Express 2-4-1 companion vouchers have been extended by six months
End of IAG? UK Government may take stakes in British Airways, Virgin Atlantic and easyJet this week

Click here to join the 15,000 people on our email list and receive the latest Avios, miles and points news by 6am.

Amazon ad
AMEX Gold 20,000 bonus points
About Head for Points

We help business and leisure travellers maximise their Avios, frequent flyer miles and hotel loyalty points. Visit every day for three new articles or sign up for our FREE emails via this page or the box to your right.


  1. Brian C. says:

    I have a BA holiday to Seychelles booked for May 19th which is due to be fully paid on the 31st March =. Paid £800 deposit with £7000 still to pay. Should i cancel now? What are my chances of getting deposit back via BA in either cash or voucher (don’t mind) as i do not want to sink another £7k into a voucher possible. If it makes any difference the flights are Qatar Q Suites.

  2. Winifred Griffiths says:

    I have had to Cancel Ba Hotels and was not given any refund after paying it in Full, Ba plays fast & loose on refunds, you are much better off booking your own Hotel/ Car rental , they overcharge on Hotel Bookings the Hotel Considers them a Third Party Booking , found this out the hard way with Hilton Hotels booked via BA Holidays.

  3. I have flights only now cancelled. I used 2-4-1 voucher and Avios for USA tickets. I don’t want a voucher I want full refund.
    Finally spoke with a humanoid yesterday who absolutely refused to action that request and told me if I wanted it now I would have to have a voucher.
    If I want cash refund I have to wait until 72 hours prior to original flight time to call again. Assuming I can get to speak to someone. Tough luck if not. It’s taken me a week to get this one call answered.
    Anyone know if my legal rights are being put at risk here?

  4. L Allen says:

    Should I expect any form of acknowledgment when filling in the voucher form? I completed it a week ago and haven’t had anything yet. I would at least expect a “thank you for your claim” response with an rough idea of how long it’ll take to issue the voucher.

    • Hey there, I’ve completed my form on the 17th March and only received an email from BA yesterday, saying that I will have my voucher within the next 7 days.

      From what I heard, the voucher is the booking reference code of the trip you’ve exchanged but this might only be a rumour…

      • Shoestring says:

        that’s exactly the system Holiday Extras airport parking are using

        they just ignored my request for cash instead

  5. Eric Walmsley says:

    Note change to package holiday credit note only however I wrote to my travel company 19 March (still waiting for reply) asking for full refund not the credit note offered does this supersede government announcement?
    BA avios 2 for 1 flight cancelled by phone after nearly two hours waiting worth it !

  6. louise says:

    I have a car hire booking with BA coming up. I know compared with some its small fry and if I have to lose the money then so be it, some people are losing a lot more, financial and otherwise. However, my takeaway from this is that I will never book car hire through BA again. My other bookings direct with AVIS, through holiday extras and Easyjet have been really easy to deal with. The amount of Avios really wasn’t worth it and I won’t do it again.

  7. Darren Thompson says:

    We have a BA holiday to Washington mid May, the flights are still live but I very much doubt these will be happening.
    I have no interest in a voucher to not receive a refund will be a big blow.

  8. Swissy says:

    I have a BA Holidays flight/car hire booked for July to Dubai. I know I have plenty of time on my side , but what makes it interesting is that I MFU’d the flight. Could be interesting if cancelled.

  9. Alan Bowen says:

    Although ABTA has been pedalling this change as ‘law’ there appears to be total silence from BEIS who enforce the Package Travel Regulations, the CAA who run the ATOL scheme and the EU Commission who wrote the underlying Directive on which the law is based. Contrast this to the situation regarding flight only bookings where the EU Commission issued clear guidance last week saying that any airline that cancelled a flight can offer a voucher if the customer wants one but equally must refund in full if the customer doesn’t.

  10. Mikeact says:

    How flexible are these vouchers ? Are they transferable to a relative/friend ?

  11. mr_jetlag says:

    Like many have posted I have a 241 booking far in advance (Tokyo half term 2021) but thinking of cancelling now while cash refunds are still possible. IMO there are two realistic scenarios here

    1. BA survive / bailout / gov takeover, redemption flights are honoured but Avios massively devalued.

    2. BA go under / merged with Virgin, all flights cancelled, I become a creditor

    In scenario 2 would s75 apply? If so, it seems the right course of action is to hold tight. If not, I should cancel and get a refund.


    • Genghis says:

      I’d leave it in place. The credit card companies are liable for consequential loss under S75 as you’ve definitely paid for something on the credit card costing more than £100 but less than £30k. As such, they’d have to source you a new business ticket

      • Genghis says:

        Assuming of course you think this will be all over by then…

        • mr_jetlag says:

          Oh pandemic definitely still going on, but I’d like to think we’d be onto herd immunity strategies by then and allowed to travel while waiting for vaccine results…

Please click here to read our data protection policy before submitting your comment.