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

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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.

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  1. Noggins says:

    I wonder whether this is why my cancelled Virgin Holiday has not yet been reimbursed!? (although we are not at 14 days yet – and they must be swamped with refund requests)
    Will our Virgin Miles / Avios – including 241 vouchers – be worth anything at the end of this…?

  2. Mark R says:

    Received notice that both flights on a BA holidays trip from Aberdeen to London were cancelled, one call and whole holiday, flights hotel and a couple of extras were cancelled and will be refunded in around 10 days. Member of staff I spoke to was very helpful.

  3. @mkcol says:

    I can’t even get Tui to cancel at NIL charges let alone chase them for a refund. I’ve contacted ABTA who say Tui are right (but later contradicted themselves) so I think the next step is MCOL.

  4. Margaret Wilson says:

    I was told we would get a full refund when our holiday was cancelled in recieved anything yet but wasnt given the option to change dates etc

  5. Will D says:

    I’ve just been told I will get a full cash refund on a holiday made through BA holidays due to the hotel closing. Not sure whether these policies are being applied consistently but I seem to be lucky here!

  6. I have a £4K package BA holiday in Antigua in Nov, and have paid all of it,I have been told that if I cancel I will only lose the £400 deposit. I am wondering now maybe I should cut and run now!

    • Balance is not due until 5 weeks before. What’s the point of cancelling now?

      You MIGHT want to cancel nearer the time if flights and hotels are massively cheaper. Swallowing the £400 loss and rebooking may end up being cheaper.

  7. Has anyone yet received their refund for their BA holidays? I got an email in the afternoon of March 17 saying my holiday cancelled and full refund to your card within 7 days, but it might take a few more days to show on your statement. Admittedly we’re only at 8 days.

    As an NHS worker I’m very keen to get this sorted before I’m too busy in the coming months to chase things.

    No suggestion they wouldn’t honour such an email sent?

    • Mark R says:

      I phoned up to cancel a BA Holidays booking yesterday as both flights were cancelled. They said the refund would take about 10 days. Thanks for your hard work in the NHS.

  8. michael says:

    BA cancelled my outbound trip (without offering an alternative) two weeks ago – but inbound is still scheduled, so far. Today BA asked for balance of trip including car rental package, whilst I asked for deposit refund. BA say no as although outbound cancelled by them the inbound is still flying. Very strange logic.

  9. pgreens says:

    Email from BA 20/03 saying my flight+hotel booking to YYZ had been canx and full refund would follow. Refund posted to my Amex o/night (25/03) and is dated 24/03.

  10. Gareth Hill says:

    This is a bad move ,everyone should lobby their MP and object to this also lobby Grant Shapps the transport Secretary.

    But with parliament shut down and European Parliament shut down can the law be changed just by ministers, that’s my question

  11. George Morris says:

    I was advised by Tui on 17th March that our holiday to Tenerife,commencing on18th March, was cancelled. I confirmed that I required a full refund, and this was acknowledged by an email which stated that I should receive a refund on 17th March. After a week having not received the refund I contacted them again and was told that it should be issued in 7 days. Again, this was not received. I contacted them on 31st March (the end of the 14 day period for issuing a refund) and have been advised by their financial control team that I should receive a refund within the next 4 weeks.
    It would appear that Tui are awaiting for a change in the law to the 14 day refund period, as suggested by Abta.

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