Why are travel businesses offering credit vouchers instead of cash refunds?

Westin

Norwegian Air Shuttle/International is actually quite an interesting example.  Given their past financial track record I had heard that credit card firms were holding back booking payments until the passenger had flown.  Similar happened with Thomas Cook in their dying days.  This withheld cash of course severely impacts cash flow and operations.   With the current situation should this not actually aid the return of money to customers who want it? The refund should come from the credit card firm.  Norwegian are possibly not holding customer’s cash but their credit card companies are.  It would make an interesting S75 test case claim.

Butts

I heard the same was happening with Flybe - The Card companies were holding back payments in a similar manner.
When they collapsed I received refunds within a couple of weeks using chargeback on a combination of Debit Card and Credit Cards for outstanding bookings later in the year.
Just thankful it happened before all this blew up or it might have been a different situation entirely !!

nilanteh

fifeken said

I know this came from IATA, who will be biased in favour of the airlines, but it doesn't take much to realise that if everybody is paid a cash refund a lot of airlines will go bust pretty quick.  We will all then spend more on flights for decades as there is less competition and the surviving rich legacy airlines take advantage.

Most flights discussed on here are discretionary spending, so no one should be hurting too much and can afford to wait or take a voucher, but would rather demand their rights with no though of the big picture or long term effects.

It is a discretionary spend but when people spent that money perhaps they also didn’t realise what was around the corner. I spent this money for a once in a lifetime holiday and just like the holiday company I didn’t see this coming. The pandemic means my husband has been made redundant and we could do with that cash back not a voucher. Why should I consider their situation if they won’t consider mine? If I was in a position to take a voucher I would but I’m entitled to a refund and I could do with that. Why is that so wrong?

fifeken

nilanteh said:

fifeken said

I know this came from IATA, who will be biased in favour of the airlines, but it doesn't take much to realise that if everybody is paid a cash refund a lot of airlines will go bust pretty quick.  We will all then spend more on flights for decades as there is less competition and the surviving rich legacy airlines take advantage.

Most flights discussed on here are discretionary spending, so no one should be hurting too much and can afford to wait or take a voucher, but would rather demand their rights with no though of the big picture or long term effects.

It is a discretionary spend but when people spent that money perhaps they also didn’t realise what was around the corner. I spent this money for a once in a lifetime holiday and just like the holiday company I didn’t see this coming. The pandemic means my husband has been made redundant and we could do with that cash back not a voucher. Why should I consider their situation if they won’t consider mine? If I was in a position to take a voucher I would but I’m entitled to a refund and I could do with that. Why is that so wrong?

If you'd gone on holiday, returned and then hubby got made redundant you'd be in the same boat cashwise and hindsight is a wonderful thing.  I sympathise with you and anyone in your position and I'm not saying what you're asking for is wrong, just putting forward another way to consider the issue, perhaps more so for people who have lost their holiday and nothing more.

SevenOfNine

fifeken- that's a strange viewpoint. Yes, nilenteh would be in the same financial position, the difference being she would have HAD the holiday!  She hasn't, & because of the pandemic & loss of regular income may not be able to afford to go 'later' using vouchers. Even all inclusive holidays come with additional outlay (travel to the airport being one, increased cost of what & where she'd originally booked to go).

fifeken

SevenOfNine said:

fifeken- that's a strange viewpoint. Yes, nilenteh would be in the same financial position, the difference being she would have HAD the holiday!  She hasn't, & because of the pandemic & loss of regular income may not be able to afford to go 'later' using vouchers. Even all inclusive holidays come with additional outlay (travel to the airport being one, increased cost of what & where she'd originally booked to go).

That's kind of what I meant, but given a choice now I read it as she would (understandably) rather not have the holiday and have the cash in her pocket instead.  That viewpoint can only be achieved with hindsight which isn't really fair.  My point regarding claiming or not is more of a general point which not all cases will fit into for various reasons, but is still a fair point IMO.

nilanteh

I think as SevenOfNine says the difference is knowing our income now I wouldn’t chose to book an expensive holiday. If I’d already had the holiday that would of course be different. I also don’t know if the prices are going to stay the same or if I’m going to have to spend more money I haven’t got. It’s a hard time for us all. I just hope these travel companies do live up to the promise of refunding in July if we are unable to rebook although it seems to me they’ll surely end up in the same boat with a lot of people wanting refunds at the same time. Who knows by then maybe this will all be over and my husband will have found work and we will be able to go away and enjoy ourselves 

Westin

Mark Tanzer, the CEO of ABTA has written this open letter to explain why some travel firms are unable/unwilling to issue cash refunds for cancelled holidays, instead offering credit notes:-

A Letter from ABTA’s Chief Executive about holidays that have been affected by the coronavirus crisis

The coronavirus crisis is creating extraordinary difficulties for everyone, in ways that none of us could ever have predicted.  International travel has been brought to a complete standstill by government measures to contain the pandemic and this has led to hundreds of thousands of holidays being affected.   

Here, I want to write to customers of ABTA Members specifically to explain the current situation with refunds for holidays that aren’t going ahead as planned as a result of the pandemic, and to ask for your support.

Many customers have rebooked their holidays for a future date, but I completely understand why those who have asked for a refund may feel frustrated and concerned at the amount of time it is taking. In normal circumstances the rules to provide a refund for a package holiday within 14 days work well. But these are not normal circumstances and the 14 day refund rule is impossible for the majority of companies to stick to.

Many travel agents and tour operators are unable to provide immediate cash refunds because they have not yet received money back from airlines and hotels around the world that may have temporarily closed.

It’s in nobody’s interests for normally healthy travel businesses to go under. As well as the loss of thousands of jobs, the Government-backed ATOL financial protection scheme would be overwhelmed by a large-scale failure of businesses and it would take many more months for customers to get a refund.

The European Commission, which is responsible for the relevant regulations, has advised Member states to find “flexible solutions” to demands for refunds on cancelled holidays during the crisis.  Many other European countries with similar challenges have already taken action to support businesses while protecting customer rights. 

Despite our pleas for support, the UK Government has so far failed to act.  For this reason, to provide some order to the chaos brought about by the current crisis, ABTA has developed temporary guidelines for dealing with refunds for its Members and their customers, where Members are financially unable to provide an immediate cash refund. These are based on a system of financially-protected Refund Credit Notes where the customer’s fundamental right to a refund for a package holiday is preserved, as set out by law.

This type of system is similar to those introduced in many other countries and is the framework under which ABTA will guide its Members and hold them to account. 

Notwithstanding the issuing of Refund Credit Notes, ABTA’s expectation is that Members should refund customers as soon as they are able to.

This crisis will pass, and I’m sure like me you want to ensure that when it does we have a healthy and competitive travel industry able to provide you with the choice of holidays that you deserve.

Thank you,
 
Mark Tanzer

https://www.abta.com/sites/default/files/2020-04/Mark%20Tanzer%20open%20letter%20200420.pdf

There are also some answers to frequently raised and asked questions.
https://www.abta.com/news/coronavirus-outbreak

Butts

I'm sure ABTA will be just as understanding of people now unable to afford future holidays due to financial problems of their own and allow them to cancel without forefiting their deposit or being subjected to other charges

Anthony147

Butts said:

I'm sure ABTA will be just as understanding of people now unable to afford future holidays due to financial problems of their own and allow them to cancel without forefiting their deposit or being subjected to other charges

This is the point exactly - Be as flexible with customers in the circumstances as you’ve FORCED customers be with yourselves.