The Whole Travel Industry Needs Sorting Out Now

antiquebiker

Like thousands of other people I am waiting to be refunded for the holiday that was cancelled by my travel company.

As I understand it, as a consumer I am entiltled to a full cash refund within 14 days of cancellation. I am unable to re-schedule and I do not want a voucher which is what I was send even though I said I do not want one.

Since refusing the voucher I have emailed several times as the phones are not manned, and all I get is the same reply. You can request a refund after your voucher expires on the 31st March 2021 or apply now but you must be aware that this will take a considerable time.

The point I want to make is the law is the law and a refund should be made within 14 days. I don't think there is anything in this law that mentions special circumstances. There should be a governing body who makes sure companies have enough access to funds to cope with situations like this perhaps by using a clients account system where customers payments are not used until 21 days before departure.

It's all very well having these consumer rights in place but who is policing it? I'm sure I speak for many people who feel totally left out in the cold and are desperatly trying to sort out "special circumstances" of their own. 

I contacted ABTA about this only to be told It's a difficult time for their members and if everyone affected pushed for a refund it could force companies to close. Sorry but finding it hard to feel any sympathy for these companies when they pay their CEO's such massive annual salaries, BA 1.36m Easyjet 750K and Tui a massive 13.3m to name just a few.

I have heard of companies doing the right thing and refunding as soon as they can but more importantly keeping their customers informed and up to date. Isn't that what all companies should be doing?

eskbanker

That's all a bit Daily Mail but there really isn't a single 'travel industry' in the sense you describe - ABTA specifically represents travel agents while your CEO salary complaints are about airlines and a tour operator.  Sure, they're all operating in broadly the same sector but not in as close a way that a single governing body could realistically manage.

Having said that, there is certainly interest in pursuing enforcement from the likes of the CMA and Trading Standards, but even they appreciate that these are extraordinary times and understand why it's nothing like as simple as you suggest.  It's clear from many threads on this board that many companies are either unable or unwilling to deal with the scale of activity involved in essentially unwinding an entire summer season, while simultaneously unable to call on enough human or financial resources even to deal with a normal workload - I'm not defending such companies though, and in fact was embroiled in a fairly animated discussion with a small travel company owner on another thread recently, in which the other side of the coin was frankly expressed by someone whose company was basically going under.

It's perhaps noteworthy that the site founder hasn't felt the need to encourage customers to play hardball, as he often would:

As MoneySavingExpert.com founder Martin Lewis said earlier this month: "Many organisations are struggling to cope. For those that can afford it, even if you've a right to a full refund for a ticket, if the firm is struggling in a struggling sector and it asks you to take vouchers instead, that's worth considering. That may just be what stops that firm from collapsing and its staff from losing their jobs."

Streaky_Bacon

The last few months have probably shown a lot of people that "the law is the law" is a fairly hollow phrase.

There is a world of difference between a legal position and successfully enforcing that legal position.

Also, no legal position is immutable or absolute, if it were then legal opponents would never go to court, because the outcome would completely predictable. Instead they know that various arguments can be advanced which may convince a court, regulator or lawmaker (for example, convincing lawmakers that they should be able to offer vouchers or delay payments).

Organisations do not seek to do what is "right", they look at the totality of the situation (the legal position being only one factor, along with customer goodwill and financial realities). This might lead them to make a decision that is counter to the legal position, to retain goodwill, but it may also mean that they take a course of action which seems to go against the generally accepted legal position if financial realities force them to.

At the moment, a lot of organisations are facing financial collapse, and so the calculations they are making take that into account.

They do not want to have to incur liability for claims, or alienate customers, but they have to survive and deal with those later.

If news reports are anything to go by, there seem to be plenty of new customers only too happy to hand money over to many of these firms, in exchange for a discounted deal, which will have been part of the calculations (i.e. that people have a short memory, especially when they think they are getting a bargain).

Could regulators and lawmakers do more? Probably, and perhaps they will, but individuals should assume that these third parties will come to the rescue, and so take responsibility for minimising their risk and fighting their own corner to get reimbursed.

DunnersO

We're in a crisis.  'Normal' no longer applies.  If these companies were to refund everyone, then there will not be a travel industry by the time this is over.  That will devastate livelihoods all over the world, and we'll all miss it when it's gone.

Nebulous2

Some companies are doing much better than others. The MSE survey produces some clues, and hopefully people will remember that. 

It has taken this episode for me to realise that the whole travel industry is run on other people’s money. The argument about jobs being lost is a false one, as the barriers to entry are so low that new companies would simply spring up to replace them. I paid my cancelled flights in full in October, I usually pay my first payment on my French or Spanish ferry crossings in December for the following August / September.

If I buy a car, I pay a modest deposit 4 or 5 weeks ahead and the rest on delivery. If the car industry can fund the manufacture and sales for a massive industry themselves, then travel should do the same. 

At the moment I’m caught up in my own issues, but I intend to start campaigning to change the law to stop travel firms using our money. Limited advance payments and money held in ring-fenced trustee accounts that are inaccessible until 14 days before the flight are possible options. 

antiquebiker

Nebulous2 said:

Some companies are doing much better than others. The MSE survey produces some clues, and hopefully people will remember that. 

It has taken this episode for me to realise that the whole travel industry is run on other people’s money. The argument about jobs being lost is a false one, as the barriers to entry are so low that new companies would simply spring up to replace them. I paid my cancelled flights in full in October, I usually pay my first payment on my French or Spanish ferry crossings in December for the following August / September.

If I buy a car, I pay a modest deposit 4 or 5 weeks ahead and the rest on delivery. If the car industry can fund the manufacture and sales for a massive industry themselves, then travel should do the same. 

At the moment I’m caught up in my own issues, but I intend to start campaigning to change the law to stop travel firms using our money. Limited advance payments and money held in ring-fenced trustee accounts that are inaccessible until 14 days before the flight are possible options. 

This is what I was trying to say but you explain it so much better, thank you.

Our hard earned money should be safe and not used until under contract to pay the full amount. Companies should be able to raise money against future revenue.

Good luck with the campaign, i'm behind you on this.

eskbanker

Nebulous2 said:

If I buy a car, I pay a modest deposit 4 or 5 weeks ahead and the rest on delivery. If the car industry can fund the manufacture and sales for a massive industry themselves, then travel should do the same. 

At the moment I’m caught up in my own issues, but I intend to start campaigning to change the law to stop travel firms using our money. Limited advance payments and money held in ring-fenced trustee accounts that are inaccessible until 14 days before the flight are possible options. 

I don't think the car analogy works, especially in the context of the inherently short timescale between commitment and delivery, whereas by your own admission, many book travel well in advance.  They're not compelled to of course, and have the option of waiting until closer to the time if they object to prepayment, but naturally end up with less choice by doing so, so are effectively buying certainty and peace of mind (in normal conditions).

Particularly in the context of recent (unprecedented) experiences, I do get the desire for increased consumer protection but fear that it's unlikely to be practical.  As mentioned earlier, what can be perceived as an 'industry' is a huge unstructured global collection of all sorts of companies, operating in a wide variety of jurisdictions, and the fact that the UK is in the midst of leaving the EU will undoubtedly have an effect on our ability to make unilateral changes to operating practices - the current improved protections we have for flights and package holidays arise directly from our implementation of EU directives but obviously we lose our ability to influence these.  If I'm a Spanish hotelier and have the choice of taking bookings from European travel agents who'll pay upfront or UK ones who'll hold onto the money until the last possible moment, can you imagine what'll happen?

It may be possible to implement the sort of escrow arrangements you suggest for UK travel firms but I'd be astonished if doing so didn't lead to increased costs and less competition, so be careful what you wish for!

Nebulous2

eskbanker said:

Nebulous2 said:

If I buy a car, I pay a modest deposit 4 or 5 weeks ahead and the rest on delivery. If the car industry can fund the manufacture and sales for a massive industry themselves, then travel should do the same. 

At the moment I’m caught up in my own issues, but I intend to start campaigning to change the law to stop travel firms using our money. Limited advance payments and money held in ring-fenced trustee accounts that are inaccessible until 14 days before the flight are possible options. 

I don't think the car analogy works, especially in the context of the inherently short timescale between commitment and delivery, whereas by your own admission, many book travel well in advance.  They're not compelled to of course, and have the option of waiting until closer to the time if they object to prepayment, but naturally end up with less choice by doing so, so are effectively buying certainty and peace of mind (in normal conditions).

Particularly in the context of recent (unprecedented) experiences, I do get the desire for increased consumer protection but fear that it's unlikely to be practical.  As mentioned earlier, what can be perceived as an 'industry' is a huge unstructured global collection of all sorts of companies, operating in a wide variety of jurisdictions, and the fact that the UK is in the midst of leaving the EU will undoubtedly have an effect on our ability to make unilateral changes to operating practices - the current improved protections we have for flights and package holidays arise directly from our implementation of EU directives but obviously we lose our ability to influence these.  If I'm a Spanish hotelier and have the choice of taking bookings from European travel agents who'll pay upfront or UK ones who'll hold onto the money until the last possible moment, can you imagine what'll happen?

It may be possible to implement the sort of escrow arrangements you suggest for UK travel firms but I'd be astonished if doing so didn't lead to increased costs and less competition, so be careful what you wish for!

Thanks for replying. There are often unintended consequences in everything, as you have said. 

You’ve put a lot in there, and I’m going only going to pick up some of it. I think the car analogy does work, as it is a hugely capital intensive industry, one of the biggest commitments a consumer makes, with a great deal of resources going into the manufacture, advertising, shipping, storage and selling of cars. My point is they can do all that without my money. While I’m impatient in changing a car, many people place factory orders and wait six months or more. 

Many Spanish hoteliers are at the mercy of large travel companies and certainly aren’t all paid in advance. When Thomas Cook went, there were stories of guests being turfed out as the hotels hadn’t been paid. Many of them would be glad of payment 14 days in advance. 

You’re right about a complicated international landscape. The UK would have difficulty imposing that, whereas the EU would be big enough to do so. 

mattyprice4004

Unfortunately these companies that have tens of thousands of customer per member of staff are realising that when things go wrong, they really don't have the man-power to handle things.

There's really not much that can be done - you'll get your refund, it'll just take a while. I'm waiting too, if it helps  

eskbanker

Nebulous2 said:
Many Spanish hoteliers are at the mercy of large travel companies and certainly aren’t all paid in advance. When Thomas Cook went, there were stories of guests being turfed out as the hotels hadn’t been paid. Many of them would be glad of payment 14 days in advance. 

You’re right about a complicated international landscape. The UK would have difficulty imposing that, whereas the EU would be big enough to do so. 

Yes, agreed - I wasn't literally trying to imply that monies are immediately forwarded by any agents in the existing model, but the key point was really that if the UK goes out on a limb and does something different in an international market that tilts the balance towards the consumer, there would be negative consequences for UK travellers.  I assumed that your reference to campaigning for a change in the law related to UK law rather than EU?

Obviously UK travellers take plenty of holidays in the UK and also many other places outside the EU, but EU countries dominate the top ten foreign destinations for Brits, so we should tread very carefully before taking any unilateral steps that could increase costs and/or reduce choice when seeking access to those countries.

bagand96

Nebulous2 said:

It has taken this episode for me to realise that the whole travel industry is run on other people’s money. The argument about jobs being lost is a false one, as the barriers to entry are so low that new companies would simply spring up to replace them. I paid my cancelled flights in full in October, I usually pay my first payment on my French or Spanish ferry crossings in December for the following August / September.

Barriers to entry are probably very low to open something like an online travel agent.  But it's very different for something like an airline, where the investments are huge, it's very hard to just "spring up" an airline, far more fail than become good, and the industry is brutal (5 years ago is something had told me Monarch, Thomas Cook and flybe would all be history, I'd have thought they'd had a few too many).

Nebulous2 said:

If I buy a car, I pay a modest deposit 4 or 5 weeks ahead and the rest on delivery. If the car industry can fund the manufacture and sales for a massive industry themselves, then travel should do the same. 

The thing with a car is that the cost of that car is (within reason, and a few %) pretty fixed.  Yes you can negotiate and shop around but every model of car has a price.  Travel, in particular the transport element (flights and ferrys etc) is very dynamic.  A flight to Malaga can cost £25.99.  But it could also cost £259.99.  You pay up front to fix the price at which you are booking.  The car market would operate very differently if the price of a new Ford Fiesta was anything from £6000 to £60,000 depending on when and where it was purchased.

I'm not trying to pick apart your arguments, there's some valid points. There's no easy fix to the current issues in the travel industry though.  It's clear some companies simply don't have the cashflow in the business.  This is especially true  for online travel agents who usually have to pass money straight on to airlines, and make a tiny % commission.  Without money back from said airlines, they won't have the money to refund.  These problems are exasperated by the fact that the airlines and travel agents simply don't have the Customer Service resource to deal with enquiries and refunds in a timely manner.  Any business will set up a customer service department to deal with enquiries from a % of customers.  The problem now in the travel industry is every single customer over a 4 month period needs or wants to get in touch.  I doubt any industry would be able to handle it very well.