The £7bn refund rip-off: Holiday plans are in ruins


Airlines are using underhand tactics to make it almost impossible for holidaymakers to claim refunds for cancelled flights, a Money Mail investigation reveals today.

Hundreds of readers have contacted us to complain major airlines are illegally withholding refunds that should be paid within a week.

Many say they have been goaded into accepting credit-note vouchers which have little consumer protection and could prove worthless if an airline went bust. 

Hundreds of readers have contacted us to complain major airlines are illegally withholding refunds that should be paid within a week

Others describe refund processes as unclear, complex or time-consuming, forcing them to give up.

Last night, the powerful Commons transport committee of MPs confirmed plans to investigate the issue in a series of hearings with aviation bosses next week.

Under EU law, passengers are entitled to a full refund on the cost of a cancelled flight within seven days, or 14 days if they have booked it as part of a package.

But carriers are delaying issuing refunds for fear of going bust — so holidaymakers’ cash is essentially being used as interest-free loans for crisis-hit airlines.

This is having a knock-on effect on package holiday companies, who are also waiting for airlines to repay them before they can issue their own refunds.

Critics say a lack of government action on the issue has turned the travel industry into the Wild West, leaving families out of pocket at a time when many are under financial strain. Industry estimates suggest companies are sitting on £7 billion in unpaid refunds.

The committee chairman, Tory MP Huw Merriman, told Money Mail: ‘Yes, airlines have a need for cash but this should be drawn from their lenders, not from passengers who are legally entitled to a refund. 

Many people have their own financial worries and may not be able to use a future travel voucher.’

‘BA left us struggling’ 

Pensioners Paul and Wendy Cary return flight from  Barbados was cancelled on March 23

Pensioners Paul and Wendy Cary return flight from  Barbados was cancelled on March 23

Pensioners Paul and Wendy Cary feared they would be stranded in Barbados when BA cancelled their return flight on March 23, a week before they were due to travel.

The last BA flight back was on March 26, so they knew they had to get on one before then. Paul, 72, could not get through to customer services. His BA online account did not show any available seats on another flight. BA offered a voucher for the cancelled flight but it could not be redeemed for the next seven days.

Finally the couple, from Hook, Hampshire, tried booking as new customers and found two economy seats on a flight leaving on March 25, costing $3,671 (£2,958). Their original flights cost £1,821 return. Paul says: ‘We had to pay. The apartment we were staying in was closing down.’

Back home, the Carys filled out an online complaint form but the airline will only offer vouchers for the original flights it cancelled. Paul says: ‘This has really left us struggling financially. We are both on a state pension.’

British Airways was contacted for comment.

BA has been accused of acting disgracefully by removing a refund option from its website, while retaining the option to receive a credit-note voucher towards a future flight. 

Passengers are told to call a customer service number — but the line is frequently blocked. When Money Mail called this week, it played an automated message, then cut out.

EasyJet customers have also described endless waits to speak to customer service. It is, however, easy for customers to claim a credit note valid for a year.

Ryanair, Virgin Atlantic and TUI are also offering credit notes automatically. These can be rejected in favour of a full refund.

However, Ryanair has warned that passengers who want their money back will be ‘placed in the cash refund queue until the Covid-19 emergency has passed’.

Virgin Atlantic is in crisis and could collapse at the end of May unless a buyer is found. This would render any credit notes worthless, unless the Government steps in to protect vouchers under Atol. Then, even if an airline folded, customers would get their money back.

Wizz Air has resumed flights from Luton to several destinations in Europe this week, meaning passengers who do not wish to travel are denied the right to a refund. 

How airlines bend the rules

The refund option has been removed from its website but the option to claim a voucher remains. The customer service line is frequently engaged or puts callers on hold for hours.

Customers are being encouraged to apply for a voucher equal to the value of their flight but must pay more if it ends up being more expensive.

BA says customers should call to rebook, refund or choose a voucher. Refunds can be requested up to 12 months after the original departure date.

The refund option was taken off the website, but reinstated after customer complaints.

The airline is trying to refund customers within 28 days, but admits it could take longer. A spokesman says: ‘We assure customers these entitlements will be available long after their cancelled flight was due to fly.’

Offered full reimbursement within 30 working days, then did a U-turn and is ‘highly recommending’ customers apply for a voucher instead. Passengers must reapply for refunds.

A spokesman says: ‘Customers who choose a voucher but don’t redeem it within 12 months may still apply for and obtain a refund. 

Customers who choose not to accept a free move or voucher will be refunded in due course, once this crisis is over.’

credit notes are being issued but can be rejected in favour of a full refund, with claims processed within 90 days. 

A spokesman says: ‘The credit [equal to the value of the cancelled flight] can be used to rebook on alternative dates, allowing for a destination and name change, for travel until May 31, 2022. 

If the rebooked date is before November 30, 2020, we’ll waive any fare difference.’ Refunds will take longer than normal.

Customers can choose a refund or credit note but can only apply for their money back once their refund credit has been received — up to four weeks after the departure date. 

A spokesman says requested refunds will take about four weeks.

Jet2 is offering cash refunds but with delays because of an ‘unprecedented’ number of calls.

Consumer champions Which? say the move was ‘nothing more than a cynical cash grab’.

Industry insiders have suggested that the Department for Transport (DfT) is set to make an announcement on the issue after weeks of inaction.

The Association of British Travel Agents (Abta) has been lobbying ministers to relax rules requiring airlines to issue refunds within a set timeframe — although most have ignored them anyway.

They want credit notes to retain Atol protection, giving reassurance to holidaymakers who fear their money will disappear.

The situation has been worsened by uncertainty about when flights will resume. The International Air Transport Association (IATA) has warned that the industry is facing an ‘apocalypse’ and more than half the world’s carriers could go bust.

EasyJet has received a £500 million emergency loan from the Treasury. But the future looks less hopeful for Virgin Atlantic, whose request for state aid was refused.

Even BA boss Alex Cruz has warned that the nation’s flag-carrier faces a fight for survival. In a dramatic announcement to staff yesterday, the company said it was making up to a quarter of them — 12,000 people — redundant.

But an Abta spokesman says: ‘Customers whose holidays have been cancelled because of the pandemic absolutely have the right to a refund, and where cash refunds are requested they should be given as soon as possible.’

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