On the Beach ditches ABTA membership following refund squabble as travellers take court action over refunds
- OTB has resigned its ABTA membership after refund policy clash
- Travellers still offered protection through ATOL scheme
- Frustrated customers take OTB to small claims court for refund refusal
One of Britain’s biggest online travel agents has ditched its Association of British Travel Agents membership over the association’s refund policy.
On the Beach resigned its membership after ABTA put its foot down and reiterated its policy that members must offer full refunds if the Foreign and Commonwealth Office advises against all but essential travel.
An On the Beach spokesperson said: ‘The travel industry is facing unprecedented challenges, and changes are inevitable as businesses and trade organisations adapt.
‘OTB has been an ABTA member since 2004, however the current circumstances have presented difficult decisions, and different legal interpretations on complex matters.’
Refund rules: On the Beach has refused to offer refunds to Spanish holidaymakers who didn’t travel to Spain after the UK government advised them not to
It said that as of last week, OTB and its subsidiary Sunshine.co.uk have informed ABTA that they will resign their memberships.
The spokesperson added that both Sunshine.co.uk and OTB travellers will still be financially protected by the ATOL scheme and OTB’s ring-fenced trust account.
In a trading update in April, OTB said: ‘OTB is also the only listed UK travel business that operates a fully ringfenced customer trust account in which customer funds are held until the point of travel.
‘Therefore the Group, unlike the majority of online travel agents, tour operators and airlines, does not rely on cash received for forward bookings to trade.
‘Monies that have been received for holidays that are cancelled by a closure of airspace can be repaid to customers in cash with limited impact on the Group’s working capital.’
An OTB spokesperson further explained: ‘For non-flight bookings, we have replaced ABTA protection with an insurance policy arranged by International Passenger Protection Limited.
‘IPP is the worldwide market leader in providing financial failure products to the travel industry.
‘The policy offers the same level of cover as the ABTA protection.’
Last month, it was reported that OTB refused to offer refunds to holidaymakers due to head to Spain a refund after FCO advice changed and advised against travel.
One travel insider said OTB’s hand could’ve been forced by airlines such as Ryanair, which doesn’t offer refunds if flights are still operational.
Ryanair says on its website: ‘Once a Ryanair flight is operational, and does not have a delay exceeding two hours, then it is not possible to get a refund. All Ryanair flights are changeable but they cannot be cancelled.’
An OTB spokesperson explained: ‘It’s [ABTA’s] cancellation and refund guidance no longer reflects the current Covid-19 environment that we and other travel businesses are operating in.’
Commenting on OTB’s resignation as a member, an ABTA spokesperson said: ‘We are sorry that OTB has resigned as a Member of ABTA following ongoing discussions about refunds due to customers when the Foreign Office advice changes to advise against all, or all but essential travel to a destination.
‘We recognise that the widespread imposition of advisories against travel places many ABTA members under enormous pressure regarding refunds.
‘But ABTA has consistently maintained that the underlying obligation to refund remains, as has been the longstanding practice of the travel industry, and this has not changed as a result of Covid-19. ABTA believes this is important to ensure consumer confidence in the package holiday market.’
Back in May, OTB raised £67million by issuing equity worth about 20 per cent of its share capital to strengthen its balance sheet to cope with the Covid-19 impact.
The news of its ABTA membership resignation comes after it’s been reported that many furious OTB customers are taking the package holiday website to small claims court over its refusal to fully refund trips.
The Competition and Markets Authority has also launched an investigation over its refusal to offer refunds to it and ABTA.
In July the CMA wrote to package travel firms to warn them about misleading customers and delaying refunds.
This month ABTA conducted a survey among its members which found that 39,000 jobs have already been lost or placed at risk across the outbound travel sector since the Covid-19 crisis started.
This figure jumps up to 90,000 people affected when supply chains to the travel sector are factored in.
On the Beach shares are up nearly 3 per cent today to 286.5p.