Holiday refunds

Lastminute.com, a major travel booking website, has recently been found to have broken the pledge it made to the regulator back in December to repay all outstanding refunds to holidaymakers after an investigation by Which?, the consumer magazine.

Lastminute.com was found to have been breaking the law on cancelled holiday refunds for months last year, meaning that, by last December, its customers were owed over £7 million in refunds. Lastminute.com promised the regulator, the Competition and Markets Authority (CMA), that it would refund all package holidays cancelled on or before 2 December 2020 by the end of January this year.

The customer is entitled to a full refund within 14 days

However, Which? found that some customers still hadn’t received their refunds by the deadline, with some customers only receiving partial reimbursements, with refunds often only for hotel stays but not for flights.

Under the Package Travel and Linked Travel Regulations 2018, if a package holiday is cancelled by the provider, the customer is entitled to a full refund within 14 days, including all travel and travel-related services.

Despite the regulations, the Chartered Trading Standards Institute has said that it is difficult to insist on a 14-day refund at the moment, because of the volume of refunds that travel firms are currently dealing with. Cancellations have obviously been more common since the start of the coronavirus pandemic, with many countries shutting their borders and Britain imposing strict travel restrictions, leaving many travel firms with no other choice but to cancel the package holidays.

The refund process has been “very complex and difficult”

Sheryl McLeod was one of the customers affected by Lastminute.com’s actions regarding refunds: she had her holiday cancelled in June and accepted the cash refund option in September, but it took until 27 January for her to be refunded £932.49, which was still over £300 less than what she was owed.

A spokesperson for Lastminute.com said that the refund process has been “very complex and difficult” due to the pandemic and constant changes in travel advice and restrictions. He continued: “We’ve been working hard to get the money back through the system and into our customer’s pockets as quickly as possible.”

Rory Bolan, editor of Which? Travel, said that “the CMA was right to intervene to demand action from the online travel agent, but, after failing some of its customers again, tougher measures need to be taken”.

Bolan added: “Despite being given ample time to return all outstanding refunds to customers ─ as well as clear instructions regarding its liability for refunding both accommodation and flight costs ─ Lastminute.com has failed to meet its commitment to the regulator.”

This might be a widespread problem across the travel industry and not just limited to Lastminute.com

A CMA spokesman said Lastminute.com must now report to the regulator about how it’s complying with the commitments it signed up to and the deadlines they agreed. The spokesman clarified that “should it become clear that they have breached these undertakings we will consider further action.”

Since the start of the pandemic, the CMA has written to more than 100 package holiday firms to remind them of their obligations to comply with consumer protection law and also recently started an investigation of Teletext Holidays following complaints that it had failed to refund customers for trips cancelled due to the pandemic. This suggests that this might be a widespread problem across the travel industry and not an issue limited to Lastminute.com.

“Shrinking to passenger levels we haven’t seen since the 1970s”

One reason for this might be that many travel companies has suffered cashflow issues, leaving a lack of available funds for refunds and forcing consumers to wait for months. Some online travel agents have also reported difficulties in securing refunds from airlines to pass on to their customers, with the airlines’ failure to pay meaning that the travel agents have been only able to provide partial reimbursement.

An indication of the struggles that the travel industry is currently facing is shown by Heathrow Airport’s chief executive John Holland-Kaye, who claimed that last year witnessed “passenger levels we haven’t seen since the 1970s”. Therefore, it is clear that travel companies are struggling at the moment, but this doesn’t exclude the rights of customers to their refunds, and it seems likely that we will see further investigations and issues on this matter in the near future.