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Should I accept a holiday company refund credit note or airline voucher? Do I have to?

Tour operators and travel agents are offering Abta backed credit notes that may not be Atol protected

Should I accept a holiday company refund credit note or airline voucher? Do I have to?

The vouchers and ‘refund credit notes’ being issued to holidaymakers in place of cash refunds for cancelled package holidays may not be financially protected by Atol.

Despite many holiday companies and Abta continuing to claim that ‘refund credit notes’ are financially protected by the Atol scheme, the government has yet to confirm this.

Similarly, some holiday companies have informed customers that the law has changed or might change and they must accept a credit note in place of a cash refund. This is not true.

Abta claims the ‘refund credit notes’ it has advised members to issue are financially protected by Atol. That’s the government scheme which guarantees package holiday customers get their money back if the firm goes bust between the holiday being booked and taking place.

However, the CAA, which operates the Atol scheme, wouldn’t confirm to Which? that these ‘refund credit notes’ were financially protected. That could mean that customers who accept one from their holiday provider may not get their money back if the provider subsequently goes bust.

Which? research has found many of the UK’s biggest holiday companies are now issuing vouchers and credit notes rather than cash refunds for cancelled package holidays. These credit notes can be used to re-book a holiday, or in some cases exchanged for a cash refund at some future date.


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The law on credit notes versus refunds for cancelled holidays

Legally, holiday companies must provide customers a refund on cancelled package holidays within 14 days under the Package Travel Regulations. But many of the UK’s biggest holiday providers are refusing or delaying cash refunds.

Tui, Loveholidays and Travel Republic are all only issuing credit notes. These can be turned into cash refunds, but the date when you are able to do so varies from four weeks to a year.

Others, like Lastminute.com, are encouraging customers to take a voucher by threatening to levy a fee on cash refunds.

Most Abta member travel agents and tour operators say they are operating under Abta guidance in issuing credit notes rather than refunds. The trade body is lobbying government to make these notes a legal option in place of immediate cash refunds, and for them to be Atol protected. It says some travel firms will go bankrupt if they refund all customers.

Which? is lobbying for the government to support the travel industry, but is insisting customers right to a cash refund must be upheld.

Should I accept a credit note from a package holiday company?

No. Until the CAA confirms that these refund credit notes are fully protected by Atol we are advising consumers to reject them.  If your package holiday has been cancelled, you are entitled to a cash refund by law so don’t be fobbed off.

You may find your company flatly refuses a refund, despite the law. Some are claiming that they are waiting for the government to mediate. The government should weigh in on the dispute within the next week or two, so for now continue to turn down any offers of a credit note and insist on a refund.

Should I accept a voucher from a package holiday company?

No. Some companies are offering their own vouchers and if the company was to go under you would not be able to get your money back easily. Regular vouchers from holiday companies have never been financially protected.

In some instances these vouchers are incentivised, and worth more than the original booking. This is classed as compensation and is not Atol protected.

Airlines and holiday companies cancelling holidays without refunds

Do I have a refund credit note or a voucher?

Look out for these things on a credit note: the original booking details and original reference number. It’s also important that it details only the amount you originally paid.

It should be called a ‘refund credit note’ rather than a voucher. If in doubt, you should contact Abta and ask if you have been issued a voucher or a credit note.

Read more about your package travel regulations rights

What if I’ve already accepted a refund credit note or voucher?

Tell your holiday provider you’ve changed your mind and ask for a refund instead. If that doesn’t work, it’s better to use the credit note to book a new package holiday as this will at least be Atol protected.

Do I have to accept a voucher from an airline?

No. If your flight has been cancelled by the airline, you are due a cash refund, provided the ticket was booked with an EU carrier or with any airline flying from an EU airport. Until December, EU rules continue to apply to UK airports and airlines.

Flight-only bookings have never been Atol protected, so if you accept a voucher and the airline later goes bust, you won’t be refunded.

If your airline continues to refuse a refund you should consider making a Section 75 or chargeback claim through your card provider.

Read more about how to use chargeback And Section 75 

What should I do if I’ve already accepted a voucher or credit from an airline?

Again, tell the airline you’ve changed your mind and want a refund instead. It may not work, but we have seen a few instances where airlines have relented on this.

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