One of the UK’s biggest package holiday operators has agreed to pay out all refunds to customers who saw their trips cancelled due to coronavirus.
Tui vowed to make the payments by the end of the month – after the Competition and Markets Authority (CMA) revealed it had received thousands of complaints from passengers claiming travel firms were withholding their cash.
The competition watchdog pointed out that consumer protection law requires refunds within 14 days. Lockdown in the UK was first announced in March.
Tui has agreed to pay out all refunds to customers who saw their trips cancelled due to coronavirus by the end of the month
Companies have struggled to return cash to customers, with many spending the money to cover overheads and pay down loans in a debt-heavy sector.
The CMA said Tui’s UK division had engaged constructively throughout the investigation.
It added: ‘While the vast majority of people have already received their refunds or rebooked during the CMA’s investigation, any outstanding refund requests for people who had their package holiday cancelled as a result of coronavirus (Covid-19) will be paid by 30 September 2020.’
Since the CMA said it would investigate any business trying to take advantage of the pandemic to either hike prices or withhold refunds, the majority of complaints aimed at travel firms have been over poor customer practices.
Officials had previously slammed the wedding insurance market for failing to make insurance payouts for cancelled nuptials.
But during the height of the pandemic, the CMA revealed four out of five complaints it received related to cancelled holidays and trips – with many complaining that travel firms were automatically offering vouchers instead of cash.
The CMA said on the Tui decision: ‘It is important they (customers) know they are entitled to a cash refund as an alternative.’
Tui, which is listed on the London and Frankfurt stock exchanges and headquartered in Germany, will be expected to regularly report to the CMA over the next year to update on the repayments.
The Competition and Markets Authority said it understood that the pandemic had created extraordinary pressure for travel companies, including Tui UK. But it added that customers must ‘receive their refunds promptly’
These commitments apply to all of Tui UK’s different businesses that offer package holidays, including First Choice, First Choice Holidays, Marella Cruises, Crystal Ski, Crystal, Tui Scene, Tui Lakes & Mountains and Skytours, the CMA added.
The move follows letters sent by the watchdog to over 100 package holiday businesses to remind them of their legal obligations to give back customers’ cash.
It added: ‘The CMA understands that the pandemic has created extraordinary pressure for travel companies, including Tui UK.
‘However, customers who had their holidays cancelled due to coronavirus must be treated fairly and receive their refunds promptly.
‘It is essential that all businesses comply with consumer protection law so that people are not being left out of pocket.’
Customers who had their holidays cancelled due to coronavirus must be treated fairly and receive their refunds promptly
The Competition and Markets Authority (CMA)
The CMA published guidance for businesses earlier this year to help them understand their legal obligations.
Andrea Coscelli, the CMA’s chief executive, added: ‘The CMA is continuing to investigate package holiday firms in the context of the Covid-19 crisis.
‘If we find that businesses are not complying with consumer protection law, we will not hesitate to take further action.’
The move comes a day after Thomas Cook relaunched as an online-only operation, a year after the 178-year-old firm went bust, stranding 150,000 holidaymakers abroad.
A Tui spokesperson told MailOnline Travel: ‘We remain sorry that holiday refunds took longer to process during the height of Covid-19. The volume of cancellations and customer contacts was unprecedented, and at a time when retail stores, contact centres and offices were closed because of the nationwide lockdown.
‘We worked tirelessly to deliver system improvements in extremely challenging circumstances, making refund times shorter prior to the CMA engagement with the package travel sector. Where due, customer refunds will be made within 14 days, as they were prior to the pandemic. We would like to thank our customers for their understanding.’
Rory Boland, Which? Travel Editor, said: ‘This is positive news for Tui UK customers and should mean there is light at the end of the tunnel for thousands of people who have been struggling to get refunds. However, there are many package holiday firms still breaking the law, forcing customers to accept refund credit notes and delaying refunds, so the CMA must be ready to take enforcement action against any firms that are failing to meet their legal obligations.
‘This action stands in sharp contrast to the situation with flight refunds, where airlines have disregarded warnings from the CAA, which has shown itself to be unable to take effective action. Consumers need a strong aviation regulator with real powers to hold airlines to account.’