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.
Rory Boland, editor of Which? Travel slammed OTB for its stance on refunds and cautioned travellers about booking with operators refusing refunds.
He said: ‘Travel operators are facing a serious financial crisis but they are also facing a crisis of trust – and OTB’s actions will only further diminish confidence that it’s possible to book a holiday without the risk of losing your money.
‘Anyone who has their hotel cancelled as part of a package holiday is due a refund for the full cost of the holiday under the Package Travel Regulations, but holidaymakers who decide not to travel because of government advice might struggle to get their money back.
‘We would currently advise anyone against booking a holiday with any travel operator refusing to allow customers refunds in these circumstances and encourage people struggling to get a refund not to take no for an answer.
‘If enough customers join us in telling On the Beach that its approach is unacceptable, the company may be forced to reconsider and pay up to those who are owed money.’
The OTB 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.
What is the difference between ATOL and ABTA?
ATOL is the UK’s financial protection scheme cover for all flight inclusive package holidays.
An On the Beach (OTB) spokesperson said: ‘The ATOL protection scheme offers financial protection and peace of mind when you need it most, which is why it’s such a priority here at OTB.’
Meanwhile, ABTA is a travel trade association. Membership is not compulsory for those in the travel industry so travel agents are freely allowed to resign their memberships at will.
An OTB spokesperson explains: ‘They have established their own specific code of conduct and guidelines, however they are not a regulator.
‘Membership is optional, and many well-known businesses in the travel industry are not members of ABTA.’
‘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.
Boland added: ‘This situation has partly been brought about by airlines continuing to refuse refunds regardless of FCO advice.
‘Which? has called on the government to offer support to holiday operators or airlines struggling due to the coronavirus pandemic – but this support should only be available to companies that are prepared to do the right thing and pay refunds to customers who can not travel due to government advice.’
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.
How has Covid-19 impacted on ABTA’s Code of Conduct?
Some time limits on ABTAs code of conduct have been relaxed due to the impact of Covid-19.
For example, ABTA members now have an extended period of 56 days to reply to correspondence from clients instead of the required 28 days, which is probably why so many travellers are experiencing delays following their complaints about refunds.
ABTA also highlights on its website: ‘If a client pursues an arbitration claim under the ABTA scheme at this time, Members can ask for a 56-day time limit to submit a defence, and can take 56 days to pay any award.
‘In terms of refunds being provided to clients for cancelled holidays, due to the exceptional circumstances and volume of cases, the Code’s time limit on this is currently suspended.
‘We ask Members to provide refunds without undue delay, but accept that there are unavoidable delays at present.’