One of the UK’s biggest package holiday operators, TUI, has agreed to pay out all refunds to customers whose trips were cancelled due to coronavirus.
TUI vowed to make the payments by the end of this 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 months ago in March.
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 has 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 September 30 2020.”
Travel firms have faced the majority of complaints about poor customer practices since the CMA said it would investigate any business trying to take advantage of the pandemic to either hike prices or withhold refunds.
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.
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.
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“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.”
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.