Coronavirus – For The Industry: Where Do We Stand With Customers? So Many Questions!

As the ongoing coronavirus pandemic unfolds, Nick Parkinson, Associate at Travlaw, explains travel companies’ obligations to customers.  In particular, in relation to when refunds are due – and the many questions which that raises!

Flights are being cancelled, borders are closing, entire towns or regions are in lockdown.  To compound matters, the list of events that are being cancelled or postponed all around the world continues to grow.  Whether you are a tour operator, hotel, airline or otherwise involved in the travel industry – it is important to know your rights and obligations.

PACKAGE HOLIDAYS – Questions!

When Are We Obliged To Offer Customers Refunds?

There are four main situations when tour operators may be obliged to offer their customers a full refund:

1. Unable to Supply.  This is where you are unable to provide all of the travel services that form part of the package without making any significant changes to the itinerary.
2. “Unwilling” to Supply.  This is where you are unwilling to supply the travel services that form part of the package (without making any significant changes).  Typically this is where supplying the holiday would be against the advice of the Foreign Commonwealth Office (FCO).
3. Extraordinary Circumstances. This is where there are extraordinary circumstances at the place of destination (or the immediate vicinity) that significantly affect either the carriage of passengers to the place of destination, or the performance of the travel services.
4. Your T&C’s allow it.  Your T&C’s ought to have been drafted to match the minimum protection offered by the Package Travel Regulations.  However, if you have offered more favourable terms to customers, you are bound by those terms. This is rare, but not unheard of.

That said, you do not necessarily need to rush into volunteering refunds to your customers for various reasons as set out below:

You Can Offer Alternatives

Before you are obliged to offer any refunds, you are entirely free to offer alternatives to customers such as replacement holidays, adjusted itineraries or deferred holidays (credit).  It is possible offer incentives to get customers to agree to your proposals.

So Many Questions!

Even if you are unable to agree an alternative with the customer:  Applying any given situation to the above is likely to prompt a number of questions such as:

• At what point do I have to cancel future bookings?
• Do I have to refund customers even if I am not able to get refunds from my suppliers?
• What exactly constitutes a significant change?
• What if the holiday can go ahead, but an event that forms part of the package has been cancelled?
• What if there are extraordinary circumstances at the place of destination but the customers have arranged their own transport to the start of the holiday?
• What if there are border restrictions on entering say Singapore but your tour is only passing through Singapore airport for a connecting flight?
• What exactly is the place of destination?  Is that the country where the holiday takes place? Is it the specific area of the country?  What if the holiday includes travel to several countries?
• What if my T&C’s do not allow refunds, for example due to force majeure?
• What if customers’ are left stranded where, for example, there has been a late decision by a country to close or restrict the borders during the holiday?
• Do I have to offer the same refunds to customers from the UK, EU and outside of the EU?
• Hang on, am I actually selling a package to start at all?  (e.g. if you are only supplying say accommodation and event tickets)

Advice From the Authorities

• What are the consequences if I do not follow the advice of the FCO?
• What if the FCO advise against travel to say Singapore but your tour is only passing through Singapore airport for a connecting flight?
• What if the FCO are not advising against travel to a particular destination, but the authorities in another country are (e.g. the CDC in the USA)?
• Do I have to refund customers over 70 that do not want to travel on cruises following the recent advice from the government?
• What if a customer over 70 wants to travel on the cruise despite the government advice?
• What exactly constitutes a cruise?  Does a riverboat cruise with 20 passengers count?

Schools & Charities

• Do I have to refund tours booked as part of a school trip following the recent advice from the government?
• What if the students want to travel on the holiday despite the recent government advice?
• What if the holiday was supplied based on donations received through a Charity?  Do I have to refund the customers or the Charity?

Customers With Symptoms?

• What if customers cancel due to symptoms of coronavirus or due to self-isolation?
• What shall I do if customers have symptoms or coronavirus but still want to travel on the holiday?
• What shall I do if customers develop symptoms of coronavirus during the holiday?
• Do I have to pay for medical treatment if they get ill?  Hotel bills?  Return flights once they cover?
• Should I be sending questionnaires out before the holiday to check if customers are at risk of infecting of other people on the package?

Cash Flow & Insolvency Concerns

• Are there any legal solutions to assist with cash flow issues?
• What are the consequences if I do not offer customers full refunds?
• Will my insurer renew my insolvency protection policy?  If not, what other options do I have?
• What is my personal liability if my company were to go insolvent?
• Who pays the customers if my company were to go insolvent?
• If my company goes insolvent, will I be able to start another company in the future?  Will the CAA issue a new ATOL licence in the future?

And perhaps one of the most important questions:  What can I do to limit my exposure to customers and suppliers in the future?

SUPPLIERS & AGENTS- Questions!

If you are simply an agent, or a supplier of a single service such as accommodation, flights or ground handling services your obligations to customers are likely to be less onerous than the obligations above.  You may also ask:   Where do we stand with refunds to our customers?

The answer is quite simply that it all depends on what T&C’s you have in place with the consumer, and whether they are fair.  Alternatively, if you are a supplier on behalf of a tour operator, it all depends on what T&C’s you have in place with them.

WHAT NEXT FROM TRAVLAW?

These are of course unprecedented times for the travel industry and we fully recognise the need to do whatever we can to assist all those struggling during these very difficult times.  With that in mind, to try and get as much information in answers to these Questions, we intend to publish further articles over the coming days and weeks covering topics such as:

• Where do we stand with our customers! We will do our best to tackle as many of the FAQ’s that we have highlighted above
• Where do we stand with our suppliers?  Above we have only covered where tour operators stand with suppliers.  Where you stand with your suppliers is equally as important!
• Where do we stand with our employees?  Just like above, many questions are being asked about your options and obligations in relation to your employees