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State guarantee given for refund credit notes issued by travel agents and tour operators

Tourism Minister Shane Ross received government approval for the proposals today.

Image: Sam Boal via RollingNews.ie

THE GOVERNMENT HAS confirmed it will provide a State guarantee for a special form of refund credit note for package holidays booked through Irish registered travel agents and tour operators. 

Tourism Minister Shane Ross received government approval for the proposals today.

The credit notes can be offered by travel agents and tour operators to their customers in circumstances where they are not able to provide a cash refund or a full cash refund. 

“The travel restrictions imposed across the world in response to the Covid-19 pandemic have led to the widespread cancellation of holidays during March, April and May, with many people having to postpone holiday, wedding and honeymoon plans,” Minister Ross said. 

“Under the EU Travel Package Directive, people who have had to cancel such bookings because of Covid-19 travel are entitled to a cash refund, and that entitlement will continue,” he said. 

However, it is also the case that many travel agents and tour operators are having severe cash flow problems, and it is not clear that all of them will be able to meet all of their current cash refund obligations and at the same time be able to stay in business. 

“The government has therefore agreed to back a new refund credit note that travel agents and tour operators can offer to their customers.”

The refund notes will work as follows: 

  • It can be to the value of all of the refund due or part of the refund alongside part cash
  • It will be redeemable for its cash value after six months and can be used to book a replacement holiday at any stage
  • It will be State-guaranteed in the event that the travel agent or tour operator becomes insolvent

Minister Ross said these are very difficult days for consumers who have booked holidays, for the tourism industry and for the many travel agents and tour operators who have seen their businesses face near-collapse in recent months. 

He said the refund credit note is an attempt to strike a balance between preventing sector-wide bankruptcy and consumer rights. 

EU letter

On 29 April, the government co-signed a letter with a number of EU countries asking for the European Commission to change the rules on how airline passengers can be refunded for cancelled flights.

The letter, which has been signed by 13 member states, calls for the commission to temporarily allow airlines to issue vouchers instead of refunds to passengers whose flights have been cancelled due to the Covid-19 pandemic.

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Under EU Regulation 261/2014, airlines must reimburse passengers whose flights are cancelled the choice of a refund or a re-routing within seven days.

But the member states – Ireland, Belgium, Bulgaria, Cyprus, the Czech Republic, Greece, France, Latvia, Malta, the Netherlands, Poland and Portugal – said current rules place airlines in a difficult situation, particularly as many are facing financial difficulties.

The joint letter stated that the temporary use of vouchers would be acceptable for consumers if key principles, such as transparency, a common length of voucher validity, maximum flexibility of use and a right to reimbursement at the end of the validity period in the event of non-use, were adhered to.

The letter followed complaints from customers that Ryanair and Aer Lingus had joined a number of other airlines across the continent in primarily offering vouchers to those whose flights had been cancelled.

With reporting by Stephen McDermott

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