Bought a BA Holiday package? You are losing your right to a cash refund.

The Independent reports today that the Government is about to suspend the rules which guarantee you a swift refund when you cancel a package holiday.

The article is here.

One intriguing feature of my inbox in recent weeks has been the number of people complaining about British Airways making it very difficult to get a cash refund for a flight booking.

And yet, for every five complaints I got about flight refunds, I would get one praising British Airways and saying how wonderful they were for refunding a ‘flight and car’, ‘flight and hotel’ or BA Holidays package virtually instantaneously.

This was not an act of generosity, however.

Under the 2018 Package Travel Regulations, a holiday company is legally obliged to refund your holiday in full, in cash, within 14 days of it being cancelled.  There is no leeway.

On paper, there is also no leeway under EC261 about not refunding ‘flight only’ bookings either, but the penalties for flouting those rules are not as strict.

The European Commission ruled on Friday that this structure no longer made sense and was likely to drive every holiday company to the wall within weeks.

Under the proposed new rules, a holiday company can now provide a voucher or a credit note for a cancelled holiday.  There is one caveat though – there must be a legally binding guarantee in place that protects the voucher if the holiday company which issued it goes bust.

According to The Independent today, the UK Government is about to announce that it will underwrite ATOL to act as ‘funder of last resort’ to credit notes issued by holiday companies.

It will agree to backstop the value of credit notes for a period of two years.  If the holiday company goes into receivership during that time, ATOL will provide a cash refund for the credit note.

The article also implies that there will be a mechanism to cash out the voucher regardless of whether the tour operator has gone bust, but this is not clearly explained. 

Obviously you can’t be allowed to refund your voucher for cash immediately or there would be no benefit in putting the ruling in place.  It also makes little sense for ATOL to pay out a cash refund if the tour operator is still trading and could pay you directly.  It may be that the ‘take the cash’ option is only valid after the two years is up.  Hopefully the official announcement will provide some clarity here.

For most Head for Points readers, the effect of this will be to put ‘flight and hotel’, ‘flight and car’ or BA Holidays ticket holders into a WORSE position than people who simply have a flight booking.

Anyone with a flight only booking will remain legally entitled to a full cash refund once their flight is cancelled.

This is a reverse of the current position, where purchasers of packages were guaranteed a refund within 14 days whilst ‘flight only’ passengers have had to fight British Airways for the cash refund they are due with the website and emails actively encouraging people to accept a voucher.

You can find out more on The Independent website here.

How to earn Avios from UK credit cards (December 2021)

As a reminder, there are various ways of earning Avios points from UK credit cards.  Many cards also have generous sign-up bonuses!

There are two official British Airways American Express cards with attractive sign-up bonuses:

British Airways American Express

5,000 Avios for signing up, no annual fee and an Economy 2-4-1 voucher for spending ….. Read our full review

British Airways American Express Premium Plus

25,000 Avios and the UK’s most valuable credit card perk – the 2-4-1 companion voucher Read our full review

You can also get generous sign-up bonuses by applying for American Express cards which earn Membership Rewards points, such as:

American Express Preferred Rewards Gold

Your best beginner’s card – 20,000 points, FREE for a year & two airport lounge passes Read our full review

The Platinum Card from American Express

30,000 points and an unbeatable set of travel benefits – for a fee Read our full review

Run your own business?

We recommend Capital On Tap for limited companies. You earn 1 Avios per £1 which is impressive for a Visa card, along with a sign-up bonus worth 10,500 Avios:

Capital On Tap Business Rewards Visa

The most generous Avios Visa or Mastercard for a limited company Read our full review

You should also consider the British Airways Accelerating Business credit card. This is open to sole traders as well as limited companies and has a 30,000 Avios sign-up bonus:

British Airways Accelerating Business American Express

30,000 Avios sign-up bonus – plus annual bonuses of up to 30,000 Avios Read our full review

Click here to read our detailed summary of all UK credit cards which earn Avios. This includes both personal and small business cards.

(Want to earn more Avios?  Click here to visit our home page for our latest articles on earning and spending your Avios points and click here to see how to earn more Avios this month from offers and promotions.)