Loveholidays backs down over flight refunds following CMA investigation

Loveholidays has agreed to pay £18 million in refunds to customers who cancelled their package holidays after the Foreign Office advised against non-essential travel earlier this year.

The online travel agent has promised the Competition and Markets Authority (CMA) that 44,000 customers will be refunded by the end of March 2021.

Loveholidays had originally told package holiday customers that they were only entitled to a refund for their hotel accommodation and transfers

It refused to refund their air fares unless the airlines refunded loveholidays first. In some cases, airlines refused to refund because the flights still went ahead.

Loveholidays and rival On the Beach left ABTA earlier this year after refusing to abide by the Association’s code of conduct over refunds.

However, loveholidays has now given an undertaking to fully refund customers following an investigation by the CMA.

The CMA said: "Under the Package Travel Regulations, online travel agents are legally bound to refund customers for package holidays cancelled due to coronavirus, regardless of whether or not the agent has received money back from suppliers, for example airlines."

So far, loveholidays has refunded £7m of the £18 million owed, but 20,000 customers are still waiting for their money back.

"Having carefully reviewed loveholidays’ financial information, and how quickly it can realistically repay customers, the CMA has accepted loveholidays’ commitment to repay these customers in full by March 2021 at the latest," said the CMA.

It said that insisting on earlier repayment would result in loveholidays dipping below its regulatory obligations.

In order for customers to receive their money back as quickly as possible, refunds for hotel and accommodation cancelled before 1 November will be refunded by 31 December and the air fare element of all holidays cancelled before 24 August will be refunded by 28 February.

But customers whose holidays were cancelled between 24 August and 31 October might have to wait until the end of March for their airfare to be refunded.

To ensure that loveholidays adheres to its commitments, the company must provide the CMA with regular reports on the progress of its repayments. If it fails to repay customers by these dates, the CMA says it is prepared to take the company to court.

CMA Chief Executive Andrea Coscelli said: "We are continuing to investigate package travel firms and where we find evidence that businesses are breaching consumer law, we will not hesitate to take enforcement action to protect consumers."

Which? Travel Editor Rory Boland described loveholidays as one of the worst culprits but he said there were countless other holiday firms that have let customers down on refunds this year. "The government must look at measures to ensure there are better protections for holidaymakers’ money, while the Civil Aviation Authority – which has been unable to take meaningful action against airlines holding up the refund process by withholding money from holiday companies – must be given stronger powers," he added.

By Linsey McNeill, Editor (UK)