With the advent of COVID-19, the travel and tourism sectors in the Union report a reduction of bookings in the range
of 60% to 90% compared to the same period last year. Refund requests from travellers due to cancellations far exceed the level of new bookings. According to preliminary estimates of the European Travel Agents’ and Tour Operators’ Association (ECTAA), the COVID-19 pandemic may cause a loss of EUR 30 billion (minus 60%) in the first quarter of 2020 and EUR 46 billion (minus 90%) in the second quarter, compared to expected turnover based on previous years.

The numerous cancellations entailed by the COVID-19 pandemic have led to an unsustainable cash-flow and revenue situation for the transport and travel sectors. The liquidity problems of organisers are exacerbated by the fact that they have to reimburse the full price of the package to the traveller while they do not themselves always receive reimbursement of prepaid services that form part of the package in due time. This can de facto result in an unfair sharing of the burden among the operators in the travel eco-system. If organisers or carriers become insolvent, there is a risk that many travellers and passengers would not receive any refund at all, as their claims against organisers and carriers are not protected. The same problem may arise in a business-to-business context, where organisers receive a voucher as reimbursement for prepaid services from carriers, which later become insolvent.

Making vouchers more attractive, as an alternative to reimbursement in money, would increase their acceptance by passengers and travellers. This would help to ease the liquidity problems of carriers and organisers and could ultimately lead to better protection of the interests of passengers and travellers. To that end, vouchers should be protected against insolvency of the carrier or of the organiser.

More information about the European Commission’s recommendations are available here.

Source: European Commission