Cross-border: Refunds in the travel sector: where does the liability lie?

As we highlighted recently in our article, COVID-19 and the travel industry: the battle between cash flow and consumer rights, the travel industry has been particularly hard hit by the COVID-19 pandemic, with many airlines and travel businesses unable to operate and forced to take drastic action in order to survive.

One particularly thorny issue is how they approach refunds to customers for cancelled holidays and flights and whether they can offer alternatives such as vouchers.  This is further complicated by the many different parties often involved in a typical booking made by payment card (as most are these days), be it travel agent, airline, card issuer or acquirer, travel insurance company or package travel security provider. 

The situation is supposed to be harmonised across the EU but variations in implementation of the Package Travel Directive and, more recently, changes to such legislation or enforcement practice in light of COVID-19 mean that it is anything but a level playing field. Our team of aviation and payments subject matter experts discuss where the refund liability lies in the ordinary course of a travel company’s business, and also take a look at how this liability changes if a travel company becomes insolvent, providing clear guidance for businesses looking to navigate this complicated landscape. 

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