Charging companies interest

By | Category: Travel rumblings

The CAA has warned Virgin Holidays that it needs to speed up paying refunds to its bookers. By the end of the month all outstanding payments should have been made, the company replies.

Couldn’t the bonding scheme be given some teeth?

Throughout the world travel, companies have been slow in refunding monies within the time limits specified in their own countries and it is understandable why. They have had to refund so much so quickly.

Nonetheless the industry has largely used a model that said they could use incoming monies paid for future holidays for day-to-day costs. Few thought to ring-fence those funds in case or repayment.

The action of the CAA in the case of Virgin Holidays shows – I hope – the exasperation of the regulator at the tardiness of the company.

Cruise companies have also come in for stick recently because of their tardiness as well.

It is nothing however compared to the years that it has taken some airlines and tour operators to pay compensation to those affected by flight delays and cancellations. TUI being one of the worst offenders has faced more court cases than I have had hot dinners. Some TUI ex-employees have taken their former company to court for non-payment. They know the ropes on how the compensation system works but they can’t even get the company to cough up the money it legitimately owes.

For at least the last eight years, India has a 2% interest charge on insurance companies that are slow payers to their policy holders. I believe the same principle will also apply to travel companies that don’t refund monies in a timely manner.

Why couldn’t that be implemented here?

There is already a late payment fee for companies not paying their suppliers within the time agreed.

As part of ATOL bonding, why couldn’t there be a clause stating that money refunds and compensation must be paid within a set period after liability has been accepted or imposed and that ATOL bonding would be suspended for multiple offences?

Those companies that are are adjudged to have deliberately gone into liquidation to avoid payment and started up again with the same staff, premises and systems could have their directors and shareholders suspended.

But better still would be a mandatory ATOL scheme whereby all monies paid for future holidays and travel should be ring-fenced and not touched until the holiday had been taken.

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