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Virgin to officially ask for a government bailout
As we reported earlier in the week, the government declined to offer a universal bailout for airlines during the coronavirus crisis. Instead, they indicated that they would consider aid on a case by case basis when every other option had been exhausted.
It was reported today by the Shadow Business Secretary on BBC News and the Financial Times that Virgin Atlantic are planning to apply for a government bailout imminently. This is despite Richard Branson pledging $250 million to the Virgin Group, with the majority earmarked for Virgin Atlantic. Virgin is in a particularly precarious position given that its route network is solely long haul and has been affected very badly by the crisis. Add in that they lease three-quarters of their aircraft and made a loss last year and it doesn’t look good at all. According to their latest reports, Virgin only had £83 million in cash compared to IAG’s £9billion.
According to the FT, Virgin will ask for “a package of commercial loans and guarantees worth hundreds of millions of pounds”. Other airlines apparently considering asking for government help include Loganair, Eastern Airways, and Norwegian Air Shuttle.
The UK government surprised many by refusing a UK wide airline bailout, which may be because many of the UK based airlines are owned by non-UK companies such IAG (Spain) and Virgin (49% owned by Delta).
Both Virgin Atlantic and the Department for Transport declined to comment to the FT.
What should you do with your Virgin Atlantic miles?
Sadly Virgin have pretty much boxed you into a corner with your miles. If you buy a ticket with miles on a partner airline you need to call up for all other airlines except Delta. Even with Delta, there is no guarantee they would get paid for the flight by Virgin and honour it. All the other options to redeem for non-flight rewards require a phone call and Virgin will simply not speak to you if your flight is not within 72 hours (I know I tried to get my money back on a miles booking!). You can read more in this article about the various options.
ABTA supporting change in refund rules
Reader Gareth wrote in to say that as we reported earlier, the travel industry are lobbying the Transport Minister Grant Shapps for a refund concession. ABTA, IATA and much if the British travel industry are lobbying the government to change rules so they don’t have to offer a refund if they cancel. The proposal is that can give a future holiday or flight credit/voucher instead. This would be likely to be valid for two years and refundable if not spent within two years. Similar moves are afoot in the US with the airlines as well.
Whilst I am all for supporting airlines get through the crisis, I am completely against this. Many people have lost jobs and can ill afford not to get a refund on their cancelled holidays and flights.
On the plus side, ABTA is also calling for a six month exemption from air passenger duty.
If you feel strongly about this too, why not use your lockdown to write to your MP and/or Grant Shapps, the Transport Secretary to object to this erosion of consumer protection. You can find your MP’s details here.
10 comments
I dont mind voucher but I don’t want to have to commit to a date right now and then have to pay to change it… currently fighting easyjet for a refund… all they offer on website is to change to a future date.
Having exploited the UK as a cash-cow through disruptor tactics, Norwegian should not be entertained in any way, shape or form, especially having hived all their assets back to Norway to escape remaining UK financial liabilities. They deserted their UK staff and have left them exposed to the whim of the Government and taxpayer.
Branson is no less culpable, having also treated his staff badly while leaving the taxpayer to pick up the pieces.
I’m referring to the many fine tour operators here, as opposed to the airlines. You advise people to contact their MP to go against voucher issuance. I don’t think that you realise that these operators have paid the money out to airlines and hotels and do not have the cash in the bank to refund. I’ve read reports in the travel trade that nearly all tour operators will go out of business if forced to refund immediately. You will then, not only have caused thousands of further jobs losses, but will give yourself the extremely arduous task of claiming your funds from the CAA which will take you multiple months to achieve. Many haven’t received Thomas Cook refunds yet. In short, you are better to accept a voucher, which you’d be likely to use anyway or which you’ll be able to refund down sometime down the line. Note that the voucher will be financially protected. Not everyone spends their last dime on booking a holiday so most should be able to whether the refund delay. This scenario is all about us all giving a little where required to help each other.
Unfortunately one solution doesn’t work for all. My fiancee and I have had to cancel our wedding in Portugal on the 7th May. We had flights booked for all of our kids and partners as well as ourselves which we paid for ourselves. We have now decided to get married in the UK as soon as we can whatever form that takes so we no longer require the flights (10 people in total). I have spoken with BA and the vouchers are only valid in the names of the people currently booked even tho it was me that paid out for all the tickets. I would happily accept a voucher for the total value of all the flights if it could be used against a single booking for myself and my partner. I dont see a problem with this as an option but BA wont entertain this. Airlines seem to be making the assumption that everybody is flying for a holiday which they will want to take at some point in the future. There are lots of reasons why people need to fly at specific points in time only ie. a business meetings, funerals, weddings etc. If they don’t want to refund the cash then more flexibility is required from airlines and tour operators rather than blanket solutions.
The only thing I can recommend is to not take the voucher and hope they cancel it nearer the time. It is pretty unfair in these circumstances.
There is one solution – it’s a bit sneaky and will need some careful research. If you have a holidays booking i.e. a flight + car or hotel you get one voucher per booking. Is there a way you could add a REFUNDABLE hotel option to your booking? Normally you can do this online. Then apply for a voucher. Let me know if it works. You can do a hotel for one night, you don’t have to book it for the whole time.
I have a holiday booked for Italy in June. The operator is still saying it will go ahead and won’t offer a voucher or refund.
I’d be happy to take a 2 year refundable voucher. I can afford to wait but many individuals and families will be in dire straits and need the money.
I don’t believe it’s true that tour operators pay up front for air fares and hotels. It’s part of the business model to pay after the holiday. That’s why in the Thomas Cook collapse the UK government was offering to pay hoteliers direct so that they would ‘release’ their guests so they could get on rescue flights.
The chances are that June will be covered eventually if the situation continues so hopefully you can get a voucher.
I am not happy about receiving a credit note. I booked a Special Package holiday through a travel company costing £7490.00 thinking that i was protected if anything went wrong. (It is unfair to change the rules when things do go wrong) For this amount of money I don’t think many people would accept a Credit Note. I would like a refund.
TUI and Cooks do not necessarily pay up front for hotels in and they own their own airlines but I stated ‘fine’ operators of which I could name many. These operators such as Kirker and Classic Collection, Caribtours etc etc even pay airfares up front. These days they more often than not, charge large deposits to include the whole airfare because they are using non-refundable published airfares which can be cheaper than their own IT airfares. We need to help these many firms if we can.
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