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Millions of holidays around the world were put on hold when the coronavirus pandemic hit in 2020, leaving tourists not only disappointed, but also out of pocket. Now, four years later, the Court of Justice of the European Union (CJEU) has ruled that travellers who cancelled their package holidays as a result of Covid must be reimbursed, even if the companies they made the booking through have since gone bust.

 

This landmark decision was made on the back of one particular case involving a group of Austrian and Belgian holidaymakers. When their travel agent went bankrupt, they asked their insurance company for a refund. Their request was denied, with the insurer arguing that it was the customers themselves who decided to cancel the trip because of the threat of Covid, and not the travel agent.

 

In general, travellers are only covered if the vacation is cancelled because the organiser declares themselves insolvent.

 

As it turns out, the travel agent did actually declare bankruptcy at a later date, but the CJEU stressed that the guarantee established in the European directive also applies “when a traveller cancels the trip due to unavoidable and extraordinary circumstances and, following that termination, the organiser becomes insolvent”.

 

In this regard, the European Court notes that “there is no reason to treat differently travellers whose package trip cannot be carried out due to the insolvency of the organiser and travellers who have cancelled their package trip due to unavoidable and extraordinary circumstances.”

 

For this reason, the CJEU interprets that the right to reimbursement would be deprived if, when the insolvency of the organiser occurs after the cancellation, the guarantee against such insolvency does not cover the corresponding rights to reimbursement.

 

 

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