When You Cancel a Holiday

Under the PTRs 2018, when you cancel a package holiday, the organiser can charge a "termination fee" that is "reasonable and justifiable." This must reflect:

• The price of the package
• The costs the organiser has already incurred that cannot be recovered (e.g., flight tickets, hotel deposits)
• The expected savings from cancellation (e.g., if they can resell the booking)

Many operators use a sliding scale: cancellation more than 70 days before departure may incur only a loss of deposit, while cancellation within 14 days may incur 100% of the holiday cost. These scales are lawful only if the stated amounts genuinely reflect the organiser's losses. Disproportionate penalties may be challengeable as unfair contract terms under the Consumer Rights Act 2015.

If you need to cancel because of unavoidable extraordinary circumstances at the destination or in the immediate vicinity — such as a natural disaster, outbreak of disease, or significant security threat — the PTRs 2018 allow you to terminate the contract and receive a full refund with no cancellation charge.

This right is narrower than it may appear: the circumstances must be at the destination and must "significantly affect" the performance of the package. General nervousness about travelling or personal circumstances (illness, job loss) do not qualify under this provision — those are covered by travel insurance rather than the PTRs 2018.

Check Foreign, Commonwealth & Development Office (FCDO) advice for the destination. If the FCDO advises against all travel, this strongly supports a PTRs 2018 cancellation without charge.

Travel insurance cancellation cover is intended to indemnify you for pre-paid non-refundable costs when you are forced to cancel for a covered reason. Common covered reasons include:

• Your own or a close relative's unexpected serious illness, injury, or death
• Redundancy (usually subject to a minimum period of employment)
• Jury service or witness summons you cannot avoid
• Pregnancy complications arising after booking
• Home emergencies (fire, flood) requiring your presence

A simple "change of mind" or disinclination to travel is not a covered reason. Always buy travel insurance as soon as you make a booking — not just before departure — so that cancellation events that arise between booking and travel are covered.

To protect your position when cancelling:

1. Cancel in writing — email or letter to the operator, agent, or airline. Keep a copy and note the date and time.
2. Request written confirmation of the cancellation and any charges being applied.
3. Check the breakdown of any cancellation fee — request an itemised breakdown if a significant sum is deducted.
4. Notify your insurer as soon as the cancellation is confirmed, providing all supporting documentation (medical certificates, redundancy notice).
5. If cancelling a standalone flight, check whether the airline offers flexible or refundable fares — some airlines offer vouchers or rebooking even on non-refundable tickets.

When you cancel a holiday and face a cancellation charge, UK consumer law provides several avenues to challenge charges that are disproportionate, unfair, or based on terms that were not clearly disclosed.

Consumer Rights Act 2015: unfair contract terms

Cancellation charges in standard-form package holiday contracts are subject to the Consumer Rights Act 2015 (CRA 2015) unfair terms regime. A cancellation charge is potentially unfair — and therefore unenforceable — if it does not represent a reasonable pre-estimate of the loss the organiser will suffer as a result of your cancellation at that point in time. Signs that a charge may be unfair include:

• A flat percentage charge that does not vary with how far in advance you cancel — for example, 50% retained at 90 days when the operator could reasonably resell the booking.
• A charge that significantly exceeds the organiser's actual costs at the time of cancellation (e.g., no flights or hotels have yet been paid for).
• A charge imposed under a term that was not drawn to your attention before you contracted.

If you believe a charge is unfair, write to the operator citing the CRA 2015 and request an itemised breakdown of the losses their fee is meant to compensate. If they cannot justify the figure, you can pursue the excess through the small claims court or ABTA ADR.

Section 75 of the Consumer Credit Act 1974

Section 75 of the Consumer Credit Act 1974 is most relevant when the operator cancels or fails to provide the holiday — not when you voluntarily cancel. However, if the operator cancels and refuses to refund within the required 14 days under the PTRs 2018, your credit card provider is jointly liable and you can make a Section 75 claim. For voluntary cancellations, Section 75 does not apply unless the operator is itself in breach (e.g., the holiday was significantly changed and you exercised your right to cancel).

CMA guidance on holiday cancellation terms

The Competition and Markets Authority (CMA) has published guidance on cancellation terms in consumer contracts, making clear that terms must reflect genuine pre-estimates of loss. The CMA took enforcement action during the Covid-19 pandemic against operators refusing refunds for cancelled packages. Under the Digital Markets, Competition and Consumers Act 2024, the CMA has strengthened powers to act directly against businesses that systematically impose unfair cancellation terms — you can report such practices to the CMA at gov.uk/cma.