Travel Agencies’ Credit Vouchers Are Controversial

From Keflavík International Airport.

From Keflavík International Airport. Eggert Jóhannesson

A controversial draft bill, allowing travel agencies to refund canceled package tours by issuing credit vouchers instead of paying cash, is still being discussed by Alþingi’s Industrial Affairs Committee, Morgunblaðið reports. The bill was introduced by Minister of Tourism, Industry and Innovation Þórdís Kolbrún Reykfjörð Gylfadóttir.

According to Halla Signý Kristjánsdóttir, spokesperson for the committee, the committee has consulted numerous people and asked for information about measures taken in other European countries. She states it is not yet clear whether the committee will suggest changes to the bill.

The Consumer Association of Iceland, the Icelandic Confederation of Labor, and BSRB – the Federation of State and Municipal Employees have all harshly criticized the bill, claiming that its goal is to shift the burden of travel company’s liquidity crisis to the shoulders of consumers.

From Alþiingi, the Icelandic parliament.

From Alþiingi, the Icelandic parliament. mbl.is/Kristinn Magnússon

Breki Karlsson, director of the Consumer Association of Iceland, states it is baffling to see that consumers are being forced into the role of creditors of travel agencies. He asks how Icelanders can be expected to travel domestically this summer, as they have been encouraged to do, if their vacation funds are tied in credit vouchers that won’t be usable until this fall at the earliest, if ever.

By contrast, the Icelandic Travel Industry Association (SAF) states that the COVID-19 pandemic and the accompanying travel bans make it impossible for travel companies to provide service and impossible for consumers to take advantage of such service. The bill’s aim is to prevent the bankruptcy of travel agencies due to a liquidity crisis.

From Keflavík International Airport.

From Keflavík International Airport. Eggert Jóhannesson

Unquestionably, current law gives travelers the undisputed right to a full refund of a package tour in cash within 14 days of the tour’s cancellation by the company, or the consumer’s cancellation due to unavoidable and extraordinary circumstances.

The law is based on the European Union’s travel directive on package travel and linked travel arrangements.

An opinion, accompanying the bill, states that clearly, the changes it suggests to the current law go against the EU directive and may violate Iceland’s commitments in terms of international law. Still, this measure is seen as justifiable, given the extraordinary circumstances. If permission won’t be given to issue a credit voucher instead of a cash refund, numerous bankruptcies will ensue. A number of European countries have chosen this route, the opinion states.

The draft bill suggests allowing the issuing of credit vouchers for package trips canceled from March 15 through June 30. If the credit is not used within 12 months, it can be “redeemed.”

The Icelandic Tourist Board points out that during this situation, an insurance system is in place, which will step in to refund claims, should a travel agency go bankrupt.

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