TUI’s optimism should be noted with caution amid refund confusion

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Following the announcement of TUI’s Q3 2020 results, industry analysts noted that even though the news that bookings for Summer 2021 are up by 145% at TUI strike a note of optimism, but caution is still necessary as numerous customers continue to await refunds.

The ‘quarantine roulette’ of the UK’s air bridges is placing great uncertainty on the travel industry and hindering its recovery. TUI Group’s response has been timely and reactive – prior to Q3 results, it announced further flight cancellations to mainland Spain, as well as the Balearic and the Canary Islands. However, similarly to other operators, the company’s reputation has been tarnished by its handling of the pandemic.

As of July 2020, 47% of passengers surveyed by MoneySavingExpert were still awaiting a refund. TUI has made adjustments to its website by offering customers the option to self-service their refund requests, yet it has still been recently criticized by the Civil Aviation Authority (CAA). Its relationship with suppliers has also been significantly damaged as it deferred 75% of winter hotel payments.

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As expected, catastrophic losses are evident for TUI. Revenue fell 98%, as of Q3 2020, to €75m (US$88.7m) comparable to the same period last year. As travel more or less ground to a halt between April and June, the company also registered a loss of €1.1bn (US$1.3bn) during the three-month period.

TUI is without doubt in a strong position to withstand further headwinds, however, it is critical that the company continues to exercise caution. With numerous customers still awaiting a refund while the operator announces more bookings for next year, there is a risk of negative sentiment towards the brand developing. Operators need to be considerate in how they promote future bookings and holidays when many remain uncertain as to the future of their travel booking.

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