Australia state border closures and lockdowns: No refund for cancelled holidays in some cases

The latest NSW lockdowns have come as a hammer blow for many would-be holidaymakers. The drawbridge is up, and anyone who lives between Bondi and the Blue Mountains, north to the Central Coast and as far south as Shellharbour is subject to stay-at-home orders which restrict travel.

Even if they could leave, most states have closed their borders to anyone coming from that area. That region is now experiencing what many in Victoria have already gone through, when hopes were running high that the worst of the pandemic was behind us.

Across the country, a series of travel restrictions are now in place due to other outbreaks, causing chaos for holiday plans. 

Coming at the beginning of the school holidays adds salt in the lockdown wound. Many families planning a winter break in the sunshine or a snow holiday have had to cancel their holidays. Most hotels are offering credits allowing guests to defer but some are keeping the full amount, no credit and no refund, on the grounds that the guest is cancelling at short notice and within the "no refund" period set out in the terms and conditions (T&Cs) of their booking. During peak periods including school holidays, hotels and car hire operators are likely to demand full payment rather than a deposit when a booking is made. That could be a huge loss if the operator decides to play hardball.

If a lockdown forces me to cancel, can a travel operator keep whatever I've paid?

They can if that's in their T&Cs. Didn't read the T&Cs? You're not alone. Under normal circumstances you won't have to fall back on the T&Cs but now is anything but normal.

If a travel operator decides you've forfeited your payment due to a COVID lockdown, don't expect the Australian Competition and Consumer Commission (ACCC) to come to your aid. According to an ACCC document titled Advice on event and travel cancellations due to COVID 19: "If the event, flight or travel service is cancelled due to government restrictions… consumers may be entitled to a refund under the terms and conditions of their ticket, or potentially may make a claim under a travel insurance policy."

"Given the exceptional circumstances, the ACCC encourages all businesses to treat consumers fairly and compassionately," ACCC Chair Rod Sims said.

Encouraged, but not compelled. Nor is it likely that travel insurance will cover your loss in this case. Since the pandemic became a 'known event' back in January 2020, most travel insurers stopped offering cover for any circumstance where a government authority has ordered a closure, quarantine or arising from the pandemic, and a COVID lockdown falls into that category.

If you've paid with a credit card you might have a case for a chargeback via your card provider. That's more likely to succeed if there are any weaknesses in the operator's T&Cs, especially if they have not been disclosed during the booking process.

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It's more important than ever to be aware of what you're signing up for when you make your travel booking. Most T&C documents are a snore to read but at least scan it for the words "cancel", "refund" and "force majeure".

Force majeure

A force majeure clause – "superior force" – can refer to acts of war, natural disasters, civil unrest and anything else beyond the control of the travel operator that renders them unable to fulfil their contractual obligations.

Some operators have invoked force majeure clauses in the current pandemic but the wording needs to be precise and the reasons genuine. For example the date on which a force majeure event is triggered is probably going to be fairly clear in the case of a natural disaster, but not so obvious in the case of the current pandemic. Was it March 11, 2020, the date when the WHO declared a global pandemic, or March 25, the date when Australia banned its citizens from travelling overseas? If the force majeure event was determined to be the later date, then a travel provider could not use the clause to absolve them from their contractual obligations on the basis of the WHO declaration. In such muddied waters the legal profession performs aquatic somersaults.

The crucial point is what the travel operator will do in response to a force majeure event, as set out in their T&Cs. Some offer a refund of any monies paid, less any costs not recoverable, such as hotel deposits. Most offer a travel credit, in some cases with a booster. When Qatar Airways cancelled my return trip to Europe, scheduled for May 2020, the airline offered to top up the travel credit by 10 per cent. However, some operators have clauses to the effect that they may cancel or postpone a tour at their own discretion and the traveller has no right to refunds or compensation.

Frustration of contract

A contract can also be frustrated, which is similar to force majeure in that a provider is unable to fulfil a service due to circumstances beyond their control. That needn't be spelled out in the T&Cs but the provider must prove beyond all doubt that external circumstances have changed to the extent that it would be impossible to provide the contracted service. If that's proven, any losses incurred by the provider up to the point of frustration are irrecoverable, and not claimable.

An accommodation alternative

Airbnb has a sliding scale of cancellation policies, set by the host, and that's an option worth considering when lockdowns can happen at short notice. The most generous is "flexible", which allows the guest to cancel up to 24 hours before check-in with a full refund. Between 24 hours prior and check-in time, the guest can still cancel for a refund minus the first night and service fee. It's not too hard to find Airbnb hosts that offer flexible booking conditions. You can select 'Cancellation flexibility' as one of the filters when you search on the Airbnb website.

Stayz offers less generous terms, with a minimum cancellation of at least two weeks before the booking commences required for a full refund.

See also: Lockdown or shockdown? Our approach to state borders is laughable

See also: Even after borders open, international travel will be a nightmare

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