A traveller can cancel a package at any time before it starts, but may then have to pay a termination fee. The contract can set reasonable standard fees based on how close to departure the cancellation is and the savings and resale income the organiser can expect. If it does not, the fee is the package price minus those savings and that income. The organiser must justify the amount if the traveller asks, and refund anything owed within 14 days.

The government’s guidance gives an example: if an organiser cannot cancel an air ticket, and so cannot resell it, it can be justifiable not to refund the ticket’s price.

A typical scale

Booking conditions often set the fee as a sliding scale, for example losing the deposit for cancellations more than 70 days before departure, rising in stages to the full price within the final 14 days. However it is set, a standard fee must be reasonable, and like other contract terms it is subject to the fairness test in the Consumer Rights Act 2015.

When no fee can be charged

• when unavoidable and extraordinary circumstances at or near the destination significantly affect the package

• when the organiser significantly changes the main features of the package, or raises the price by more than 8%, and the traveller chooses to cancel

• when the organiser cannot meet a special requirement it accepted and the traveller chooses to cancel

Worth knowing

The termination fee belongs to the organiser. Any fee a retailer adds for its own service should be included in the total price quoted before booking and made clear, including whether it is refundable. Charges for amending a booking are not termination fees. Personal reasons such as illness do not remove the fee, and travel insurance is the usual answer.