Davey said ministers should clarify how the regulations governing refunds should be fulfilled during the coronavirus pandemic.
"So long as a customer’s right to a refund is protected, I think it is reasonable to allow travel businesses more time to pay, so long as they issue legally binding credit notes in the interim," said Davey in response to a letter sent to him as part of Abta’s Save Future Travel campaign by TTG Media CEO Daniel Pearce.
"This would provide cash flow support while not undermining consumers’ basic rights," Davey continued.
Abta launched its Save Future Travel campaign earlier this month, urging travel professionals – and supporters of the industry – to write to their local MPs about the impact the requirement under the Package Travel Regulations to refund customers for cancelled Atol-protected holidays within 14 days was having on their businesses.
In the absence of clarity from government, Abta has promoted a "refund credit note" regime, with these notes able to be exchanged full cash refunds at a later date.
The association’s guidance states these notes should carry the same financial protection as the original booking, in line with the package operator’s current financial protection arrangements which could run through to March 2021. However, government is yet to give the CAA the go ahead to confirm these notes will be protected.
Davey said he backed Abta’s stance for two additional reasons.
"First, because it does not involve the government providing a financial bailout, with the risk that this would then be demanded by all sectors," he said.
"Second, because many travel firms have a cash flow problem due to the airlines’ refusal to compensate them for flights that have been cancelled. A credit note solution looks like a smart way to prevent a domino collapse across the whole sector."
Davey also acknowledged action taken by several European countries to make temporary changes to their own interpretations of the EU Package Travel Directive.
"The UK would not be alone in taking this approach to help the travel industry," he added.
"I am worried that the British Government is just acting too slowly.
"I, and my Liberal Democrat colleagues, will continue to raise the concerns of the industry and support practical, cost-effective solutions to helping the travel sector during this extraordinary and deeply troubling time."
