On the Beach has admitted letting customers down over refunds for cancelled holidays but said much of the blame lay with airlines that failed to return money.

The online travel agent also said its decision to throw in free COVID tests with holidays in September, October and November last year, cost it £1 million.

In and end-of-year strategic report, published this week, On the Beach Non-Executive Chairman Richard Pennycook said: “Whilst On the Beach had done its best to repatriate customers stranded by last minute ‘red’ or ‘amber’ country reclassifications and to refund monies paid for cancelled holidays, the strain on the system was intense and in a number of cases we let our customers down.

“This was particularly the case where airlines failed to refund our customers for flights which had been cancelled.

“Only when we had secured our liquidity, were we able to start refunding our customers for that portion of their holiday even when the airline had not in turn refunded us.

“As a consequence, we – along with the rest of the industry – incurred reputational damage.”

He said the company’s decision not to sell holidays in summer 2021, due to COVID uncertainty, was a ‘responsible’ thing to do.

“We believe we were seen as a responsible company helping customers to avoid major disruption to their annual holidays.

“Alongside that unusual marketing campaign we called the industry to account for its behaviour towards customers with respect to refunds,” Mr Pennycook added.

CEO Simon Cooper said the free COVID test campaign was ‘On the Beach’s largest ever promotion at a cost of over £1 million, which meant we could reduce the holiday hassle administration as well as saving our customers money’.

The report also reveals former MP Justine Greening, who spent eight years in Cabinet, including as Transport Minister, joined the board in March 2021 as a Non-Executive Director.