Holiday firm Lastminute.com has agreed to repay more than £7m owed to customers whose package holidays were cancelled due to the Covid-19 crisis.
More than 9,000 customers are waiting for refunds, and the move follows pressure from the Competition and Markets Authority (CMA).
The watchdog is currently chasing more than 100 package holiday firms to get refund commitments.
The travel sector has been deeply affected by the coronavirus crisis.
Lastminute.com was told to repay customers after hundreds of complaints that it was dragging its heels over refunds.
The firm has agreed to repay at least half of customers by 16 December and the rest by no later than 31 January 2021.
Anyone entitled to a refund for cancellations on or after Thursday 3 December will be paid within 14 days, the CMA added.
“Online travel agents have a legal responsibility to provide prompt refunds to customers whose holidays have been cancelled due to coronavirus – irrespective of whether the agent received refunds from airlines and accommodation providers,” said Andrea Coscelli, chief executive of the CMA.
“Our action today means that customers whose holidays were cancelled by Lastminute.com will receive their money back without undue delay.”
Lastminute.com has been approached for comment.
In October, the CMA received a commitment from Virgin Holidays to refund all customers “without undue delay” after hundreds of complaints were made over delayed payments.
The watchdog also wrote to more than 100 package holiday firms in July to remind them of their refund obligations, and got commitments from Tui, Sykes Cottages and Vacation Rentals to repay customers.
Package holiday customers are legally entitled to refunds within 14 days for cancelled trips.
But many people have been left waiting months for a pay-out during the pandemic as travel firms face a cashflow crisis.
The travel and aviation industries have been hit by the coronavirus crisis in most parts of the world, with the International Air Transport Association warning in September that hundreds of thousands of jobs were at risk without more state aid.
The industry body said in November that London, which was previously the world’s most connected city, had seen a 67% fall in connectivity in air travel.
London was overtaken by Shanghai, with the world’s four most connected cities now all in China, where the coronavirus was first detected.
Air travel within China has broadly recovered and during its Golden Week holiday season 425 million people travelled around the country, according to the Chinese tourism ministry.