The boss of a major online travel agency has condemned rival firms and airlines for offering vouchers instead of cash refunds for cancelled holidays.

Simon Cooper, founder and chief executive of On The Beach, said the issuing of vouchers is “a travesty” as consumers face being ripped off when they re-book once the coronavirus pandemic is over.

A number of travel companies and airlines are offering vouchers which can be exchanged for an alternative booking at a later date.

In an interview with the PA news agency, Mr Cooper described this as “a bad idea for everyone concerned”.

The temptation then surely has to be that, as an operator, you're simply going to manipulate the price of your holidays

Tour operators issuing vouchers will be in “no better cash position” in the coming months, he said.

“The temptation then surely has to be that, as an operator, you’re simply going to manipulate the price of your holidays.

“The only way that you can avoid bankruptcy is to massively increase the prices you charge to recoup the losses.

“The audience you’re dealing with is a captive audience. They can’t go anywhere else.”

UK consumers are meant to be protected by laws stating that cancellations should lead to refunds within seven days for flights and 14 days for package holidays.

Mr Cooper said On The Beach is only offering cash refunds rather than vouchers, but it has been unable to return much of the money which went towards flights as many airlines are not handing it back promptly.

Airlines owe the company tens of millions of pounds for flights cancelled in the past few weeks, which it would then pass on to customers, he said.

He described the behaviour of carriers as “an absolute joke” and stated “the laws are not currently being applied”.

It doesn't surprise me that they didn't do much in the first week or two, but we're five weeks in now

Mr Cooper has been lobbying organisations such as the Civil Aviation Authority (CAA) – which regulates UK airlines – to enforce refund rules.

“It doesn’t surprise me that they didn’t do much in the first week or two, but we’re five weeks in now,” he said.

“On a three-times-per-week basis, I phone or I email the top regulators and say ‘I cannot understand how you can sit on your hands any longer’.”

He added: “In an environment where it’s a choice between protecting the end consumer or protecting an insolvent travel operator, I know which one I’d be choosing.”

Derek Jones, chief executive of luxury travel brand Kuoni, said he is worried about the sector’s reputation being damaged.

He told BBC Radio 4’s Today programme: “I think the travel industry does need to be more proactive and we do need to get our heads around how we make a better fist of looking after our customers at this difficult time.”

He added that Kuoni has been “clear from the start that we will refund”, adding that some customers are in “fairly dire straits right now and they need access to that money”.

The CAA said in a statement that it “understands the acute impact that coronavirus is having on the industry, as well as those with upcoming travel plans”.

Its website advises passengers they “are entitled to a refund” if their flight is cancelled, adding that they “may wish to open a complaint with the airline” if it is refusing to pay out.

Travel trade association Abta has warned that many travel firms will not be able to survive unless the Government amends refund rules.

The Foreign and Commonwealth Office has advised against all but essential international travel since March 17, while domestic holidays are not allowed due to the Government’s lockdown orders issued six days later.