Regulator says travellers must spend credit notes issued during the pandemic or risk losing them.
Holidaymakers are being urged to use £132m worth of unspent vouchers issued during the pandemic before they lose financial protection.
The credit notes were offered by travel firms as alternatives to cash refunds when holidays had to be cancelled.
The vouchers, backed by the Atol insurance scheme, can be used towards new holidays or exchanged for cash.
But the regulator said the refund protection against firms going bust will end on 30 September 2022.
The Civil Aviation Authority (CAA) also said travel firms would not longer be able to issue the Atol-protected cover after 20 December. The refund credit notes (RCNs) were issued from March last year, the month of the first UK coronavirus lockdown.
Michael Budge, head of Atol, which is run by the CAA, said: “With over £130m of Atol refund credit notes yet to be redeemed, and international travel opening up again, we want to remind consumers to redeem any unused credits to make sure they do not lose out.”
He said RCNs were a fantastic tool to reassure consumers and support the industry.
Many travel firms faced ruin if they were forced to hand back huge refunds in cash after large swathes of the industry closed down. But travellers were outraged at being offered credit notes instead of cash refunds, fearing that if firms went bust they would lose money.
In July 2020, the CAA decided to cover credit notes under the Atol scheme, and £131.7m of them remain unspent.
“The decision to end the scheme reflects the changing of international travel restrictions with significantly increased demand from consumers over recent months due to the opening up of more destinations.” Mr Budge said.
Under the Atol scheme, if a firm goes out of business holiday costs will be refunded. If it happens when travellers are abroad they will be able to finish their holidays and fly home.
All tour operators selling package holidays by air must hold an Atol licence.