Flights will be formally notified to pax as cancelled just a few days before departure - at which point pax can claim a refund. If it's not formally cancelled, then airline can use T&Cs to state that only a voucher can be issued. It's all about trying to find ways to prevent negative cashflow and minimising the number of refunds so as to keep the airline alive long term, without breaking the law
There was something similiar going on with the Iceland volcano in 2010