Another BAH-related flight cancellation question but it felt unseemly to tag this one on onto the thread started by bisonrav a couple of days ago so this is a new thread.

We have a BAH reservation in which the first flight (a domestic flight) has been cancelled. They have not yet rebooked us but there are alternative flights quite close to the original flight (< 1 hr difference) on which we could be rebooked without problems. There also have been some relatively minor (<= 1hr) retiming of other flights on the itinerary at an earlier stage.

Prior to the latest fight cancellation, we had decided that we preferred to travel at some other time and we have already made another booking at different dates for a similar holiday. I was resigned that we would lose the deposit but had not cancelled the original holiday yet (under the 'you never know' principle ) and was waiting for it to end up cancelled when payment of the balance was due. I am wondering whether the flight cancellation offers us an opportunity to ask for the holiday to be cancelled without losing the deposit.

My suspicion is that the answer is "no" on the basis that the alterations to the package are not significant enough to allow us to do that. OTOH, even under a package holiday, we are still supposed to be entitled to the 261/2004 rights, including the right to a full refund for the flights but I wonder how that works when the flights are part of the package and where only a deposit has been paid for the package.

If we set aside the (legal) question of what we would putatively be entitled to under the package holidays Regs and under UK261/2004, what is the actual practice of BAH in those cases?