@Clive64 Just say no and keep saying no. Your policy is clear on your listing. When the guest booked your place, they accepted the policy. It's a contract that both parties agree to. Too bad for them. But keep saying no because Airbnb will send guilt-tripping emails to you. Don't budge. Then later, if you re-book the dates and feel like throwing some money their way, go for it. Don't promise it up front, don't promise anything - just say no.
Also, how do they know they're going to be ill in August? Come on. I don't believe that for a second. If they want to push Airbnb for extenuating circumstances, that's up to them, but there's no need for you to help them do it.