What to Do if Your Airline Goes Bust

Aeroplane in the sky

With once-established airlines such as Thomas Cook and Flybe both entering administration in recent times, knowing where you stand in the event of an airline closure is absolutely paramount when booking a holiday.

From paying for a holiday on credit card to making sure you have adequate travel insurance, this guide will tell you everything you need to know about your rights following an airline collapse.

Are you covered if an airline goes bust?

This is the first question which crosses people’s minds when they hear reports of an airline gone bust, and the only answer is that it is entirely dependent on your individual circumstances.

Your first port of call should be to find out whether or not you can still travel.

If you booked your trip directly through the flight provider then your flights (and packaged holiday, if you booked one) will almost certainly be cancelled and you should only make the trip to the airport if you have alternative accommodation (i.e. another flight) in place.

If you booked via a travel agent then there is every chance that, as long as there is enough time to arrange alternative travel, your trip might still go ahead. If they haven’t been in contact with you already, get in touch with your travel agent to discuss your options.

If your trip cannot be rescued then you need to check to see if you’re ATOL protected.

READ MORE: Flybe administration – what you need to know

What is ATOL protection?

ATOL stands for Air Travel Organiser’s Licensing, which is a Civil Aviation Authority scheme that provides financial protection to those who have purchased flights and holidays from registered tour operators.

If you booked a package holiday with an airline that was ATOL registered and has since gone bust then you are protected for everything which was included in your holiday, including flights, accommodation and any extras such as car hire. All package holidays are ATOL protected.

If you booked flights, accommodation, car hire (etc.) separately then certain rules apply to determine whether or not you can claim. For example, if you used an ATOL-registered company to book your flights and accommodation within 24 hours of each other, you’re protected by the Civil Aviation Authority.

If you booked flights and accommodation separately directly with the airline then you might not be covered, as this does not class as a ‘package holiday’.

ATOL protection – Flight only

If you booked a flight-only deal through an ATOL-protected dealer, you will be protected to either be returned to the UK (if you are already away) or reimbursed for the amount you have paid.

This protection does not stretch to any accommodation, car hire or other expenses – it only covers the cost of the flight.

How to know if you are ATOL protected

When booking your holiday, look out for the ATOL logo on the website/brochure of the travel company – this is what it looks like:

ATOL protected

Your travel company will be able to tell you whether or not your holiday is ATOL protected, while you should also receive an ATOL receipt once you’ve booked to confirm this.

What does it mean if your flight is NOT ATOL protected?

So what happens if an airline collapses and you don’t have ATOL protection?

There are typically 2 routes you can take from here: claim from your card provider or claim on your travel insurance policy.

Credit card protection

If you paid at least £100 for your trip (even if this was just the deposit) on a credit card, you might be able to claim your money back from your credit card company under section 75 of the Consumer Credit Act.

Remember, you cannot use 2 separate transactions to make up the minimum £100 spent. For example, booking your outbound and inbound flights separately might cost £100 in total, but you won’t be covered for either if you didn’t buy them together (as a return flight).

You do not have to have paid for the entire holiday on credit card and should always look to pay at least £100 of any significant purchase on credit card, as long as you pay it off straight away.

Credit card protection under £100

If your purchase did not reach or exceed £100 (as is often the case with flight-only bookings), there is still a chance you could claim back from your card provider under what is known as the ‘chargeback’ scheme.

This is offered by many providers of both credit and debit cards, but they are not legally required to issue you with a refund – however, there is certainly no harm in enquiring.

What if you are already on holiday?

If you’re already on holiday when your airline goes bust then you may have to book your own flight home, unless you are ATOL protected.

If your return flights have been booked with an ATOL-registered airline, you are guaranteed your money back and will be flown home at no extra cost. If you have the correct level of travel insurance, you may be able to claim back a set amount per-person for any additional flights you need to book.

In some cases, competitor airlines will offer cheaper ‘repatriation fares’ which allow customers with proof that they were set to fly with a collapsed airline to fly home at a reduced fee.

Travel insurance

You should always buy travel insurance at the same time as you book your holiday to help protect against uncertainties like when an airline goes bust.

Depending on the type of travel insurance you purchased, you might be protected against airlines that have gone into administration – this type of cover (known as ‘airline failure protection’ or ‘scheduled airline failure insurance’) is included in less than half of all travel insurance policies as standard, and only available as an optional extra in around 9%. Be sure to check if you are covered for this in your policy before purchasing.

How to claim if your airline goes bust

How you claim for your refund following the collapse of an airline will depend on your chosen method:

If you are ATOL protected you will need to apply to the Civil Aviation Authority (CAA for a refund). ATOL claims can be made by entering your booking reference number, name and various other details into the CAA website.

If you are claiming using credit or debit card protection, you will need to get in direct contact with your card provider.

If you are claiming on your travel insurance then you will need to contact your travel insurance provider at the next possible opportunity.

Travel insurance advice with Bobatoo

From staying safe on your holidays to ensuring that you are protected in the event of scheduled airline failure, Bobatoo has a range of helpful blogs and guides which we are certain will come in handy, whether you’re setting sail on a luxury cruise or backpacking across the dessert.

You can also find a great travel insurance deal to suit you by tapping or clicking the green button below.