What To Do If Your Airline Goes Bust

Airline Gone Bust? What Are Your Rights?

By Sharron Livingston on 17 July 2010 in Travel Articles

In the last sixteen years, holidaymakers have enjoyed a newly found freedom and unprecedented choice in holidays thanks to the low cost airlines and the internet.

Searching the net for the best deals on flights and accommodation became popular, unsurprisingly so, as this is a highly flexible and convenient way of arranging a holiday. So far so good. But what happens when things go wrong?

In the last two years alone, 27 airlines have failed, including three business class only airlines: EOS, Maxjet, Silverjet, as well as Oasis Hong Kong and the Canadian low-cost airline Zoom.

Then there was XL Leisure Group, with their charter airline, which has gone bust. The latest casualty is SkyEurope and more recently Flyglobespan. All blame fuel charges and the credit crunch.

Recently independent tour operator Goldtrail Travel Ltd went into administration leaving 16,000 stranded and 50,000 without dashed holiday hopes and even more recently Kiss Flights operator ceased trading too.

Whatever their reason, for holiday makers this means chaos and misery. This is especially true for the thousands of holidaymakers who travelled with XL last year and booked Flyglobespan without any ATOL protection (Air Travel Organisers Licensing) and may well be stranded abroad.

So what are your rights when an airline goes bust?

I booked through a Travel Agent/Tour Operator

All tour operators and travel firms selling air holiday packages in the UK are legally bound to hold an ATOL. This means that if a travel company, airline or hotel goes bust, help is at hand to get you home or if you can't travel you will get a refund.

So, travellers that booked their flight and accommodation as a package through an ATOL/ABTA or AITO bonded agent or operator will find that they are covered for the worst and that the CAA (Civil Aviation Authority) will be responsible for getting you home. 

Passengers will either get a full refund, or if they are already abroad, they can continue enjoying their holiday with the peace of mind that ATOL will be sorting out their homeward bound travel plans.

But consumers should be aware if they are booking only flights from a travel agent even if they ARE ATOL-protected. If you purchase a scheduled flight and are given either an e-ticket or paper ticket immediately or within 24 hours of the airline going bust, you will not be covered and the travel company is not legally bound to refund or repatriate you.

I booked through a travel agent or third party website

Protection depends on whether or not the agent has ATOL (Air Travel Organisers License ) bonding. If they are, you are entitled to a full refund but its not clear-cut. Some agents will only refund the cost of the flight if it was booked in conjunction with a hotel (in effect it became a package). Request for refunds for flight-only bookings may fall on deaf ears.

I booked my flight online via the airline's own website with a credit card

If you paid using a credit card, you are probably protected under the Consumer Credit Act, as long as the transactions is over £100, but it depends on the card issuer. Contact your card provider or bank and they will send you a claim form. You will need to provide evidence that your flight was cancelled.

So if you are not due to fly yet you must wait and see whether the administrators can get the planes flying once more.

However, there is no provision to cover the costs of getting home.

I booked my flights online via the airline's own website with a debit card

If you paid using a Visa or Maestro Debit card you may be protected on transactions over £100. You will have to check that your individual bank has signed up to the 'chargeback' procedure. However non-visa debit card payments will have no such protection.

Travel Insurance - Does it assist in getting a refund?

Unlikely. If you have stipulated this as a condition of your insurance you will be okay. Standard travel insurance policies, generally, won't have this provision.

Does Travel Insurance cover a package holiday?

Travel Insurance policies tend to favour package holidays over stand alone flight bookings when the firm goes bust. But it is worth checking. Your travel insurer will tell you to go to ATOL first.

Does Travel Insurance cover scheduled flight only travel?

It is not safe to assume that your travel insurance will cover airline insolvency. If the policy contains SAFI, then you are covered, but this is hardly ever the case.

Should I go ahead and book another flight, stay at my hotel and chase down the cost of the original flight later? Or should I wait for my refund to come through first?

If you are travelling quite soon, then go for it. Consumer Credit Act refunds can take several weeks and the same applies to travel insurance claims. So buy now and chase claims later.

Have you got a question not answered above? Leave a comment below.


roger, Kent

as the wording of "safi" is scheduled airline failure insurance, does this cover for charter flights i.e. Thomas Cook

23 November, 2011

Joan, London

I booked through International Flights in March for tickets for my family's summer holiday, depositing ВЈ1200 using my VISA Direct. By the time I was to pay the full balance and pick up my tickets, I was told they had gone bust with no administrators to contact till now. I am still hoping I get my money back. If anyone has the same experience with International flights please let me know.

6 September, 2010

7 September, 2010

Mr/Mrs Pedge, Essex England

We were on a package holiday in Northern Cyprus when Cyprus Turkish Arlines went bust.We were due to fly home on the 25/06/2010 when the hotel manager told us that all CTA flights had been grounded leaving us stranded in Northern Cyprus.On the 27/06/2010 the hotel managed to find us flights from Laraca Airport with Thomas Cook Airlines which we had to pay for at a cost of ВЈ245-00.The tour operator who we booked our holiday with is Atol bonded so we thought it would be a simple thing to get a refund on the extra cost of our flight,how wrong we were.After weeks of phone calls to Atol all we get is a recorded message saying (could you leave a message and we will get back to you) we are still waiting. Also no replies to our emails,so we finally wrote them a letter which they did reply to telling us there was nothing they could do as no airlines are Atol bonded.But as the whole package holiday was booked through a bonded tour operator should I not be able to claim this money back from Atol. If the answer is no then whats the point in being covered by Atol. What is your opinion

5 September, 2010

WhichBudget Cheap Flights, www.whichbudget.com

Collapsed travel firms 2010

Flight Options (Kiss Flights)
Sun 4 U
International Flights
Malachite Travel
Wigmore Holidays and Travel (Aspects of Tunisia)
Finlays Skiing
Adventura (Pure Escapes)
Flight Bureau (Think Delta, Think Emirates, Think Flights)
Love Holidays
Business Travel Services

Source: CAA. (Trading name in brackets)

19 August, 2010

Sue Bell, Blackpool

I booked through an online travel agent, Sun4u. My flights were with Goldtrail. My hotel and transfer still stand, though I can get refunded my flights from CAA. If I book more flights at a different time - does my transfer still stand?

25 July, 2010

Malcolm M, Burnley

I booked a package holiday to Turkey departing on the 23rd of august,the flight was booked through Goldtrail which is covered by the travel company for supplier failure.I was going to take out holiday insurance this week.can I still do this or will I have the option of another flight or a total refund by the company I booked with?

19 July, 2010

aleasha, bargoed

im due to fly with goldtrail in 8 weeks time but they have gone bust... wat are the chances of the administrators getting the flights going again by then??? im on a very tight budget and cannot afford to re book and chase claims later.. will i get a refund within 8 weeks? or is it ever possible for the tour operator to replace our flights with a nother airline??? please help.. ben on hold all day no answer.. sent hundreds of emails and no reply dont these people have hearts.. ive saved for 3 years to afford this holiday..

18 July, 2010

sandra, london

myself daughter & 2 grandchildren are going to greece in august. Can anyone give me please a travel insurance company where i can get insurance should the company go bust. It happened to me last year with freedom direct and lost everything. They told me they had their "own" travel insurance. The flights were safe but i had to book another hotel/transfers.

12 April, 2010

david ramsay teresa edgar, prthshire

my partner and i are booked to fly to egypt on the 27th of jan with globescan.our travel arrangements with hays. following the collapse of the airline we contacted hays and were told basically their hands were tied but suggested we purchase two tickets with another carrier at 700 to 800 pounds and rising.alternatively we could cancel the whole holiday but we would lose a sizeable amount of what we paid.we simply cannot afford to book with another carrier so my questions are these;have we lost our holiday[through no fault of our own]and what is abta and atol protection protecting?because the way we see it its not us.

18 December, 2009

Graeme, Glasgow

I am due to fly out to Turkey at the end of May... I booked with Freedom Direct I have heard in the papers that they have went bust? out of our party who is traveling none of us know who or wen to contact or what to do, looking for some help???

23 April, 2009

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