Are you protected against airline failure?

What will happen if you have booked a flight with Flybe and the company collapses? Partner in travel and insurance law in the Exeter office at Trowers & Hamlins, Bronwen Courtenay-Stamp, explains what rights people have in the event.

In the case of a failure of an airline much depends on whether the flight is ATOL protected or not. ATOL is a financial protection scheme for holiday makers.

Where there is ATOL protection you are guaranteed a refund if a company collapses and you would be found an alternative flight home if you find yourself stranded abroad.  If you booked your flight through a travel agent or as part of a package deal then almost certainly you would have ATOL protection.  Travel companies have to display their ATOL license number on websites and brochures.  If an airline goes bust before you go on your holiday then you should contact your travel agent.  Your booking may remain in place.  Some travel arrangements will continue unaffected although there may be changes to flight times. 

If you are abroad when the airline collapses and there is ATOL protection then you will be found an alternative flight home.  There should be no extra cost but you ought to talk to the travel agent.

If however you booked flights directly with the airline then almost certainly you will not be covered by ATOL. 

If you are abroad without ATOL protection then usually you would need to book alternative flights back with another airline and pay for it yourself.  There are some exceptions and indeed when Monarch airlines collapsed the UK Government did pay to arrange for people to be brought home for some two weeks after that collapse.  Other airlines sometimes offer reduced repatriation fees for stranded passengers.

If you booked your ticket through an airline ticket agent you should speak to the agent in the first instance because they may have also provided travel insurance which includes scheduled airline failure cover.  Scheduled airline failure insurance (SAFI) is good protection but this will vary depending on the type of policy taken out.  Sometimes the policy cover simply provides cover for the cost of the original tickets purchased or any unused portion or it can cover the additional cost of purchasing new flights such as new tickets for travel back to the UK. 

Airline failure or SAFI is not covered as a standard insurance risk on very many travel insurance policies.  You ought to check your own travel insurance policy because sometimes airline failure can be bought as an "add on" and you may have done this or indeed may feel that going forwards you should buy this protection when you take out travel insurance.

If you paid for your flight with a credit card and the sum paid was over £100 then under section 75 of the Consumer Credit Act 1974 you will be able to get a refund from the credit card company.  You should contact them directly.  If however you bought your flight with a debit card the Consumer Credit Act will not assist.  You may have similar cover to protection provided through the Consumer Credit Act 1974 if you paid with a Visa Debit Card but in that case you ought to check with your bank.