What are my rights if my airline collapses?

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When an airline closes down, intending travellers are often uncertain about their rights and options. Our travel correspondent, Simon Calder, outlines the prospects for getting refunds and rearranging holidays

Passengers in the departure area of Heathrow Airport Steve Parsons/PA

I am due to fly home, but the airline has gone out of business. What should I do now?

The Civil Aviation Authority (CAA) has plenty of experience of organising rescue flights. It generally aims to emulate as much as possible of the stricken airline’s original schedule, though not always to the exact intended UK airport. For example two flights could be combined into a single wide-bodied jet and flown to Stansted, with passengers for East Midlands continuing on by coach.

If you are booked to travel today, and have heard nothing to the contrary, then  it is probably wise to go to the airport as normal.

If you are booked later in the week, stay by the pool, order another drink, and await instructions – by email, text or phone – about the plans for your flight.

Should this all sound too uncertain, you could always take up the offer from rival airlines for cut-price rescue flights; these are a standard feature of airline failures. You need to produce evidence of a booking on the failed carrier.

Passengers who choose to act independently in this way may find it difficult to recover the fare paid.

Do I have to pay again for a rescue flight?

Past experience suggests this is unlikely. Rescue flights are funded by the CAA’s Air Travel Trust Fund, which has a surplus of around £150m. The fund is intended to protect passengers with ATOL certificates, which typically many travellers will have. But in the past other passengers who do not have ATOLs, but have valid tickets for flights, have been carried home on the rescue flights.

It is possible that the CAA may follow up and ask ineligible passengers to pay, in which case the issuer of the payment card or travel insurer may foot the bill.

Why are aircraft chartered in, rather than just paying the pilots and cabin crew of the defunct airline to stay on?

There are, after all, planes – and staff – sitting around.

The aircraft are leased, and the lessors will want the planes returned to them. In addition, it’s possible that some aircraft will be held on the ground because of fees owed to airports. So other operators have to be brought in.

I have a forward booking for a flight on a failed airline. What rights do I have for a refund?

Intending travellers with forward bookings fall into two broad areas.

The first, package and “Flight-Plus” holidaymakers, who have been provided with an ATOL certificate. Their entire holiday – flights, accommodation and perhaps car rental – will routinely be refunded in accordance with ATOL rules. Some travel agents will seek to re-book clients on alternative holidays, knowing that a refund will come through.

In addition, some agents and airlines confer flight-only bookings with ATOL protection, providing passengers with the same level of protection.

Second, travellers who have booked their flights with the airline (without ATOL protection) and their accommodation separately. They are likely to be able to claim for the flights from their card provider, so long as the purchase totals £100 or more. Even for smaller amounts some banks are likely to provide refunds. Failing that, travel insurance policies may cover the fare – if you have paid extra for Scheduled Airline Failure Insurance that should certainly be the case.

But there is no certainty about the accommodation, or other elements. A hotelier or cruise line can take the view that they are able to provide the service booked; the fact that the customer cannot reach the location is not their problem.

I need a holiday, not a refund. What chance do I have of finding one?

If the failure occurs outside school holidays, then there is likely to be plenty of alternative capacity with tour operators and budget airlines – though prices are likely to rise steeply as demand spikes from disappointed holidaymakers.

For dates within school holidays, flight seats could be scarce as well as expensive.

If the airline has shut down, my flight is by definition cancelled, So can I claim compensation under EU rules?

Not in the event that the airline folds.

I have an outstanding claim for compensation with the failed airline. What are the chances that I might get it?

Between very poor and zero. Depending on the exact nature of the failure, it is possible that you may have status as an unsecured creditor, but the chances are remote that you will recover more than a small fraction of the outstanding claim.


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