What to do if your carrier goes bankrupt

claiming back when you have no insurance

Travel Insurance News - 04/07/2008

<< Low cost travel insurance from Gulf Bank | Travel News | Air travellers to receive help in cancellation compensations >>

The increasing cost of oil and the international economic recession last month claimed its latest victim with the bankruptcy of carrier Silverjet. As the vacation season has started, there are serious concerns that other carriers could be vulnerable as well.

Getting a refund on the costs for flight tickets for a collapsed carrier depends on how you purchased the vouchers and which card you made use of to pay for the tickets.

If you used your credit card for the payment then the credit card firm should be informed. First the company will try to establish a Mastercard or Visa chargeback — basically, get your cash out of the carrier’s account. However, if an airline has gone bankrupt, then usually the carrier’s accounts will be frozen, so this might not be an option. Then, the credit card supplier will refund your money via the Section 75 clause of the Consumer Credit Act.

A refund via Section 75 isn't possible if a Visa debit card was used to pay your flight ticket, so any claim would have to be via the chargeback scheme.

Even this way isn’t an option for travellers who made their payments on Maestro debit cards. These people will be added to the creditors list.

However, if you purchased your flight ticket via a travel shop with an ATOL Licence and have an Air Travel Organiser's receipt, then it might be possible to refund under the ATOL system of the Civil Aviation Authority.

This applies by UK law to all air travel packages, i.e. where you have purchased another part of your vacation such as lodging along with the same firm’s flight service. But if you just arrange a flight service with a carrier, you aren’t covered. Additionally, several travel insurance plans offer coverage for scheduled airline cancellations. The Post Office will provide up to £1,500 coverage only for air travel booked in Britain. EasyJet also includes cover on its travel insurance policy.

<< Low cost travel insurance from Gulf Bank | Travel News | Air travellers to receive help in cancellation compensations >>