Air passenger Q&A guide to bankrupt airline protection
By Darren Cronian on Saturday, August 30th, 2008

Having flown with a number of low cost airlines it has never worried me that I was not protected should an airline go into administration. With over a dozen airlines going bust in the last eight months, like many consumers I am starting to feel uneasy about booking direct with a low cost airline.

Air passenger Q&A guide to bankrupt airline protection

Reading the news this weekend, there is so much mis-information and I want to try write a guide that is accurate and will help consumers protect themselves against airline bankruptcy. I welcome comments from anyone who can add their own advice for consumers.

ATOL protection

I understand the best way to protect yourself against failing airlines is to book your flight as part of a package holiday, which should be covered by the Civil Aviation Authority and Air Travel Organisers Licensing (ATOL)

Check that the travel company is a member of ATOL by entering its membership number into the ATOL website. Confirm with your travel agent that you are covered because they are several variations of ATOL protection, and the rules are so complex that not all travel agents understand them.

Please refer to the comments for more information on ways you can protect your money.

Travel Insurance

They are very few travel insurance policies that covers airline failure so it is worth spending time searching around for companies that includes scheduled airline failure insurance. I am led to believe that the Post Office offers an annual family insurance that includes this.

Question to Travel Insurance companies:
Do any of you offer Scheduled airline failure insurance (SAFI) and how do consumers go about claiming should their airline go into administration? Why is it that not many insurance companies offer this as standard in today’s economic climate?

Credit card protection

If you buy your tickets with a credit card, and your transaction is more than £100, your money is protected under the terms of the Consumer Credit Act. Your money may be protected even if the cost of your air travel was less than £100 and you paid by credit card, but you should claim within a reasonable time.

Please note that this protection does not apply to debit cards such as Maestro or Delta but your bank may be able to assist. It’s advisable to persist if they first say no, and ask for the bank’s head office address to receive written confirmation.

Compare flights like-for-like

As Lisa, a travel rants reader pointed out to me earlier, her flight with Air Canada was nearly the same price as the low cost carrier Zoom Airlines, so do not assume that a low cost airline is going to offer you the best price – shop around, and compare the flight, like for like, include all those surcharges too.


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14 responses to “Air passenger Q&A guide to bankrupt airline protection”

Darren Cronian | 31 August, 2008 at 3:48 am

Please can we keep to advice and responses to questions/answers highlighted in this post and this comment section.

Thanks.

Julie | 31 August, 2008 at 1:51 pm

In response to the ATOL protection question.

Airlines do not need to hold an ATOL. As a flight ticket provider they are exempt from this part of the CAA regulation, so if you buy direct you are not ATOL protected. All tour operators selling air holidays must hold an ATOL licence from the CAA. If a Licence holder fails, the CAA is responsible for ensuring customers are either repatriated to the UK or receive a refund of payments made.

Nick | 31 August, 2008 at 4:22 pm

Airline protection. (As always all comments apply to UK only)

You need to look at all airlines not just no frills to get protection now. Just look at the news about Alitalia the worlds 19th largest airline. It worth being aware if you booked within last month on Zoom that airline protection insurance would not of covered you as it has been excluded.

Ways of Keeping you money safe.
1) ATOL protection, this does not just have to be as part of a package. Travel agents booking consolidated tickets have to protect these though the ATOL system. Airlines selling the same ticket are not protected. (Ask when buying a ticket from a travel agent if your buying this type of ticket).

2) A Package holiday must be protected by Law. How to tell if you have a package. If everything you buy flight + hotel/car/etc. is quoted as one price. (extras in flight meals, fuel surcharges etc. can be separate.) The total price must also be shown on your ATOL confirmation along with the ATOL number.

3) ABTA travel agents can offer airline failure protection. Most do this as a optional extra, so ask. cost is just a few pounds per person. Other agents can also offer this if the have a agreement in place with someone. (looking around price seem to be around £3 -£5). This can only be offered on bookings though the agency.

Darren Cronian | 31 August, 2008 at 4:45 pm

@ Nick

Re. “ABTA travel agents can offer airline failure protection. Most do this as a optional extra, so ask. cost is just a few pounds per person”

I think most people would be prepared to pay £5 if it meant that your flight was covered. This protection through ABTA agents is it for package holidays only or can it cover you for flight only?

Darren Cronian | 31 August, 2008 at 5:05 pm

Please note that I will be editing / deleting comments which do not answer the questions in the post or are off-topic. I want this post to be a guide for consumers so moderation will be higher than usual. I hope you all understand.

Dean | 31 August, 2008 at 5:29 pm

I read with interest the comments on the site, but must correct one of the points being made as it could be misleading. I am an Abta travel agent, and hold Atol protection, so can speak with some knowledge.

ATOL protection, this does not just have to be as part of a package. Travel agents booking consolidated tickets have to protect these though the ATOL system. Airlines selling the same ticket are not protected. (Ask when buying a ticket from a travel agent if your buying this type of ticket).

This is not quite correct. Atol protection does not apply to a flight only airline ticket, even if it is sold through a travel agent. However there is a legal obligation for travel agents to protect this sale, so that is why many travel agents will include Airline failure insurance. But it is not mandatory, and some do not use AFI, relying on chance that there is no problems.

In simple terms

Package holiday = ATOL cover (check if you are booking with an Atol holder)
Flight only = Airline Failure Insurance (optional but most companies offer it - usually £2 to £3 per passenger)
DIY holiday = no cover (maybe some from a credit card)

Darren Cronian | 31 August, 2008 at 5:37 pm

@ Dean

Thanks for the clarification.

Airline Failture Insurance I understand you can get as part of your travel insurance. Is this the same as the insurance that travel agencies can offer, or different? So if someone does book their own flight but has insurance that includes airline failure insurance will they be covered the same?

Tricia Pearson | 1 September, 2008 at 9:20 am

I would think the main reason most Travel Insurers do not offer Scheduled Airline Failure is because they would have to charge the same £3 to £5 extra for it and as most people choose their policy by price via aggregator sites this would make their policy uncompetitive - that is further down the list!

Nick | 1 September, 2008 at 11:14 am

The ABTA protection insurance can cover flights, holidays, hotels etc. We charge £3 for the first item to be covered and £1 for each additional item. So flight plus hotel will be £4 per person. But it is down to the agent to set there won prices. But as I said you may need to ask for the cover as it is not always offered. This is the similer to Airline Failure that you can get with some travel insurance, so if you have it on your policy you will be covered in the same way, but just for flight part.

Darren Cronian | 1 September, 2008 at 12:37 pm

Thanks for the comments everyone.

Apologies for being so heavy on the moderation but I wanted to make sure that we didn’t get into a discussion and just highlighted the facts. I am waiting for a few travel insurance companies to comment and then I will close the post for comments.

If you have any more advice to add then please feel free until the post is closed for comments.

Jeff Venables | 12 September, 2008 at 9:48 am

If as you say (the answer to Julie August 31) that airlines are do not need to be covered by ATOL why not in this modern day are they not made to be by the government

Stuart | 12 September, 2008 at 1:59 pm

How long does it take for an ATOL claim to be paid?

Tony Dent | 13 September, 2008 at 12:09 pm

we are going to book a trip to las vegas with BMI using our airmiles through BMI one paying and one on airmiles how safe is the booking? these are scheduled flights and with a large company

Paul Mclean | 16 October, 2008 at 7:49 am

“Question to Travel Insurance companies:
Do any of you offer Scheduled airline failure insurance (SAFI) and how do consumers go about claiming should their airline go into administration? Why is it that not many insurance companies offer this as standard in today’s economic climate?”

International Passengr Protection Limited is the largest provider of SAFI in the world, operating in over 30 countries around the world. We provide SAFI to every ABTA agent through the online ABTA Protection Plan, many airlines such as Ryanair, EasyJet, British Airways and Flybe as well as many travel insurance schemes and ATOL holders.

In today’s climate a considerable amount of companies are offering SAFI and many more travel insurance companies are adding the cover for 2009. It is expected that 80% of travel insurance policies will include the cover by the end of 2009.

Remember credit cards do not cover repatriation and at the most they will pay half the original ticket cost but not the increased return fare costs on a more expensive airline. SAFI will cover this increased costs and repatriation.

Paul Mclean
Director
International Passenger Protection Ltd