We’re all going on a summer holiday - But not if our airline goes bust.

Although the weather would have you believe otherwise, summer is only a hop, skip and a Jubilee weekend jump away (where has the time gone?). Thousands of people will soon be escaping the rainy streets of Britain for more exotic locations, some of those lucky people will have already fished out their suitcases, bought their holiday wardrobe and are currently checking the weather forecasts. But the economic climate has seen many companies crumble and fall, and even some of our most beloved high street brands are now only a distant memory.

So what can you do if, after all the packing and the planning, you find out that the airline you are due to fly with goes under? Can you get your money back? Claim costs for accommodation and alternative flights if you are already abroad? Well I am afraid it all depends on a number of factors…

What are your rights?

The first thing to be aware of is that the level of protection you will have will depend partly upon whether you booked your flight as part of a package holiday, or directly with the airline as a separate purchase.

If you’ve booked your holiday direct with an airline it may still be classed as a ‘package holiday’ if your hotel and car hire were booked through the airline rather than being redirected to another party’s website. Can’t remember? Check the documents you’ve been provided with (and make sure that you take these documents with you on your trip).

Package holiday protection

If an airline fails before you travel and you have booked a package holiday, then the good news is that if your tour operator holds an Air Travel Organiser’s Licence (an ATOL to you and me) they must offer a replacement holiday or a refund. If the tour operator fails and it has an ATOL, you will be given a full refund if you have not travelled by the Civil Aviation Authority (CAA).

Already abroad? Don’t panic, your tour operator has a duty to take care of you if your airline goes bust at no extra cost, and if it’s your tour operator who goes under the CAA will be the ones in charge of making sure you get back home. Not only does the tour operator or CAA have a duty to prevent you losing money, but they must help you sort out any "practical problems" you may encounter. Unfortunately this does not extend to calling your boss to explain why you won’t be in the office on Monday, but it does mean that you will have help getting home again if you’re already sat on a sun lounger sipping a margarita when the airline goes under. Usually you will be able to return home as planned, on the same date and to the same UK airport. There may be occasions where you will need to extend your holiday by a few days or fly back to or from a different airport but you won’t be charged again for your return flight or for any extra transport you need because of a change of airport.

Book-It-Yourself (BIY)

If you bought your airline ticket directly with the airline you will not have automatic protection under ATOL, however you may still have some rights if:

you booked with an agent that offers protection under ATOL or a similar scheme;

you paid for the flight by credit card (if the amount paid was over £100) or, in some cases, if you used a Visa or Maestro debit card; or

you have taken out travel insurance and the terms of this insurance cover flights in the event that an airline goes bust (unfortunately, such insurance is unusual, but it is always worth checking the terms of any policy you have in case).

Again, take the time to check the terms of any policy you have and remember to pack these documents with you along with the sun cream and sandals. Unless the first of the above options apply, you will need to find alternative flights, accommodation and transport to and from the airport yourself.

Delays

Note that European law also provides passengers with certain protection if their flight is delayed, and this is due to change soon to provide those who are stuck in airports with even more rights. This includes rights to refreshments and calls if your short-haul flight is delayed by more than two hours, or four hours in the case of long-haul flights. If a delay extends beyond five hours you are also entitled to a refund (if you choose not to fly) or the cost of accommodation. Note however there are certain exclusions to this, and these are the instances where delays usually occur - bad weather, strikes and security alerts. It may nonetheless be worth seeing what airlines are willing to provide.

Claiming a Refund

One final thing to note about obtaining a refund, this takes time. You can bet your bottom dollar (or euro, peso, yen - all depending upon where you are heading) that if you are seeking a refund so are the hundreds of other individuals who are in the same boat as you, so be prepared to pay for alternative flights and book accommodation and chase refunds at a later date. If you choose to wait, be prepared to accept the fact that you may miss out on that holiday!

Knowing your rights is half of the battle; the other half is chasing down the person who is obliged to assist you. Good luck and happy holidaying!

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.