Your Rights When an Airline Goes Bankrupt
So you booked a flight and now the airline has announced it has gone bankrupt? Unfortunately, in the world of aviation, it is becoming a regular occurrence for popular airlines to suddenly go under due to financial issues. Thus, leaving the blameless passengers in a horrible nightmare of a situation where their tickets are suddenly worthless.
If you happen to find yourself in this position right now, then you have come to the right place for your answers and hopefully, some much-needed information and explanation. In the sections below we will give you advice on how to contact the right people, get regular updates, how you can get a refund for your flights and how to secure yourself against this in the future.
1. What to do if your airline goes under
The most stressful part about an airline announcing they have become bankrupt is the total lack of information that follows. It is almost like they drop that bombshell and then disappear from the face of the earth.
Due to the nature of bankruptcies, they really differ per airline, as there is no standard policy or procedure which will therefore completely depend on the airline's policy. So, it is best to start by checking the airline’s website as they will likely have put up an update to provide assistance for all passengers as well as contact details. There’s probably not going to be a lot to go on though, so it’s good to read up on your rights, and know how you can get a refund or a ticket home.
Customer support from Vayama
There are certain elements that we at Vayama need to take into consideration when dealing with a bankrupt airline and trying to help you, the passenger.
It is difficult because everything is different per case so we need to ensure that:
The airline has become officially bankrupt (financial or operational problems are not classed officially as bankruptcy)
Vayama is completely dependent on the individual airline’s policy in case of bankruptcy which includes all details revolving around refunds, compensation, and rebooking of flights.
We will only provide you with concrete information and will therefore only make statements we know to be true and clear.
Unfortunately, refunds are never guaranteed under these circumstances (especially for those who have not purchased Ticket Service which provides insurance protection). If Ticket Service has been purchased, and the airline is officially bankrupt, then passengers will receive their refund within 2 months.
It will differ per case as to what can be refunded in terms of non-flight products (i.e. booking fees, cancellation insurance, etc). This will be reviewed per individual case.
Usually, the airline will contact the passenger directly. However, if this is not the case then please do not hesitate to contact our Customer Services Team.
2. What are your rights?
This is where it starts to get even more stressful. When an airline suddenly becomes bankrupt your flight ticket instantly becomes worthless as the flight no longer exists. The worst news? Due to there being no protections being in place for this you are literally left stranded.
It is actually down to the airline itself that decides what rights you have as a passenger. You can find it in the T&C’s on your ticket. So, it is now that you should read up on these and find out what exactly your rights are and if there is anything which covers bankruptcy. Please note, however, the T&C’s themselves are probably unlikely to be honoured if the airline is no longer operating anymore which will leave you screaming with dismay. Still though, it is best to read up on these so you can argue them further down the line when trying to obtain refunds, compensation or alternative flights.
3. Multiple Tickets & Airlines?
While your ticket may essentially have become useless, some airlines do provide stranded passengers a route home so that they are not entirely stranded abroad. This is a rarity, however, and it won’t be completely free either. This will possibly come at a discounted rate and it will be a completely new ticket.
If your government or other airlines aren’t stepping in to offer assistance, your best course of action is to buy replacement flights yourself and try to get a refund for the original ticket. Unfortunately, this will not be covered and will be at your own expense with the possibility that any refunds or claims are not guaranteed.
4. Examples of major bankruptcies
Flybe - March 2020
Financial problems, forced by low demand and customer cancellations in the wake of the Covid-19 outbreak stopped Flybe from operating. On March 5th 2020 the airline filed for bankruptcy and ceased all operations.
Thomas Cook - September 2019
Recently, the travel group Thomas Cook has filed for bankruptcy. Departures after the bankruptcy registration can not be started for legal reasons and bookings have been canceled.
WOW Air – March 2019
On March 28 2019 WOW air has suspended all flight operations as a result of financial problems. All of their flights of WOW air were cancelled and they did not provide any alternatives.
Airberlin – September 2017
In September 2017 Airberlin announced that they were cancelling and rebooking flights due to operational reasons.
5. How to obtain compensation
The good news is that there are several ways in which you can claim for compensation to gain back the value of that lost flight ticket.
Did you pay with a credit card?
More often than not, this is the safest way to buy anything these days and it is certainly an advantage in this instance as your credit card will protect you if the airline company goes under and you can call your provider and ask for a refund. Be sure to chase this straight away and have as much information as possible to provide them with in order to make the refund process as smooth and timely as possible.
Purchased Ticket Service?
If you have purchased the above through Vayama then the amount of the flight will be claimed for which you paid with our insurance provider once the airline has been officially bankrupt.
Once the claim has been approved you will receive the money via Vayama not the insurance company and will take 1 to 2 months. During this time, we will take care of the full process and inform you about any updates.
6. How can you protect your flights and money?
The best way to cover yourself for any eventuality, and especially airline bankruptcy is to take any of the steps above to help put your mind at ease.
Here, at Vayama, we highly recommend purchasing Ticket Service when you book your flight as we operate as an ABP service to indemnify you in respect of your Financial Loss arising directly from the cancellation or curtailment of a Scheduled Airline Flight arising solely from the Insolvency of the Scheduled Airline up to and not exceeding £ 2,000 (or maximum the similar amount in your local currency) for any airline ticket, as defined below.
It is a condition, however, that the Airline Bankruptcy Service fee has been paid to Vayama in full as and when it falls due for payment.
Read up on the full details about Vayama's airline bankruptcy service.
7. What else can I do?
The best course of action in this situation is to keep checking with the airline website for the latest updates and our FAQ’s on the Service & Contact page.
Be sure to check out my website for more information and travel advice as well as my Twitter @TakeLeapTravel and Instagram @taketheleaptravel.
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