What you can do when your airline goes belly up

Feb 12, 2020

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Editor’s note: This post has been updated with the latest credit cards information and benefits. It was originally published on March 28, 2019.

There are many unanswered questions left in the wake of an airline’s collapse. The latest example is Air Italy, the two-year-old airline that has just announced it’s closing its doors for good on Feb. 25. This follows on the heels of WOW Air just over a year ago, the Icelandic low-cost carrier that continues to pop up in the news for its attempts to reinvent itself.

Regardless of your airline, the most pressing question for ticketed passengers is likely to be: “What now? How do I get home and how can I get reimbursed?”

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The first thing you should probably do is call your credit card company and ask for a chargeback, which is a reversal of payment due to Air Italy’s failed delivery of the goods or services you paid for (in this case a flight). There’s no guarantee your issuer will reverse the charge, but it’s definitely worth trying.

You also can demand repayment from the air carrier itself. Air Italy’s website states that it will refund passengers booked after Feb. 25, 2020, though it may not be able refund your money if funds run low. When Danish low-cost carrier Primera Air suspended operations in anticipation of filing for bankruptcy in 2018, passengers reported problems getting their money back for route and flight cancellations.

Credit cards that can help

You have the best chance of getting a refund if you paid for your flight with one of several credit cards that offer trip cancellation/interruption coverage. The amount of available coverage differs, as does the eligibility of members of your traveling party, but you should be able to file a successful claim with these cards:

  • Chase Sapphire Reserve and Chase Sapphire Preferred Card: Receive coverage up to $10,000 per person per trip (maximum $20,000 per trip). Coverage is available to the card holder and his or her immediate family. Chase specifically includes a provision in its coverage addressing the “financial insolvency of the Travel Agency, Tour Operator, or Travel Supplier whose services you booked.” It further defines a supplier as “a Tour Operator, occupancy provider, cruise line, airline, railroad or other Common Carriers.” The Ink Business Preferred Credit Card offers the same benefit up to $5,000 of coverage.
  • The Platinum Card® from American Express: Up to $10,000 per covered trip, though it explicitly covers return home or flight to resume itinerary but doesn’t cover one-way travel without a return destination.

Related: The best credit cards for airfare purchases

Help from the EU

The European Union requires that any EU carrier must compensate you if your flight is canceled by either:

  • transporting to your final destination using comparable alternative means, or
  • having your ticket refunded and, where relevant, returning you free of charge to your initial departure point.

Additional reporting by Carissa Rawson.

Featured photo by Alberto Riva/The Points Guy.

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Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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