What you can do when your airline goes belly up
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
If the past couple of years have told us anything, it’s that airlines come and go. In 2019, we saw the demise of WOW Air, Thomas Cook Airlines, and Adria Airways, and 2020 has already claimed Air Italy. Many of these shutdowns left thousands of customers stranded around the globe and would-be passengers left with a worthless ticket.
Now just a couple of months after Air Italy’s demise, we’re already seeing airline insolvency take over the news cycle as the coronavirus outbreak puts a huge financial strain on airlines worldwide. Virgin Australia — an Aussie airline based in Brisbane — was the first airline to enter voluntary administration during the coronavirus outbreak, and while it may survive after restructuring, there’s no guarantee. And now it looks like Virgin Atlantic might be very close to the same fate.
What happens if you find yourself with a ticket on an airline that’s no longer flying? Are you eligible for a refund? Let’s take a look at what you can do when your airline goes bankrupt.
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.
Chargeback your credit card or request a refund
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 the now-defunct airline’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.
Make sure to cite the Truth in Lending Act when you submit your dispute. This law requires banks to remove a charge when the supplier fails to deliver a product or service, but only covers the credit card holder for 60 days after the original charge was made. Regardless, it’s worth submitting a claim even if you’re outside of this 60-day window; there’s a chance your credit card issuer will still lend a hand.
This is one of the many reasons I always recommend booking airfare with a credit card. In addition to earning lucrative points and miles for your airfare purchase, you have a better shot at getting your money back from a defunct airline due to the Truth in Lending Act. And let’s be real: the bank is always more motivated to get its own money back than money deducted right from your checking account.
Further, you may be able to demand repayment from the air carrier itself. In the case of Air Italy, its website states that it will refund passengers booked after Feb. 25, 2020, though it may not be able to refund your money if funds run low. For example, Danish low-cost carrier Primera Air suspended operations in anticipation of filing for bankruptcy in 2018 and passengers reported problems getting their money back for route and flight cancellations.
File a claim with your travel insurance company
If you have traditional travel insurance, check your plan’s terms and conditions to see if it covers airline insolvency. If it does, open an insurance claim and ask your provider to reimburse you for the now-useless ticket. You may receive a full refund or a new ticket at the insurance company’s expense.
Unfortunately, travel insurance included with cards like the Chase Sapphire Reserve, Chase Sapphire Preferred Card, and The Platinum Card® from American Express do not cover airline insolvency at the time of writing this article.
UK readers: See if you’re eligible for an ATOL claim
U.K. travelers may be able to receive compensation for tickets canceled due to airline insolvency by filing an ATOL claim. The ATOL — short for Air Travel Organiser’s License — covers British travelers who have purchased airfare as a part of a larger travel package. All travel packages sold in the U.K. are required to have ATOL coverage, something that proved useful when Thomas Cook Airlines collapsed in 2019.
Always have a backup plan for returning home
It’s important to have a backup plan in mind when traveling abroad, especially when we eventually start traveling in a post-coronavirus world. Airlines will be more volatile than ever, so there will be an increased chance of your airline going bust when you’re already abroad, leaving you with no return flight home.
Travelers with points and miles can use them as an insurance policy of sorts when traveling abroad. If your airline goes bust and leaves you stranded with no return ticket, you can simply book a new ticket home using points and miles. This will be significantly cheaper than buying a last-minute return ticket in most cases. Plus, you’ll have peace of mind that you can always return home when you’re traveling.
No one wants their favorite airline to go out of business, but with the coronavirus outbreak continuing to ravage the travel industry, we will likely see more airlines go bankrupt the coming months. Make sure to follow the steps outlined in this article if your airline goes out of business, and always have a backup plan for returning home when you travel abroad.
Mike Cetera and Carissa Rawson contributed to this post.
Featured photo by Alberto Riva/The Points Guy.
Welcome to The Points Guy!
Earn 90,000 bonus miles after you spend $3,000 in purchases within the first three months of card membership. Plus, earn a $200 statement credit after your first Delta purchase within the first three months. Offer ends 7/28/21.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 Bonus Miles after spending $3,000 in purchases on your new Card in your first 3 months and a $200 statement credit after you make a Delta purchase with your new Card within your first 3 months. Offer expires 7/28/2021.
- Limited Time Offer: Plus, get a 0% intro APR on purchases for 12 months from the date of account opening, then a variable 15.74%-24.74%. Offer expires 7/28/2021.
- Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees