What to do if your travel operator goes bust - Information from ASDA
Holiday firm collapse: what protection do holidaymakers have?
Storm clouds blown in by the economic downturn have resulted in the collapse of several holiday companies. When a holiday firm fails the news usually comes as a shock to its customers. So what holiday protection exists if you’re already abroad when a travel operator goes bust, or you’ve got a forthcoming trip booked and paid for?
Package holidays
If you buy a package holiday (a package being a holiday which is made up of two or more elements, such as flights and accommodation) your money will be protected.
If you book a trip which includes a flight, you will be covered by ATOL (Air Travel Organisers' Licensing) protection, which is operated by the Civil Aviation Authority. If you’re yet to travel you will be refunded the full cost of your holiday. And if you’re already abroad, arrangements will be made to allow you to continue your holiday where possible, and be flown back.
Similar arrangements exist for package holidays which don’t feature flights, such as foreign coach trips.
Flight-only or accommodation-only bookings
If your holiday hasn’t been booked as a package the picture isn’t so clear. If you buy your flights through a travel agent it may not be ATOL protected – so make sure you ask. If you’ve bought your flights direct from an airline, which subsequently collapses, you won’t have ATOL protection.
In the case of accommodation-only arrangements, again, you’ll need to ask if protection exists. Unlike package deals, there’s no legal requirement for a travel agent or accommodation provider to offer you protection. But some may provide back up via membership of a trade association.
How to create your own holiday protection
If you buy your holiday with a credit card you’ll automatically get protection against loss under the Consumer Credit Act 1974. This is because the Act stipulates that your card provider is liable for any losses for goods worth more than £100, up to a maximum of £30,000. So, for example, if you buy flights direct from an airline which then goes bust you can claim the money back. Visa debit cards also provide similar protection, but other debit cards do not.
One thing you can’t do is claim money back twice. So if you’ve lost flights that have ATOL protection, and you bought them using a credit card, ATOL will demand you seek compensation from your card provider.
Can my travel insurance policy help?
If you've taken out holiday insurance, how much cover you have in such a situation will depend on your individual policy. You should check your travel insurance policy details to see if you're covered for extra costs, and what receipts or paperwork you'll need to make a claim.
