Empty Skies and Struggling Airlines: What to do When Your Airline Goes Bankrupt

Posted by Holly Hou on 7/20/20 10:53 AM
The COVID-19 pandemic has posed unprecedented challenges, impacting almost all industries globally. The travel and hospitality industry in particular has been undeniably hit hard. With travel restrictions and stay-at-home orders in place worldwide, the industry has been brought to a halt - hotels are closing, airlines are suspending flights, and tours are getting cancelled. 

 

In normal circumstances, you are able to modify or cancel your flight (and during COVID-19, airlines have been more flexible with travel vouchers). However, the financial impact of COVID-19 on the industry has been significant, causing many to speculate potential airline bankruptcies. While there are cases of airlines filing for bankruptcy yet continuing to operate (Delta, for example, filed for Chapter 11 bankruptcy in 2005 to restructure and did not shut down), there are also cases of airlines ceasing operations altogether (such as WOW Airlines in 2019). What happens when the airline you have a ticket or voucher with suddenly fails and stops flying? The specific circumstances will vary case-by-case, but here are some general tips if you find yourself in such instances.

 

Airline Bankruptcy

 

Check with your travel agency. NexTravel Support will do our best to assist you in requesting a refund. Please keep in mind that each case varies and there are no guarantees of a refund - it will depend on the specific airline’s policies. However, if the airline by any means can no longer be reached, a passenger right claim has to be filed directly by the passenger. In most cases, it would be at your advantage to sort it out with the airline directly for the agreement.

 

Refer to the airline's website for information. In most cases, there will be no one left from the airline to assist customers, including customer phone support. Calling customer service might be worth a try though, especially if there is a prompt guiding you on how to get a ticket refund. Otherwise, head on to their website and see if there is any other assistance they could offer. Here is an example from the case of Air Berlin:

Air Berlin Bankruptcy

After years of losses, Air Berlin, Germany's second largest airline, declared bankruptcy in August 2017 and ceased operations in October 2017.

 

Contact your bank. If you paid with a credit card to purchase the flight, you may reach out to your credit card company to file a dispute for a service you did not get and request a refund. This is by far the easiest way to get your money back, but is not guaranteed,

 

Review your travel insurance. You may have your own insurance or insurance through your credit card company. Your travel insurance may offer some protection, but that depends on the policy’s terms and conditions. Review the policy to see if it covers bankruptcies and whether the airline you’re flying with is one of the insurance’s covered suppliers.

 

Here's an updated list of covered suppliers by Allianz, our partner travel insurance provider, as of June 1, 2020. Keep in mind that purchasing insurance the moment an airline declares bankruptcy will not help. As always, review the fine print! There are some insurance providers who require advance purchase before an airline declares a financial default.

 

Know your rights based on your country. Aside from reading the terms and conditions of airlines and travel insurances, you should also read up on your rights and see if there is anything that offers any protection.


  • United Kingdom - If you book a holiday package, you may be protected. ATOL (stands for Air Travel Organiser’s Licensing) is a United Kingdom Civil Aviation Authority scheme to give financial protection to people who have purchased package holidays and flights from a member tour operator. If your flight was canceled and you were not informed about it in less than 14 days before departure, you may file a claim in accordance with EU261 regulation.
  • United States - The Fly Rights posted by DOT (US Department of Transportation) does not specify if US passengers are entitled to compensation due to bankruptcy, thus, getting a refund from the airline itself is considered lucky.

Topics: Air Travel, COVID-19

Leave A Comment

Get the latest updates on all things corporate business travel!

Recent Posts

Connect With Us

See how NexTravel can simplify your business travel by speaking with a business travel specialist.

Let's Connect