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What should I do if my travel company goes bust?


October 18, 2018

Cypriot carrier Cobalt Air has collapsed leaving many people out of pocket, while others are stranded overseas without a ticket home.

The news comes just weeks after budget Danish airline, Primera Air, announced it had ceased trading.

If the worst has happened to you, read the advice below to find out what your options are and the next steps you should take.

Did you pay by credit card?



If the holiday, flight, car rental or other travel service you purchased cost £100 or more, and you paid all or even just a penny of it on a credit card, your credit card company is equally as liable as the retailer under Section 75 of the Consumer Credit Act.

Whatever rights you would have had with the retailer/company, you have the same rights with the credit card company. This is a legal protection that credit card companies have no choice about.

This means you should be able claim a refund from your credit card company. However, it’s important to note, the £100 lower limit is for a single item – if you ordered two items at £90 each, for example, you will not be covered.

Did you pay by debit card?

Through the Visa Debit Chargeback scheme, you can claim if the service you paid for doesn’t occur due to a company’s failure. If you paid with a Visa or Mastercard debit card for any amount, or with a Visa, Mastercard or Amex credit card for goods under £100, and that order isn’t fulfilled or a mistake is made, your bank can do a Chargeback from the bank that collected the payment.

This is not a legally binding requirement for banks, but it’s worth a try as many of our customers have reported success – the rules state you must complain within 120 days of realising there’s a problem (not from the date of the transaction).

What about your travel insurance?



Many travel insurance policies won’t cover companies going into administration, unless you specifically requested it and the provider agreed to include it.

Check with your travel insurance provider to find out whether you have cover for End Supplier Failure – policies that offer this cover should protect you in the event of a travel company going bankrupt, and you should be able to make a claim.

Are you ATOL protected?



The Civil Aviation Authority (CAA) financial protection scheme for holidaymakers – the Air Travel Organisers’ Licensing scheme or ATOL – applies to any package holidays that include air travel, which have been bought from UK based operators.

By law, any UK seller of a holiday package must guarantee total financial protection via the ATOL bond system. A package is your flights plus at least one other element – for example, your flights plus accommodation or car hire bought together.

Be aware that hotel-only or car hire bookings are not ATOL-protected; you need to have purchased your flights alongside your accommodation or hire car for it to count as a package. The scheme also does not protect holidays where there is no air travel such as a cruise or rail holiday.

If you booked your hire car, flight or accommodation independently, such travel arrangements are not covered by ATOL or any agency protection scheme.

Primera Air is not part of the CAA scheme, though travellers may be able to claim compensation if they booked through an ATOL-protected travel agent.

Can you claim from administrators?

If a company is in administration, it means it can’t provide your goods or services and the management is no longer in control. However, this doesn’t necessarily mean the company has closed down completely. The administrator’s job is to maximise the value from selling off the company and if keeping it as a going concern in order to sell it does that, then it will keep trading.

That may mean you can get a refund or you receive the product as normal. Otherwise, to be in with a chance of getting your cash, you’ll have to apply to the administrator, not the company, and any cash left after the administrators have paid the secured creditors and staff will be split between everyone who’s submitted a claim.

If you need to get a refund through the administrators, be aware that it is often just a few pence per pound owed and usually 10% back at best.


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