What are my rights if my airline collapses?

Our travel correspondent, Simon Calder, outlines the prospects for getting refunds and rearranging holidays when a carrier closes down

Passengers in the departure area of Heathrow Airport (Steve Parsons/PA)

Monarch Airlines is assuring passengers it is "trading well", that "all flights are operating as normal" and says it is poised to announce "a significant investment from its stakeholders". But the uncertainty about its immediate future has led to many intending passengers asking about their rights and options.

I am abroad and due to fly home, but the airline has gone out of business. What should I do now?

The Civil Aviation Authority (CAA) has plenty of experience of organising rescue flights. It generally aims to emulate as much as possible of the stricken airline’s original schedule, though not always to the exact intended UK airport. For example two flights could be combined into a single wide-bodied jet and flown to Stansted, with passengers for East Midlands continuing on by coach.f you are booked to travel today, and have heard nothing to the contrary, then it is probably wise to go to the airport as normal.

If you are booked later in the week, stay by the pool, order another drink, and await instructions – by email, text or phone – about the plans for your flight. There is nothing to be gained by going to the airport ahead of your booked day of travel.

Should this all sound too uncertain, you could always take up the offer from rival airlines for cut-price rescue flights; these are a standard feature of airline failures. You need to produce evidence of a booking on the failed carrier, and can expect to pay around £50. But passengers who choose to act independently in this way may find it difficult to recover the extra fare paid.

Do I have to pay again for a rescue flight?

Past experience suggests this is unlikely. Rescue flights are funded by the CAA’s Air Travel Trust Fund, which has a surplus of around £150m.

The fund is intended to protect passengers with ATOL certificates, which typically many travellers will have. In the past, though, other passengers who do not have ATOLs, but have valid tickets on the collapsed airline, have been carried home on the rescue flights.

It is possible that the CAA may follow up and ask ineligible passengers to pay, in which case the issuer of the payment card or travel insurer may foot the bill.

Why are aircraft chartered in, rather than just paying the pilots and cabin crew of the defunct airline to stay on?

There are, after all, planes – and staff – sitting around, so it might seem obvious to use these assets. But aircraft are generally leased, and the lessors will want the planes returned to them. In addition, it’s possible that some aircraft will be held on the ground because of fees owed to airports. And fuel companies may not be prepared to refuel aircraft if they are uncertain about payment. So other operators have to be brought in.

I have a forward booking for a flight on a failed airline. What rights do I have for a refund?

Intending travellers with forward bookings fall into two broad areas.

The first, package and “Flight-Plus” holidaymakers, who have been provided with an ATOL certificate. Their entire holiday – flights, accommodation and perhaps car rental – will routinely be refunded in accordance with ATOL rules. Some travel agents will seek to re-book clients on alternative holidays, knowing that a refund will come through.

In addition, some agents and airlines confer flight-only bookings with ATOL protection, providing passengers with the same level of protection. Monarch does this for bookings commencing in the UK.

Second, travellers who have booked their flights with the airline (without ATOL protection) and their accommodation separately. They are likely to be able to claim for the flights from their card provider, so long as the purchase totals £100 or more. Even for smaller amounts some banks may provide refunds.

If you bought your flights with PayPal, paying the airline direct, then the PayPay Buyer Protection scheme should cover you — so long as the booking is less than 180 days ahead; PayPal’s terms insist that you "Open a Dispute” for non-receipt of the purchase within this time.

Failing any of these options, travel insurance policies may cover the fare; if you have paid extra for Scheduled Airline Failure Insurance that should certainly be the case.

But there is no certainty about getting a refund for accommodation, or other elements such as car rental, that you have bought separately. A hotelier or rental firm can take the view that they are able to provide the service booked; the fact that the customer cannot reach the location is not their problem.

I need a holiday, not a refund. What chance do I have of finding one?

If a failure occurs outside school holidays, then there is likely to be plenty of alternative capacity with tour operators and budget airlines – though prices are likely to rise steeply as demand spikes from disappointed holidaymakers.

For dates within school holidays, flight seats could be scarce as well as expensive.

If the airline has shut down, my flight is by definition cancelled, So can I claim compensation under EU rules?

Not in the event that the airline folds.

I have an outstanding claim for compensation with the failed airline. What are the chances that I might get it?

Between very poor and zero. Depending on the exact nature of the failure, it is possible that you may have status as an unsecured creditor, but the chances are remote that you will recover more than a small fraction of the outstanding claim.

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