There are few things more exciting than packing your bags to head off on holiday, but unfortunately our trips away don’t always go as planned.
One of the most unsettling things to discover, either before you leave or whilst you’re already away, is that your holiday company has gone bust.
Some holidays are better protected than others if this happens: here’s a guide to your rights.
If you’ve booked a package holiday with a travel agent or tour operator, it is protected by law (under the Package Travel, Package Holidays and Package Tour Regulations 1992, to be precise).
This means that you have to get your money back if the company fails or be brought home if you’re on holiday when it happens.
A package holiday is defined as having two or more elements. This could be transport (flight or coach travel, for example) and accommodation. If your holiday includes a flight it will be protected by the Civil Aviation Authority’s ATOL (air travel organiser’s licence) scheme.
If you book a holiday that is ATOL protected, you should be told this at the time you book. The company you book with must either have an ATOL or be an agent of a travel company that does. You can check whether or not a company has an ATOL on the Civil Aviation Authority’s website here. Always check that the company is ATOL protected before you book.
If you book a flight from an ATOL member or agent, your flight is protected if the airline fails.
Although you’re protected if you book your flight with an ATOL company, you may not be protected if you book a flight via a travel agent. However, your travel agent should be able to arrange insurance for scheduled airline failure which normally only costs a few pounds.
If you book your flight directly with the airline, you’re not covered if the airline fails.
If you pay for your flight by credit card, and the airline subsequently fails, then under Section 75 of the Consumer Credit Act, you are covered for the cost of the flight (as long as it costs more than £100 and less than £30,000) and any reasonable costs you incur in getting home (for example, if you have to book alternative flights).
If you pay for your flight using a debit card, you should ask your debit card provider to do a ‘chargeback’, which is essentially a refund of the money you paid. It’s not a legal right like Section 75 is but is something that debit card providers have agreed to do.
Booking a new holiday
Unfortunately, while you should be refunded the cost of your original holiday, it is likely to take some weeks for the refund to arrive and you aren’t able to claim any additional costs you may face by having to book another – and possibly much more expensive – holiday.
ATOL’s website has a useful section on Making an ATOL claim, which has a list of ATOL companies that have failed, and how you go about making a claim.
One of the common misconceptions is that travel insurance policies are similar to each other. They aren’t. In fact, they can vary widely. And the cover offered by travel policies in the event of the failure of a travel firm is one example of this. In the case of package holiday companies which fail, holidaymakers will be covered by ATOL, but if you were to put together your own ‘package holiday’ by booking your flight and accommodation directly with an airline and a hotel, you might have to make a claim on your insurance.
If you’re looking for travel insurance, we have partnered with Staysure to provide you with first class travel insurance, tailored to suit your needs. There’s no upper age limit and they’ll cover most pre-existing medical conditions. You can also take advantage of their 20%‡ discount, just quote REST03 at checkout.
‡Discount applies to the base premium of the policy only and not to medical screening costs or add-ons where relevant. Terms, conditions, and exclusions apply.
Paying by credit card
If you paid for your holiday by credit card, then as mentioned you may be able to get your money back under section 75 of the Consumer Credit Act if your holiday company goes bust and it’s not covered by package holiday or ATOL protection. However, it’s not guaranteed that you’ll get your money back. Here are some of the things you need to consider.
- You don’t have to have paid the full price on your credit card, you are still protected if you’ve paid the deposit by credit card and the balance by debit card or cheque. In this case you can make a claim for the cost of the whole holiday (not just the deposit).
- Whether there was breach of contract or mis-representation. If the holiday company/airline goes bust before you’re able to take your holiday, it should be fairly easy to show that there has been a breach of contract. But it may not be cut and dried in all cases.
- The difficulty can arise around what the company was contracted to sell you. If you deal direct with the car hire company, for example, and they go bust you may be able to make a claim against your credit card company for the cost of car hire. However, if you bought tickets for a scheduled flight from your travel agent, they are only obliged to provide you with the tickets (not the flight itself) so you may not be able to make a claim under section 75 if an airline failed and the tickets had arrived but the flight didn’t take place.
- Whether there is a break in the supply chain. You can only make a claim against your credit card company if the supplier you paid failed to deliver the holiday/flight etc. But, according to the Financial Ombudsman Service, if you paid a website portal for your holiday and they’d passed payment onto the airline, hotel, car hire company etc for you, you might well not be able to make a claim under section 75. Whether or not you could make a claim would come down to who you paid and who your contract was with.