What to do first
As soon as you hear that your airline or holiday company has gone bust, you need to sit down with a phone and take stock of your situation.
The first call should be to your travel agent – if you booked through one – to make sure your booking is still in place.
If it is, your travel arrangements should be relatively unaffected. You may have to change flight times, but your holiday or trip should go ahead as before.
If you can’t contact the travel company, go directly to your airline and accommodation provider to check they have your booking and that your payment has been made. If the booking is there, you should be fine to proceed with your holiday.
Types of holiday protection
This section looks at the role ABTA and ATOL can play in protecting your trip or the money you’ve paid for it.
The Travel Association (ABTA – formerly known as the Association of British Travel Agents) is the UK’s largest travel association. It represents travel agents and tour operators that sell over £37 billion worth of holidays and other travel services, ensuring they keep to a strict code of conduct to maintain high standards.
It also offers travellers financial protection if a holiday company goes bust. This means, if your holiday is a land- or sea-based package, such as on a coach, cruise or railway, and you booked with an ABTA member, then your money is protected in the event that member folds.
More on ABTA protection
The Air Travel Organiser’s Licence (better known as ATOL) has been protecting people booking package holidays since 1973. By law, every UK travel company that sells holidays and flights is required to hold such a licence.
This means that, if your overseas holiday was booked with an ATOL member and it goes bust before you travel, you can apply to the Civil Aviation Authority (CAA) for a full refund. If you’re already on holiday when the company goes bust, the CAA will arrange to get you home.
There are certain rules as to whether you’re ATOL-protected if you’ve booked your flight, hotel and car hire together or separately. Check the ‘When does ATOL protection apply?’ section under ‘Common questions’ at the end of this guide.
Make sure you receive an ATOL certificate for your holiday at the time of booking and take a copy with you on your trip.
More on ATOL protection
Other forms of holiday protection
There are two routes open to you if your trip isn’t ATOL protected or booked through an ABTA member and your airline or holiday company goes bankrupt: travel insurance and credit or debit card protection.
Situations such as your holiday firm going bust are one of the main reasons to buy travel insurance as soon as you have booked your holiday. That, and knowing you’re covered for loss or emergencies so can relax before your holiday’s even begun.
Don’t assume all travel insurance policies protect you against companies going out of business as standard, though. Some providers might include it as standard in all their cover levels, some may offer it on some cover levels, and some might not include it at all. Check different providers’ policy wording carefully.
Credit card protection
If you haven’t got travel insurance in place at the point when your holiday company goes bust, you may be able to claim back your money through your credit card company.
To be eligible, you need to have paid more than £100 for your holiday or flights and booked directly with the holiday company or airline.
If you paid by debit card, you may be able to claim through the Mastercard and Visa Chargeback scheme, which most high street banks have signed up to. This allows you to ask your card provider to reverse a transaction on your debit card, giving you your money back.