The warning signs airline is about to go bust - and what can you do about it?

More than a dozen airlines — Thomas Cook, WOW Air, flybmi, XL Airways, Germania, Adria and more — failed last year, resulting in stranded travellers, government repatriation efforts and scuppered holidays. It seems like every week there’s another airline that looks like it might be going under, too, with rumours circulating on social media and airline statements that sound reassuring… but how do you know? What are the warning signs? And how can you protect your trip?

Keep up to date and do some online research

If you’ve never heard of an airline before, that’s not necessarily a dealbreaker. There are hundreds of commercial airlines worldwide offering regularly scheduled flights, and more doing charters and other sorts of options.

For a quick ‘sniff test’ as to whether the airline looks healthy, run a web search before you purchase your tickets. Visit their website and see how slick it is — bearing in mind, of course, there are areas of the world where this isn’t always an exact science.

See if you can find verified social media accounts, and especially see if the airline looks to be responding well to passengers on sites like Twitter. Check their Wikipedia page too. If you can’t buy tickets with credit cards and must go through a travel agent — which is rare — that’s a red flag.

Make a plan

Keep your eyes on the travel news as your holiday approaches and think about what your plan would be if you were to start hearing things about your airline. Would you cancel the trip and seek refunds? Wait for the airline to go bust? Do you have travel insurance or benefits via a credit card to save your vacation?

Figure out what the trigger is for you to act. If the airline stops selling tickets, particularly if it has been directed by a government agency to do so, that’s a pretty bad sign, for example.

But do note that bankruptcy isn’t always the same worldwide. In the United States, for example, most of the major airlines have filed for bankruptcy, kept flying, renegotiated with their creditors and come out the other side. Alitalia, for instance, seems to perennially hover around bankruptcy.

In the UK, by contrast, if an airline goes bust that’s it: it stops flying, its planes are grounded, and if there are passengers stuck overseas the government will usually start flying repatriation missions to bring people home. This may change, though; after Monarch and Thomas Cook went under recently, there are moves to keep airlines flying until they’ve fulfilled some or all of their obligations to passengers.

At any rate, if you’re concerned, make sure you have protection via your credit card, travel insurance or package holiday regulations.

Book using a credit — not debit — card

I always use a credit card to book travel for two reasons: firstly, because you can do a chargeback, and secondly, because some of the better cards offer protection against trips being cancelled or interrupted. I also prefer credit to debit because if the card gets stolen, cloned or otherwise compromised, it’s the bank’s money going missing and not everything that’s in your current/checking account.

Let’s talk chargebacks first, which are also known as raising a dispute. Essentially, you prove to the satisfaction of your bank or credit card provider that the product or service (in this case air travel) wasn’t provided or won’t be provided. That would likely be something like a cancellation email in this particular case.

From there, your bank (or credit card provider) demands the money back from the airline’s bank, rather than the airline. Perhaps unsurprisingly, your bank has more clout than you do in this kind of situation, so it’s more likely (but not guaranteed) that you’ll have success.

The system is similar in most countries where credit cards like Visa, American Express and MasterCard are issued. Some, but not all, debit cards can also offer chargeback, but it seems to work better with credit cards.

Many credit cards, particularly those aimed at a more premium market, will also offer trip cancellation and interruption benefits. Essentially, your card provider will reimburse you directly if your trip has to either be cancelled before you depart, or if you have to return early or via a different route.

These sorts of credit card benefits are particularly prevalent in the US, but are also available in other countries. While these types of cards do sometimes come with annual fees, it may well be cheaper to pay the fee than to make other arrangements, including travel insurance.

Always take travel insurance

Travel insurance is another excellent way to make sure you’re covered in the event of something going wrong. Again, some of the better (and often fee-paying) credit cards may include this as part of their package, so do your homework if you’re a regular traveller.

But check your policy carefully to make sure that there’s a clause in it covering “financial insolvency” of travel suppliers. Some of them do, some of them don’t, and it’s important to make sure that it’s included, especially if you’re concerned in any way.

Book a package holiday — even just two parts of the holiday at once.

One last way to protect yourself, especially if you live in Europe where regulations are different, is to book a package holiday or ‘linked travel’. Wait, don’t roll your eyes — this doesn’t have to be a classic ready-made bucket-and-spade hotel trip.

The latest package travel regulations in the UK expand the definition of “package” to include at least two of the following list: transport (not including airport transfers), accommodation, car rental, or a tourist service (this has to be a pretty major part of the trip, either because of its cost or because it can’t be separated from the trip: tickets for a Disneyland trip, for example).

Yes, that can be as simple as booking a rental car via your airline alongside the flight — as long as you pay one single price for it, rather than clicking through from the confirmation email. Otherwise it may be “linked travel”, and while that does have protection benefits it’s a little complicated, as the Association of British Travel Agents explains.

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