Experts warn that cover for scheduled airline failure is no longer provided by 88% of travel insurance products.
Debit cards do not offer the same level of protection. But, it’s important to think carefully about credit cards, and to pay off the balance in full to avoid paying interest.
Recent reports of Spirit, an American airline, filing for bankruptcy are a timely reminder that large airlines are not immune to economic pressures. There have been four recent airline failures in the UK, with Monarch, Thomas Cook, Flybmi and Flybe failing in the last seven years.
Anna-Marie Duthie, Travel Insurance Expert at Defaqto, said: “Even though airline failure is rare in comparison to other risks when travelling, when it does happen, the impact is enormous.
“Holidaymakers may not realise that most insurance products no longer provide cover for this. In the event of an airline failing, consumers can potentially recover costs from the ticket provider, the package agent or through Section 75 under their credit card, if paid using this method.
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“That’s why it’s a good idea to book flights or holidays using a credit card, and then to pay off your balance before you’re charged interest if you can.”
Tips for added protection when purchasing a holiday
- Book on a credit card as this will give you the Section 75 protection meaning the credit card company becomes jointly liable with the retailer if an item or booking is faulty or not delivered.
- Ensure you take out travel insurance as soon as you have booked to ensure you are covered should anything go wrong beforehand.
- If you are booking a package holiday it should come with ATOL or ABTA protection – ensure it does before purchase.
- If you are booking elements of the holiday independently such as the flights and the accommodation but under the same transaction you should get the same protection as a package holiday. Again, check this.
- If you are booking elements separately however, through different websites or transactions then you may not get the same protection and so look for a travel policy with travel disruption covers included.
The Defaqto data shows that five years ago more than half (52%) of travel insurance products provided cover for scheduled airline failure as standard. Between 2019 and 2022 this reduced by 10%, and then reduced dramatically to just 12% in 2024.
Anna-Marie Duthie explains: “Last year the International Passenger Protection (IPP), stopped offering cover for Scheduled Airline Failure and End Supplier Failure Insurance. IPP was one of the key providers to the insurance industry so when it decided to cease offering these covers it meant that the providers themselves had to either find another company to do so or to stop offering that cover to their customers.”