About 50 airlines have collapsed since the start of last year including XL Airways, Zoom Airlines, Sterling and Futura. 

The problem shows no sign of abating and a few weeks ago it was announced another airline, SkyEurope, which flew out of Luton and Manchester collapsed.  We’re now in autumn/winter, the time when airlines are most vulnerable as bookings slow after the summer rush and cash flows dry up.  Mark Gettinby from Intune, the financial products and services provider that gives all its profits to Age Concern and Help the Aged, looks at how you can avoid being stranded and out of pocket if things go wrong. 

Many airlines are feeling the effect of the economic downturn and more could be at risk of going into administration as business and leisure customers cut back on travel and companies transport less cargo.  According to the International Air Transport Association’s (IATA) September figures, airlines worldwide are likely to lose $11bn in 2009, more than double its estimate in March of $4.7bn for 2009.  With the current fragile state of the airline industry, increasing fuel costs and an increase in air passenger duty coming into force in November, aviation experts are warning consumers to brace themselves for more bad news. 

While there are a number of safety nets in place to provide passengers with help and compensation, an increasing number of consumers are opting to book flights directly from airlines rather than going through an ATOL-bonded tour operator or an ABTA agent, and so may find they are unprotected.  Intune outlines your options if the worst happens:
• According to Directgov, the UK government’s website which provides information and online services for the public, if you booked your flights as part of a holiday package (such as where accommodation and travel are combined in one transaction) through an ATOL licensed agent or airline, you should be protected by ATOL (Air Travel Organiser’s Licence).  Some airlines offer flight and accommodation or car hire, sometimes through website links to other independent sites.  These are often separate purchases from a different company, and will not count as a package holiday. 
It is up to the customer to check whether their tour operator has an ATOL licence which can be done by looking on the Civil Aviation Authority’s website at www.caa.co.uk/atol.  For those who have booked through a member of ATOL, if an airline goes into liquidation, a full refund will be given to holidaymakers who have yet to travel and arrangements will be made for those stuck abroad to fly home.  Passengers booking a seat-only fare on a charter airline and scheduled flights bought through ATOL licensed travel agents will also be covered.
If tickets are purchased directly from the airline and it subsequently goes bust, the situation is less straight forward. 

• Consumer Direct advises that if you pay more than £100 and up to £30,000 using a credit card, you should be able to claim the money back from your card issuer under the Consumer Credit Act (1974).  This protection applies to some debit cards but by no means all, so it may be worth considering if the fee charged by airlines for credit card transactions is worth it. 

• Airline failure may be covered as standard on your regular travel insurance. However, research by Intune shows that 87% of annual and single travel insurance policies do not provide cover for scheduled airline failure at all.  Just over 11% of policies provide scheduled airline cover as standard and less than 1% of annual policies and just under 2% of single policies provide optional cover for an extra cost.

• If you are not protected by one of the above measures, you’ll be an ‘unsecured creditor’ and to get your money back from the airline you’ll have to contact the official receiver through The Insolvency Service (0845 602 9848, www.insolvency.gov.uk).  But there is no guarantee that you will get back all of your money. 

The travel insurance offered by Intune has been specially designed to provide its
customers with the reassurance that, whatever their age, they can travel with fast
access to financial and medical help, for a wide range of emergencies.  Scheduled
airline failure cover was added in response to consumer concerns in these tricky
times.  Many people were worried that they could find themselves in a position where
they wouldn’t be reimbursed if they had to buy new airline tickets in order to get
home from a holiday abroad if their airline got into difficulties.

Directgov warns that if the airline you booked with goes bust, you may need a return flight with another airline.  If there is a delay or no other airline flies the same route, you may need to book a hotel or do some extra travelling at one or both ends of your journey.  You will have to make and pay for these arrangements yourself.

For further information on Intune’s travel insurance and other products, please visit
www.intunegroup.co.uk or call the travel telephone number on 0800 030 4829.