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Traveller advisory: What do you do if an airline shuts down?

by onlinecitizen
23/04/2019
in Finance, Lifestyle, Transport
Reading Time: 5 mins read
0

Fleet of Jet Airways Airbus A330 standing on the apron of Indira Gandhi International Airport. Jet Airways is going through a financial crisis currently (Photo by Yatrik Sheth from Shutterstock).

by ValueChampion

Airline shutdowns are more commonplace than travellers may imagine. In the span of a few months, two airlines shut down, leaving passengers stranded. What should you do if this happens to you?

On the back of Iceland’s budget airline WOW Air’s shutdown, India’s Jet Airways has declared bankruptcywith plans to shut down fully in the coming weeks. Its last flight was April 17, 2019, leaving passengers wondering what they are to do if they have booked future flights with the airline.

Unfortunately, airline bankruptcies aren’t as rare as may seem, with at least 15 airlines shutting down in the past 10 years. Below, we discuss what travellers should do if their airline shuts down during or before their trip.

What Happened to the Stranded Passengers?

In both the case with Iceland’s WOW Air and India’s Jet Airway shutdown, travellers were able to get on a flight from a partnered airline for free or get discounted tickets from other airlines. However, in some cases these prices were still quite expensive and even the discounted tickets still cost around S$1,300.

This can be a blow to consumers who already paid a hefty price to get to their destination. However, customers who recently booked flights with WOW Air may have been able to call their credit card companies to cancel the charge.

After Jet Airway’s shutdown, travellers had a slightly different experience. For one, travellers who booked directly with Jet Airways can reclaim their payment. Furthermore, you may have the option to rebook, reroute or refund your tickets if you booked through a codeshare partner like Virgin Atlantic.

What to Do if You Become Stranded in the Middle of Your Trip

If you are stranded because your flight has been cancelled due to a shut down airline, there are several things you can do. First, as mentioned above, you can see if other airlines are willing to seat passengers affected by the shutdown. In the best case scenario, you may be able to get a heavily discounted flight home or receive a 100% ticket refund.

In the worst-case scenario, you may end up having to pay last-minute fares for a trip home. This will not only be expensive, but it may also require taking additional days off from work, given that there is no guarantee you can get on a same-day replacement flight.

You should also notify your travel insurer to see if your policy covers the cancelled flight. While some insurers do not provide trip cancellation coverage due to airline faults, other insurers do. However, even among the insurers that offer coverage, there are often stipulations.

These can range from whether you were offered an alternative flight or if you were able to get a replacement flight within 24 hours of the cancelled flight.

What to Do if You Booked a Trip With a Defunct Airline

If you have booked an upcoming flight with an airline that shut down, you have several options. You can see whether your travel insurance offers benefits under insolvency protection. This benefit may let you claim for losses incurred due to your airline shutting down. However, it is worth noting that while some insurers covers travel agent, tour operator and transport provider insolvency, other insurers only cover travel agency insolvency.

This means you may be unable to get the money back from filing a travel insurance claim. Instead, you can try calling your credit card company and to see if they can cancel the charge. Credit card companies offer consumer protection services and will refund charges for non-delivered goods and services, which may include unusable airline tickets.

Always Take Reasonable Precautions Regardless of Your Trip

Natural disasters, airline shutdowns and medical emergencies can wreak havoc on your trip. This is why travel insurance exists—to protect travellers and to help them recoup costs after something goes awry. However, beyond buying travel insurance, you should also take a number of other precautions. First, you can try budgeting emergency expenses into your trip.

You should at least be able to cover emergency hospital or delay expenses. That way, if you are left stranded with no financial recourse, you are not pulling money out of your savings or racking up credit card bills.

Last, you should also be wary of the companies that you book with. While low-cost airlines are popular with travellers because of their unbeatable fares, they also suffer from profitability issues. This puts them at risk of going under, which was seen not only with WOW Air, but also with BerlinAir, Monarch Airlines and Primera Air.

Instead, you should book with trusted, larger airlines that have a healthy financial record. You’ll be able to tell if they do by following airline industry news and keeping an eye out for airlines that seem to be struggling financially.

This was first published at Value Champion’s website, “Traveller Advisory: What Do You Do If An Airline Shuts Down?“.

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