Why airlines are going bust, what you should do if your airline goes into administration?

Why are so many budget airlines going bust?

The simple answer is, competition is impossible to beat. Larger airlines can operate at much lower costs, as they have better flight routes, more customers and a larger budget. In case of variables such as fuel price volatility, or a sudden decrease in passenger numbers, maybe because of the weather for a time period such as a half term holiday. Everyone likes to get a better value for their money, when Ryanair offer prices as low as £1 on some flights, how is it possible to beat?

How does a budget airline like Ryanair make money?

Apart from having more customer and better flight routes etc. These big budget airlines come with hefty fees for things such as extra luggage weight and size, printing fees for your boarding pass. Yes, in theory, you can avoid all of these additional fees and get the best value flight, but you must sacrifice your convince and time for it.

For instance, if you wanted extra legroom or front row seats that’s £7, sitting with a group or family? Extra £4, print your pass at the airport for £25. There is also an additional £6 for bringing overhead luggage and the list goes on. According to the Daily Mirror, Ryanair makes a huge £6 million a day, just from these types of extras that a smaller airline doesn’t offer or can’t get away with.

What can I do to be safe from being stuck abroad?

So, you can buy travel insurance that would cover you from airline company failures, but even then, it’s a huge headache and really would just ruin the entire holiday or trip. Best bet would be to use a bigger airline like Ryanair or EasyJet. To be able to get a refund, pay by credit card. It is often your best chance of getting your money back if your airline does go into liquidation. If you are worried about airline insolvency, ask your card provider about their policies before you go ahead with your purchase.

What should I do if my airline has gone bust?

The first thing you should do is check the website and or ask the staff if the airline will assist passengers. There’s probably not going to be a lot to go on though, so it’s good to read up on your rights, and know how you can get a refund or a flight home. Here is a list you can check.

Check ATOL - ATOL stands for Air Travel Organiser’s Licence and is a UK financial protection scheme which covers about 20 million holidaymakers and travellers each year. Upon purchase, you will be presented with an ATOL receipt, which will be proof that your flight is protected in case something happens.




Contact your travel agent - If you booked your flights through a third party, such as a travel agent or tour operator, you have an additional useful source of information and advice. They will likely have other customers in the same situation, so they’ll be able to advise you and help you book new flights, if that’s what you want.

Refund via your travel insurance - Check what your insurance policy says about airline insolvency. While many have coverage for flight cancellations, some do have exclusions for bankruptcy. Travel insurance is best claimed back at a later date, you would need to meet any immediate costs associated with extra accommodation or flights etc yourself. Keep all receipts, no matter how small, and pay for everything on a credit or debit card, so each transaction is recorded on a statement which you can provide to the insurance company later.

NB, have travel insurance in place from the day you book your flight or holiday, if an airline goes bankrupt and your travel insurance doesn’t start until your flight date, you may not be covered. A yearly travel insurance policy is a huge saver and you would be surprised how cheap a years policy is, when compared with a 2 week policy.

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