Airline collapse: what can you do?

17 December 2009

Globespan, Scotland's biggest airline, has collapsed leaving thousands of holidaymakers stranded - and an estimated 100,000 people unsure about how to get their money back.

The airline and tour operator (known as Flyglobespan and Globespan respectively) has been put into administration after suffering “liquidity issues”, and all flights have been cancelled and aircraft grounded.

Around 4,500 passengers are believed to now be stranded in Spain, Portugal, Cyprus and Egypt, while 100,000 are thought to have travel plans booked. The airline carried 1.5 million passengers last year, and operates 12,000 flights each year.

The Civil Aviation Authority (CAA) says it is working to help customers of Globespan return home, as they are covered under its ATOL scheme – this means the CAA will ensure you do not lose the money you paid over or, if you're abroad, it’ll arrange for you to finish your holiday and fly home. 

However, tickets bought directly from the airline Flyglobespan are not covered by the ATOL scheme and therefore customers with a flight only booking with Flyglobespan will not benefit from this protection.

The airline says it will not be offering any refunds to customers, or compensation to cover the cost of accommodation or other associated costs. 

It is estimated that around 80% of the company’s customers booked flights directly – equal to tens of thousands of passengers – meaning they stand to lose out as a result.

If you’ve been hit by the collapse and are not protected under the ATOL scheme, then you may be able to get your money back under section 75 of the Consumer Credit Act.

This protects anything you buy on your credit card (between £100 and £30,000), with the credit card provider jointly liable with the merchant should something go wrong. This includes airline collapse.

Customers should contact their card issuer to find out how to claim a refund.

If you paid by Visa debit card, then you may be protected under the Chargeback scheme.

However, claims must be made within 120 days of the transaction. Each application is assessed separately and, although the scheme is not enshrined in law, the Financial Ombudsman Service has deemed it an example of good practice, and it is widely accepted in the banking industry.

However, the Visa Chargeback scheme does not apply to all Visa debit cards so you’ll have to check with your bank or building society. And, of course, MasterCard, Switch and Maestro cards do not offer this protection.

If you have travel insurance then you may be able to claim under this – however, not all policies will include airline collapse so contact your insurer or check your policy details.

Graeme Trudgill, technical and corporate affairs executive at the British Insurance Brokers Association, says: “This really highlights the importance for travellers to focus on the cover within their policy and not just the price, especially independent travellers who are not assisted by package holiday protections.”

As Globespan is in administration, all customers are considered ‘creditors’ – you could try to make a claim to the administrators, PricewaterhouseCoopers c/o Erskine House, 68-73 Queen Street, Edinburgh EH2 4NH.

How can I get home?

The CAA says it will arrange flights to bring all eligible customers home.

You can find out more on the ATOL website or by calling its helpline - +44 (0) 2034410846. 

If you booked your holiday through a travel agent, then contact the firm for information. If you booked through The Globespan Group, then you should contact ATOL directly.

If your flight isn’t protected by the ATOL scheme, then you’ll have to make your own arrangements to return to the UK.

EasyJet and Ryanair have offered stranded passengers special “rescue" fares, and Thomas Cook says it is making arrangements to allow for additional flights out of Glasgow airport.

If you have travel insurance in place, then contact your insurer to find out what help – if any – it can offer you.

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