Can You Get Your Money Back When Your Airline Goes Bust?

Oof. This question went from the realm of the barely possible to reality for a whole mess of suddenly stranded people all over the globe recently. A couple of weeks ago, the Icelandic low-cost airline Wow rather unceremoniously closed up shop and canceled all upcoming flights.

airline goes bust

So what’s a frugally-minded passenger to do? Are you stuck paying legacy airline prices for security? If you choose a low-cost airline with rock-bottom prices do you have to just roll the dice like you’re at a craps table in Vegas? Not exactly. There are some things you can do to protect yourself. Here’s the low-down.

Pay with a Credit Card – No Exceptions
As part of the Federal Fair Credit Reporting Act, you’re due a refund if an airline goes belly up—as long as your ticket was paid for with a credit card. This scenario also applies in situations where the airline simply cancels your route, or goes bankrupt (but remains in operation). Paying with a credit card does come with some perks!

Buy Airline Insurance – with One Caveat
Not ALL trip insurance covers airline bankruptcy, so make sure you’ve done your due diligence and read the fine print. Allianz and Travel Guard cover you in case of airline bankruptcy, but they do have a list of covered suppliers. If your airline is not on that list – sorry, no coverage for you!

You should also make sure to check and see if your policy covers the land portion of your trip, if you’ve purchased some sort of package. It would be painful to know that the airline ticket is covered, but you’re on the hook for a much more expensive ticket to get you to your overland trip in Borneo (let’s say for argument’s sake). It might not even be possible at the 11th hour to find an affordable airline ticket.

For this reason, if you have an expensive overland trip planned, like a safari it may be safer to buy your ticket through the operator (who has an incentive to get you there). Of course, those prices are often heavily inflated. It’s one of those situations when you really need to weigh the risks versus rewards.

Meet in the Middle – a Low-Cost Offshoot of a Bigger, Legacy Airline
If you’re interested in trying one of the low-cost airlines, check out one like Eurowings, a subsidiary of Lufthansa. In the event that Eurowings was in trouble, Lufthansa would most likely absorb those flights and honor the fares already paid and trips already scheduled.

Get a Handout from the E.U.
If your flight was on a European airline within the European Union, the E.U. actually offers protection for passengers stranded by a bankrupt airline and will make sure you either (a) get to your final destination by an alternate means of transportation – usually a train; or (b) get a refund and return you back to your place of origin.

Have a Plan B
Some airlines do have something called a “repatriation fare” that they can offer stranded travelers at a significant discount– those folks unable to get to their destinations for a variety of reasons. This is crucial for someone whose flight just got permanently canceled, but the number of these fares is often very limited.

Other options might be researching an alternative mode of transport – after all, most Europeans (and a lot of Americans), used the eminently efficient train network for a whole heck of a lot longer than airplanes. Of course, a train is a much slower way to get around than an airplane but is often a scenic and pleasant way to get from point A to B, especially on the continent. Buses and trains are also readily available in most other parts of the world.

Booking with an online agency like also has its perks. pros of booking with us or an agency.  If you booked with a travel agency like us, reach out to them. Your agency should be able to advise you what your options are and often can help you apply for a refund or rebook if you are stranded. And we offer a monthly payments option that could come in handy if you need to rebook a ticket at a price greater than you expected.

Chances are, your trip will not be affected by such an emergency but it’s nice to know your rights and options if it is.

Has this ever happened to you? We’d love to hear about your experience in the comments below.

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