This winter could see more airline failures

November 6th, 2009
At least 32 airlines have collapsed this year and more failures are predicted this winter as increased Air Passenger Duty, rising fuel prices and the global recession put the airline industry under pressure. To make matters worse, around half of all holidaymakers are still travelling without financial protection. Currently, only holidaymakers who book with companies holding an Atol (Air Travel Organisers' Licensing) bond are guaranteed a refund if an operator collapses. So far this year, 28 Atol-protected companies have failed, according to the Civil Aviation Authority, most notably the ski operator Descent International and the cruise operator Hebridean International. In 2008, 42 Atol-protected travel companies collapsed.
With the financial crisis likely to claim more victims, it is doubly important to get some protection. Some travel insurance companies offer Passenger Protection Insurance, often termed Dynamic Packaging Protection, sold separately or part of a travel insurance policy but always check the small print if this is offered as these are quite often the restrictive in their cover. You can reduce the risk further by organising your travel through tour operators and agents covered by ATOL or who hold bonding through an approved body, such as ABTA or AITO.
What is ATOL? This stands for Air Travel Organiser's licensing and is a protection scheme for flights and air holidays, managed by the Civil Aviation Authority (CAA) and protects the customer from losing money or being stranded abroad when a tour operator goes bust. All licensed firms have to lodge bonds with the CAA so that, if they go out of business, the CAA can give refunds to people who can't travel and arrange for people abroad to finish their holidays and fly home.
And ABTA? Members of the Association of British Travel Agents are required to provide financial protection for their customers which means that you can book your holiday knowing that if an ABTA member fails financially while you are on holiday, you can continue your holiday as planned. If your holiday has not started, then you will receive a full refund or be given help to make alternative arrangements for the trip to proceed. Likewise AITO, or Association of Independent Tour Operators to give it its full title, require their members to protect their customer's money in the event of an AITO member going into liquidation.