Third of travel insurance doesn’t cover Flybe style airline collapses

Why Flybe collapse means you should check your travel insurance smallprint: A third of holidaymakers wouldn’t be covered if an airline goes bust

  • Flybe announced it has gone into administration
  • A third of travellers wouldn’t be covered by insurer for airline failure 
  • We reveal what passengers can do to claim their money back 

Flybe announced yesterday that it had gone into administration, blaming the lack of demand for air travel due to the coronavirus outbreak as one of the main reasons it had gone bust.

It is the latest airline to go under following Flybmi, Monarch, Primera, Air Berlin and Germania, among others, who have ceased trading in recent years.

Following news that the budget airline is the latest to go bust, Flybe customers stranded abroad will be left wondering how they will get home – but a third of those are likely to be left vulnerable, new data has revealed. 

One in three travel insurance policies offer no protection for airline failure, according to financial information firm, Defaqto, meaning a third of customers will be left exposed, with little protection. 

Headache: Flybe is the latest airline carrier to go into administration, leaving customers vulnerable 

Although many customers will now be turning to their insurance company to organise alternative flights and reclaim money for flights not yet taken, just 49 per cent of policies offer protection for airline failure as standard.

This means travellers could be left unprotected should the airline they book with get into financial difficulty and they can’t travel – the current situation for some Flybe customers with inadequate cover. 

Although cover for airline failure is offered as an optional extra in 19 per cent of policies, 32 per cent offer no protection at all.

Brian Brown, consumer finance expert at Defaqto, said: ‘With flights and holidays cancelled as a result of the Flybe collapse, a lot of people’s holidays will be ruined over the coming months.

‘Airline failure is not covered as standard on over half of travel insurance policies as the risk is usually relatively small.

‘Anyone who has booked a trip with Flybe as part of a package holiday will be fully protected through the ATOL scheme and should not lose out.

‘ However, those who have booked flights directly and haven’t travelled yet, are at risk.’ 

Schedule Airline Failure No. of Policies % of Policies
No cover 374 32%
Optional 224 19%
Standard 571 49%
Total 1,169 100%
Source: Defaqto     

What to do if you’re a Flybe customer 

For Flybe customers who have flights booked, trying to claim their money back on their travel insurance should be their first port of call. 

If they are currently stranded abroad, they should also contact their insurer to try and arrange alternative flights back to the UK.  

However, for those who don’t have any travel insurance – or find that theirs is one of the third that doesn’t cover airline failure – they can try and claim back money on their credit card under Section 75 of the Consumer Credit Act.

For any payment between £100 and £30,000 made on credit card, customers can claim back money through their bank, if there is a problem with the service they have received. 

Unfortunately, it is likely for some that their flight tickets were little over £100 and so may not be able to recover much of their money. 

For those who bought package holidays, they will have ATOL protection which will cover their flights, accommodation and car hire – but it won’t cover other outgoings such as meals and taxis, something travel insurance could recompense customers for.   

However, for those who bought their flights directly through Flybe, they will not be ATOL protected and are only likely to get their funds back through insurance. 

Rory Boland, Which? Travel editor, said: ‘This will be terrible news to Flybe passengers, many of whom were loyal customers and used the airline regularly.

‘Unlike Thomas Cook’s collapse, most people flying Flybe won’t have ATOL protection so the government is unlikely to step in and repatriate those abroad or provide refunds. 

‘Instead passengers with travel insurance should check if their policy includes scheduled operator failure cover. 

‘Alternately, those who booked tickets costing more than £100 with a credit card will be able to claim from their credit card provider. 

‘If the tickets were under £100 or booked with a debit card, passengers can try to use chargeback from their bank or card provider.’ 



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