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What travellers should know in case of an airline bankruptcy announcement


What travellers should know in case of an airline bankruptcy announcement

With the sudden collapse of WOW Air we are all left wondering if Norwegian Air will suffer the same fate, or if it instead will mark its survival?

Speculation has been swirling in the last months that popular air carrier Norwegian Air has been teetering on the edge of bankruptcy. The shock announcement of Wow Air’s collapse on 28 March 2019 didn’t help ease anxiety amongst travellers - the ceasing of Wow Air’s operations was immediate and not only left Iceland without its touted airline, but left thousands of checked-in passengers without a flight.

Will the same industry pressures push Norwegian over the edge or will the fall of WOW pave the way for an ease of competitive pressure?

CEO, Michael O’Leary of airline heavyweight Ryanair took the view last year that Norwegian or SAS would succumb to the rising fuel costs in the coming winter.

Norwegian survived the winter and with the collapse of WOW Air easing competitive pressure in the lead up to the busy summer period, it looks as if it may yet survive another season.

With this uncertainty however, passengers must know their travel rights when an airline, whether it be Norwegian Air or another, goes bust:

Stranded Passengers in the event of an airline bankruptcy

If you have used part of your travel ticket (i.e. flown the outward leg of your return ticket) you will need to make your own arrangements for the remainder of your journey. The same goes if you are at the airport awaiting your flight. You should immediately contact the bankrupt airline representative at the airport or call customer service for guidance. In addition, a stranded passenger should contact their travel insurer or applicable, their travel agent for assistance. On other occasions when airlines have announced an immediate cease of operations (Primera, Wow Air), other airlines have offered reduced repatriation fares. Weclaim, an industry leader in flight reclamation services, have put together a comprehensive set of information regarding repatriation options available to passengers. Check details about repatriation rescue fares and routes available here.

Unused ticket refunds in the event of the airline bankruptcy

If your flight has been cancelled by the airline, you are entitled to a full refund. This however will be tricky due to its insolvency.

  • Option 1: Going after a bankrupt airline for the your refund of your unused ticket In order to obtain a full refund for unused tickets if an airline goes bankrupt, you will need to contact the airline directly. Because the airline filed for bankruptcy, it’s very likely that the airline will not respond to your claim or won’t be able to meet its refund legal obligations.

  • Option 2: claiming a refund against the credit card company If you booked directly with the airline using a credit card, you should contact your credit provider immediately and request that the payment be refunded to you.

UK specific: If you paid directly to the airline by credit card you might be protected by Section 75 of the Consumer Credit Act 1974. Check with your card issuer for further advice.

US specific: If you paid directly to the airline by credit card, you might be protected by section 170 of The Fair Credit Billing Act. Check with your card issuer for further advice. Some card providers will ask for a negative response letter confirming the position. You will be able to find this letter on the website of the Civil Aviation Authority of the region of the air carrier (i.e Civil Aviation Authority of Norway for Norwegian Air).

  • Option 3: Going after your travel insurer

Passengers may also be able to make a claim against their travel insurer. Check your coverage and notify your travel insurer immediately. Even though Insurance policy usually provides that no compensation is due in the event of an airline bankruptcy, it is worth checking your coverage and notify your travel insurer immediately.

  • Option 4: Going after the Travel Agent, if applicable.

If you booked your ticket through an airline ticket agent you should claim a full refund immediately from the online booking flight travel agent. According to Weclaim, travel compensation reclamation service, the regulations and consumer laws differ according to your region.

Cancelled flight Compensation against a bankrupt airline

A range of international regulations provide the framework for consumer protection in the flight industry. Amongst others, consumer friendly European Regulation 261/2004 provides for cash compensation in certain instances, including cancellation of flight. If your flight was covered by the European Regulation 261/2004, it would be worth making a claim for the purpose of preserving your claim, however due to the airline’s bankrupt status, payment of compensation will not be forthcoming.

Only time will tell whether Norwegian Air will continue to operate. (In any case, if you are unsure if you are eligible for compensation due to a disrupted journey, you can always test it free of charge on www.weclaim.com.)

Frédéric Pelouze, CEO

1 May 2019

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