What Happens When a Travel Provider Shuts Down

October 14, 2019

So far, you have heard that the British travel operator Thomas Cook Group has gone bankrupt, including retail travel agencies, wholesale travel packers and even airlines. This is the biggest travel agency failure in recent memory. Approximately 600,000 passengers remain in foreign destinations, and many homebuyers who have not yet begun to travel but have not yet begun to travel are less likely to see the purchase of travel or any advance payment. The question raises a question: What happens to customers when the travel agency that the customer pays is closed? Is there a legal guarantee for reimbursement? Short answer: only for some people.

Thomas Cook closes
As of September 23, all of Thomas Cook’s retail agents have been closed and all travel operations have been closed. Two affiliated airlines, Condor and Scandinavia, are still operating. The Condor has used the Condor Ticket to tell the traveler that it will accommodate them on their return home flights, but will not accommodate travelers who have not yet begun the Thomas Cook package tour.

According to reports from the stranded Thomas Cook travellers and several media outlets, many hotels are owed money for the accommodation they have provided or are providing and are likely to not receive payment. According to reports, some hotels try to charge replacement fees from passengers, but the general recommendation of the British government and other authorities is that passengers should not be responsible for lost expenses. The Turkish Ministry of Tourism ordered the hotel not to charge Thomas Cook travelers for missed fees and said the Turkish government would pay them.

About three-quarters of stranded travelers traveled from the UK or Germany. The British and German governments have made great efforts to bring hundreds of thousands of passengers home through charter flights, which is called “the largest peacetime repatriation in British history.”

ATOL: Who is likely to reimburse
When this happens, British passengers are the only ones who have encountered luck: many British travelers booked by UK travel agencies are financially protected by the British Civil Aviation Authority’s ATOL (Air Travel Organizer License), which was established to cover the case. The passenger is in the breakdown of the travel agency. Tour operators must be covered by paying fees to the ATOL program (which belongs to Thomas Cook).

For travellers from other countries, it seems that no existing efforts have been made, which means that only UK talent as a customer of an ATOL license operator is likely to receive payment. These customers can file ATOL claims here through the UK government.

If you are trapped at your destination
Without any formal recovery plan, North American travellers booking on a return flight that Thomas Cook Airways does not currently have should check with other airlines for possible reductions in emergency one-way return fares, usually at travel agencies or airlines. Available at the time. Passengers who have booked a return trip from another airline should expect to use the ticket on the ticket, but please check with the airline to make sure your reservation is still valid.

Insurance Vulnerability: If you purchase a travel interruption insurance that includes “Supplier Bankruptcy” or “Supplier Default” as an “expressed reason”, the insurance should cover the cost of the new return ticket. Please contact your insurance provider before purchasing.

If you have paid for a trip to Thomas Cook (but not yet started)
If you have booked a tour group including Thomas Cook Airways, your booking may now have expired and you will receive such notice. You are unlikely to receive any refunds from Thomas Cook, but there are two alternative ways to get your money back:

If you purchase insurance for cancellation of travel, including “Supplier Bankruptcy” or “Supplier Default” as “clear cause”, the insurance should reimburse your package.
If you pay by credit card, please ask your bank to refund the fee in accordance with federal regulations, which means that you can get the money back.

If you have a travel package for Thomas Cook that books airline travel from other airlines, your air travel should still be legal, but the vacation package is not legal.

If you are worried about other travel companies failing
In the United States: For travellers from the United States and Canada, the mistakes of airlines and travel agencies were once a serious problem, but only recently. The North American airline market has eliminated all vulnerable players, and at this point, financiers don’t seem to worry, at least for any large US airline. Again, if you don’t understand these faults, it can be difficult to predict. Enter the list of alerts for the insurance provider Travel Guard, which is a list of companies that will not be included by default. The list does not include airlines that are currently operating, nor do they have well-known travel agencies.

In Europe and elsewhere: However, in foreign countries, airline failures remain a constant threat. Recently, a small number of low-cost European airlines have closed down. Industry experts seem to believe that there are still “too many” small routes and too much price competition, and all participants are not spared or even slightly declining. Any airline with a lot of debt on its balance sheet is a candidate for failure.

Meaning: In both cases, as long as you purchase TCI insurance, you are likely to be protected by the closure of the travel agency.

How to protect yourself
There are three basic strategies to minimize the risk of airline or carrier failure:

Limit your upfront risks. Book as many arrangements as possible at a cancelable price. Refundable fares are prohibitively expensive, but even if you have to cancel a non-refundable ticket, you can usually retain the value minus the change fee (except for basic economy class fares). Meaning: Book a refundable ticket/hotel reservation and avoid the basic economy.
Prepay by credit card only; debit rules do not apply to debit cards or other similar direct debit methods.
If you are at great risk, please purchase Cancel Travel and Travel Interruption Insurance (TCI / TII) to ensure insurance.
Insurance provider closed by the travel provider
Many TCI / TII travel insurance policies cover the failure of travel providers. Coverage includes compensation for prepayments that you cannot recover from unusable suppliers, as well as funds for spare accommodation and return fares that are in trouble due to the closure of the travel agency. However, please pay attention to the purchased items and purchase time:

Some policies include the “bankruptcy” of suppliers as the reason for coverage. Others say that suppliers are “defaulting”. Default protection is stronger: companies often fail and never formally declare bankruptcy.
You must purchase insurance within a limited time (usually two to three weeks) after the initial payment. By the way, this is also the time requirement for many policies to abandon existing conditions; what you definitely want to do.
You must purchase insurance within the minimum specified time before departure; usually around two weeks.
Do not attempt to purchase last minute insurance as a bailout: Travel insurance does not cover any unexpected circumstances that you “foresee” when you purchase a policy. Therefore, this is a waste of money.
Purchase insurance through an independent third-party travel insurance specialist. Most policies do not cover the default of a company that sells insurance to you. Meaning: When Thomas Cook goes bankrupt, so does any travel insurance purchased with the package.