Airline collapse, passengers’ rights bankrupt carrier


Over the past two years, we have witnessed the collapse of 39 airlines, and in recent weeks three failures by European carriers. British based Thomas Cook, French based XL and Slovenian based Adria’s fleets will no longer take to the sky. Adria has just opened insolvency proceedings, as was announced in a recent press release. This is important from the point of view of passengers, the process for applying for compensation in the case of bankruptcy is very different.

Although the consequences of an airline bankruptcy can’t be avoided, there are several ways to minimise losses:

  • tickets purchased with a credit card – a complaint should be lodged with your bank indicating the cancellation of the flight and the corresponding charge on the card used to pay for the ticket. The bank will perform a chargeback procedure on behalf of their client, a successful completion will result in a refund
  • tickets purchased through a travel agency – in this case, the flight is part of the travel contract and is covered by mandatory package holiday insurance. Ticket costs may thus be recouped by contacting the travel agent and policy issuer
  • travel insurance that covers airline collapse – banks and insurance companies offer many policy options, including cancellations for various different reasons
  • tracking information about the selected airline
  • preparing an alternative travel plan

However, should you do if all of these methods fail? The first step should be to file a complaint directly with the failing air carrier. “The complaint should indicate the flight number, date, and flight route. The airline is required to respond to a complaint, as per Regulation EC 261/2004. The airline should list any such claims on its list of claims”, says Elżbieta Tyszka, Head Lawyer at flight compensation company GIVT. “If the failing carrier’s assets allow for these claims to be satisfied, then the passenger’s situation is much better and they can expect compensation and reimbursement of costs incurred in connection with the cancelled flight.”

Passengers are in a worse position if the court announces the airline’s bankruptcy. Recovery of any monies is very difficult such an event, because the airline is unable to pay its current liabilities on an ongoing basis.  “Under Polish law, the deadline for filing claims is set out in the court’s decision of declared bankruptcy, beginning from the date of publication in the Court and Economic Monitor (Monitor Sądowy i Gospodarczy). The period cannot be shorter than one month, and no longer than three months. To comply you should submit a claim by registered mail. The deadline for filing claims is the same for all creditors, but the order in which their claims are met depends on the priority set. In this case, the customer is second of 4 categories, only when claims from the first category are satisfied will any subsequent claims be paid”, adds Elżbieta Tyszka from GIVT.

There is an exception to this rule, however, if the flight was served by another airline that cooperated with the failing carrier. In this case, the partner airline may be contacted to obtain compensation.

“This procedure may differ slightly in other countries however the general rule should be to protect debtors in the event of a creditor’s insolvency. In many countries work is underway to create a fund from which money will be paid to cover passengers’ claims in the event of airline, or travel agency bankruptcy”, says Elżbieta Tyszka.

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About GIVT

We seek compensation from air carriers for delayed or cancelled flights and in cases when air travellers are denied boarding. We act fast and efficiently, and we follow transparent rules. To make the process of obtaining compensation for our clients, we focus on advanced technology, task automation systems, machine learning, and advanced Big Data. GIVT has attracted experts with expertise in several sectors, including aviation, finance, modern technology, consulting, digital marketing, and legal services.