Kristina Tammaru, head of the consumer rights advisory bureau of the Estonian Consumer Protection and Technical Surveillance Authority (TTJA), has outlined the steps passengers should take when an airline faces financial difficulties or ceases operations. The advice covers scenarios from bankruptcy to flight cancellations under EU rules.
Bankruptcy: filing claims and recovery chances
If an airline is declared bankrupt, passengers should act according to official bankruptcy information and file their claims, Tammaru said. However, she noted that in bankruptcy proceedings it is not possible to predict whether or to what extent passengers will recover their money. The recovery depends on the assets in the bankruptcy estate and the priority order of claims, and passenger ticket refund claims are generally not given priority.
Tammaru pointed out that if the ticket was paid by card, passengers can inquire with their bank about a chargeback. A chargeback is not automatic but may provide a chance to recover money; conditions depend on the bank and the card organization's rules, such as VISA or MasterCard.
Travel insurance may not cover airline bankruptcy, Tammaru warned. Passengers should read the terms of their policy and ask the insurer about which risks are covered before concluding the insurance.
Package tours and flight cancellations
For passengers who purchased a package tour, the tour operator remains responsible for fulfilling the contract even if the airline goes bankrupt. If the operator cannot fulfill due to unavoidable circumstances such as airline bankruptcy, the paid amount — including the flight cost — must be refunded.
When an airline cuts routes and cancels flights, the European Union's air passenger rights regulation (EC) No 261/2004 applies, Tammaru noted. If the passenger is notified of cancellation more than two weeks before departure, they can choose between alternative flights and a refund. If notified less than two weeks before departure, they may be entitled to compensation and a return flight in addition to new tickets or a refund. If notified immediately before the flight, the airline must provide care.