The short answer
The airline will not refund you. A carrier that has stopped flying has stopped processing refunds, and the administrator running it must pay secured lenders and employees first. Your money comes back from somebody else, and which somebody depends on how you paid and who you bought from.
Act in the first week. Waiting for the administrator to write to you burns a deadline that does not pause.
| How you booked and paid | Who you claim from | Realistic outcome |
|---|---|---|
| Package from an ATOL holder | The travel firm, backed by the Air Travel Trust | Replacement flight or full refund. The strongest position by far. |
| Direct from the airline, UK credit card | Your card issuer, under Section 75 | Full refund on fares over 100 pounds. No deadline for years. |
| Direct, debit or charge card | Your card issuer, under card scheme rules | Usually works. Roughly 120 days from the flight date. |
| Insurance naming scheduled airline failure | Your insurer | Pays the ticket, sometimes the replacement fare. Most policies exclude it. |
| Bank transfer, cash or airline credit | The insolvency practitioner | Unsecured creditor. Assume nothing. |
Why will the airline not just refund me?
Because an insolvent company is not allowed to choose who it pays. Once an administrator is appointed the order of payment is fixed by insolvency law. Secured lenders, the practitioner’s fees, wages and preferential tax claims all rank ahead of you. Ticketholders sit at the bottom of the unsecured pool. A cancelled flight from a trading airline gives you a solvent company with a legal duty and a bank account. A collapsed airline gives you a duty nobody can honour.
Do not expect a rescue either. When Monarch failed in October 2017 the Civil Aviation Authority ran the largest peacetime repatriation in UK history, bringing home around 85,000 passengers. That was a funded one-off, not an entitlement. When Flybe stopped trading on 30 January 2023 the CAA said plainly that the government had commissioned no repatriation flights, because other airlines, rail and coach had capacity. Passengers got themselves home and paid for it.
A fix was designed and shelved. The Airline Insolvency Review, published on 9 May 2019, recommended a Flight Protection Scheme costing under 50p per passenger to repatriate any failed airline’s passengers. The gov.uk collection holding it was withdrawn on 18 June 2021 and no scheme exists.
Does ATOL cover my flight?
Only if you bought a package. The scheme’s own guidance is blunt about the limit: if you buy an airline ticket from an airline or travel company and receive a valid e-ticket in exchange for payment, ATOL does not cover that flight.
Hold on to the distinction, because it decides your claim. ATOL protects you against your travel firm failing, not against an airline failing. But if your ATOL holder is still trading when the airline underneath your package collapses, the firm carries the problem. It has to provide alternative flights so the trip can go ahead, or refund you. That is the best reason to book flight and hotel together, and the rest of the gap is in package holiday rights against booking it yourself. Check the paperwork, not the marketing: a genuine package produces an ATOL Certificate at payment. No certificate, no protection.
How do I claim through my card?
For most people who booked direct, this is the whole answer. The CAA’s standing advice on scheduled airline failure sends passengers to three places: Section 75 if you paid by credit card, chargeback if you paid by debit or charge card, and your insurer if the policy covers scheduled airline failure.
Section 75 of the Consumer Credit Act 1974 makes your credit card issuer jointly liable with the airline for a breach of contract, on a single item priced over 100 pounds and up to 30,000 pounds. A flight that never operated is a plain breach. You do not need the airline to agree, or to exist. The issuer owes you directly, which is why this route survives an insolvency that kills every other claim. If it refuses, get the final response in writing and take the complaint to the Financial Ombudsman Service within six months.
Chargeback is not law, it is card scheme rules, and it is the clock that runs out first. For services not provided the window generally runs about 120 days from the date the service was due rather than the date you paid, which keeps a flight booked eleven months ahead claimable. Which route to file first is in our chargeback and Section 75 playbook. File on the strength of the airline having stopped flying.
What do I do if I am already abroad?
Assume nobody is coming. Book your own way home the same day, because seats on the remaining carriers price upward fast when a route loses an operator. Keep the evidence: the booking confirmation, the card statement line, the cessation notice, and receipts for the replacement flight and any extra nights.
Then understand what each claim recovers, because the two card routes are not equivalent here. Chargeback only ever reverses the amount charged, so it returns the fare and nothing else. Section 75 is a claim for breach of contract, so the losses the breach forced on you, including the replacement flight home, are in scope. Insurance with scheduled airline failure cover does the same job without the argument, and our guide to travel insurance exclusions shows where that cover goes missing.
Can I still claim EU261 or UK261 compensation?
On paper yes, in practice almost never. The duties to refund, reroute and pay fixed compensation sit on the operating air carrier, and it still owes them the moment it cancels your flight. But a company in liquidation cannot honour a money judgment, so the compensation claim joins the same unsecured queue as your ticket price.
Timing changes the answer. If the flight was cancelled while the airline was still trading and the collapse came later, you may have a genuine claim from that window. Pursue it as an ordinary claim first. Thresholds and amounts are in our guides to EU flight delay compensation and the UK regime after Brexit.
Europe has strengthened the rules, but not in time and not for this. Directive (EU) 2026/1024, adopted on 29 April 2026, requires insolvency refunds within six months and lets travellers refuse a voucher within 14 days. It governs the insolvency of the package organiser, not of an airline you booked direct, and it applies from 29 March 2029.
What if the airline was American?
The federal refund rule is strong and useless here. Under 14 CFR Part 260 a covered carrier must refund a cancelled flight within seven business days for a credit card purchase, and 20 calendar days otherwise. That binds a solvent airline. Spirit Airlines stopped flying on 2 May 2026 and moved into a wind-down, and a carrier in that state has nothing left to process it with.
Your real route is the Fair Credit Billing Act, through Regulation Z, where a charge for services not delivered as agreed is a billing error you can dispute. The deadline is what catches people, because it runs from the wrong date. Your notice must reach the issuer no later than 60 days after it sent the first statement showing the charge, not 60 days after the flight. Book in January for an October flight and the statutory window closes before the airline collapses. Ask anyway: issuers often waive it for future travel, and the scheme chargeback rules alongside the statute use the service date.
Where these claims fail
- You accepted a voucher or airline credit before the collapse. That converts a live refund claim into an unsecured claim against a company with no money.
- You paid by bank transfer or an open banking link. No card in the chain means no Section 75 and no chargeback. It is the most expensive way to save a card fee.
- You waited for confirmation. Administrators take weeks to write to creditors. The chargeback clock started the day the flight was due.
- You booked through an agent that took the payment. If the agent is the merchant of record your card claim runs against the agent, and a solvent agent may owe the refund directly.
- You claimed only the fare. Bags, seat selection and priority boarding from the same airline were also services never delivered.
Frequently asked questions
Does my travel insurance cover an airline going bust?
Only if the policy names it. The cover is sold as scheduled airline failure insurance, sometimes as end supplier failure, and it is an add-on far more often than standard. Search the policy for the word failure before you assume.
Is administration different from liquidation for my claim?
For the outcome, rarely. In both, a practitioner controls the money and you are unsecured. What matters more is whether the airline is still flying. If it is, chase the refund normally. If it is not, go to your card.
I paid a 90 pound deposit by credit card and the rest by transfer. Am I covered?
Probably. Section 75 tests the cash price of the item, which must be over 100 pounds, not the amount you put on the card. A part payment by credit card on a 400 pound fare pulls the whole 400 pounds into the issuer’s joint liability.
Should I file a claim with the administrator as well?
Yes if the sum is large, no if it is small. It preserves a claim if the card route fails, but do not treat it as your plan: unsecured creditors in airline failures typically recover a small fraction, and often nothing. A connecting flight you booked separately is a different contract, covered in who owes you what on a missed connection.
Sources: Failure of scheduled airlines, and advice following Flybe entering administration, UK Civil Aviation Authority. What ATOL protection means, ATOL. Airline Insolvency Review final report, 9 May 2019, Department for Transport, and the review collection withdrawn on 18 June 2021. Section 75, Consumer Credit Act 1974. Revised package travel rules, European Parliament. Refunds for airline fare and ancillary service fees, 14 CFR Part 260. Billing error resolution, 12 CFR 1026.13.
Researched from primary sources and checked September 2026. General information, not advice.
