Passengers warned to get airline failure cover


TRAVEL INSURANCE:AIRLINE passengers have been urged to take out scheduled airline failure cover in the wake of the collapse of Scottish airline Flyglobespan.

Unlike travel companies, scheduled carriers do not have to be bonded, though passengers can take out travel insurance which includes scheduled carrier failure.

More than half of all trips abroad from Ireland are not sold as part of a package and so the tickets fall outside any bonding protection scheme. is one of the travel insurance companies that covers schedule airline failure and third party supplier insolvency cover. It says there are likely to be more airline failures next year and it would be prudent for passengers to take out such insurance.

The payment-processing firm E-Clear has been partially blamed for the collapse of the airline because it held onto travel transaction cash.

It has held on to £34 million (€38 million) worth of transaction payments, both from flights that have been taken and flights that have yet to be taken. Under UK legislation, you are entitled to a refund if you spent more than £100 (€113) through your credit card. The decision by E-Clear not to pass the money on to Flyglobespan is being investigated by PricewaterhouseCooper, the receivers of flyGlobespan. Payment processing companies have been holding onto more cash as insurance against airlines that collapse, as low-cost XL and Zoom did last year. It is known as credit card holdback.

Two of the major rivals to Flyglobespan, Ryanair and EasyJet, have both offered “rescue fares” for stranded passengers. Ryanair has made great play over its €2 billion in cash reserves and said Flyglobespan’s failure underlines the risks of flying with airlines that are financially unstable.

Easyjet has offered passengers in France, Switzerland, Spain and Portugal a rescue fee of €60 to return to any UK airport by Christmas Eve.