The announcement on Monday 2nd October that Monarch Airlines, the UK’s fifth largest airline, had ceased trading was a huge shock and one that caused a stir in the UK media.
This development created an unprecedented situation, where more than 110,000 passengers had no way of returning home from abroad, leading to the UK’s largest peacetime repatriation.
It has been estimated that a further 300,000 future bookings – expected to affect a total 750,000 customers – have been cancelled. The good news for consumers is that they have a number of chargeback rights, regardless of whom they booked their travel with.
Which?, the UK’s largest independent consumer advocate body, has created a guide that goes through what rights a consumer has should an airline go bust. From a chargeback perspective the travel industry is unique, thanks to the existence of the ATOL protection scheme, which is used by the majority of travel companies in the UK.
As outlined by Which?, consumers rights with travel purchases depend on whether or not the purchase or booking is ATOL protected, which essentially means that the consumer is guaranteed a refund if a company goes into administration. They will also be provided with an alternative flight home, should this occur when they are abroad.
One caveat to ATOL protection is that a consumer isn’t automatically covered. Rather, this will depend on how a flight was booked. For instance, the ATOL scheme applies if a flight is booked as part of a package holiday that has been purchased through an ATOL-licensed travel agent.
If a purchase is made directly with an airline, it is not covered by the ATOL scheme. In the same vein, it is unlikely that most travel insurance policies will cover consumers for airline financial failure or insolvency.
The UK Consumer Credit Act
Should a consumer not be eligible to claim a refund via ATOL, they can claim against their credit card provider under section 75 of the Consumer Credit Act. To be considered eligible, a consumer has to have paid more than £100 for flights and used their credit card to book directly with the tour operator, or in the case of Monarch they must do so with the airline directly.
There are nuances to these rules, with some credit card companies insisting that the airline or holding company be named on a credit card bill. Despite this, some card companies will action a refund even if a consumer has paid via a travel agent, whose name is listed on the credit card bill.
Return flights must have a total value of more than £100, and any single destination journeys must also be at least £100 to be eligible.
What If I Paid on My Debit Card?
Any consumer that made a purchase on their debit or prepaid card is not eligible for a refund via the Consumer Credit Act; however, they are covered under by way of their chargeback rights.
To make a chargeback claim, a consumer must contact their card provider within 120 days – of either discovering the problem or from purchase date, depending on your card provider. You can also claim after these timeframes for future purchases, which in the case of Monarch Airlines would come into effect from the date of the scheduled flight. (It is worth noting that a claim must be made within 540 days of when the purchase was made).
Know Where You Stand
The demise of Monarch airlines is a shock that has caused mass disruption, job losses and the loss of a UK institution. But there is a faint silver lining is that the incident has brought to light the importance of understanding your rights as a consumer when it comes to protecting your payments.
The good news is that many of those affected by this recent announcement do have options to retrieve their money. However, the difficulty lies in understanding what those options are and how you can move forward with them.