EU Air Passenger Rights: What Happens When Your Airline Goes Bankrupt?

Imagine you are going on a vacation with your flight tickets already purchased, and you rest assured that you have arranged your return. Still, when it is time to go home, you realize that the airline you are supposed to fly with went bankrupt. Your return home is now uncertain.

European airlines Flybe and Flyr went bust in 2020 and 2023, respectively, leaving countless people going for a mere city break stranded. Blue Air suspended flights in September 2022, forcing travellers to stare at a void ticket. Since the pandemic, 64 airlines have been killed off, causing many people to think: how will I get back home or to my destination?

As an air passenger, you have rights. The problem is that it is not as easy to have them respected if the airline does not have the money to pay you back. You need to fight for your rights to receive your due EU airline compensation. This article will tell you more about what happens and what exactly you can do about it.

What Happens If Airlines File for Bankruptcy?

When an airline files for bankruptcy, it means that all business comes to a halt. Operations within the airline are stopped, so every flight is cancelled. Since the plane is now directed into its hangar and is no longer flying, there’s no way for you to return home with the ticket that you purchased.

man at airport with luggage

Sometimes, the airline will tell the traveller of their plans or continue operations for a time after going bankrupt. If this is your case, you might not even notice it happening. However, other airlines might try to get as much last-minute profit as they can from the clients, suspending operations right after falling.

Thomas Cook is an example of such a circumstance, filing for bankruptcy on a Monday in September 2019. This left around 60,000 air passengers stranded in various corners of the world, most of whom were Britons. Passengers had to find alternative routes to get home, as the main one had their doors closed on them.

female tourist looking at flight schedule board

What Are Your Flight Rights in the EU as an Air Traveller?

As an EU air passenger, you are protected by the EC261/2004 if your flight gets cancelled. This includes cancellations caused by a company that went into bankruptcy. In this case, the following passenger rights should apply:

The Right to Information: The airline must inform you of a potential cancellation ahead of time so that you can rebook or opt for a refund.
The Right to Assistance and Care: Technically, under EC261/2004, you still have the right to care and assistance, such as meals and accommodations. The issue is that since the airline is no longer operating, you might only have your flight rights EU respected if you have travel insurance or pursue legal action.
The Right of Reimbursement or Re-Routing: Since you are a ticket holder, you still get the right for reimbursement or re-routing. However, the latter can be especially challenging since the company is no longer operating.
The Right to Compensation: Airline regulations still give you the right to flight compensation EU. Still, since the company may no longer hold assets and liabilities, you may not obtain total compensation when dealing directly with them.

Remember that while the Government advises offering full refunds, there’s not much they can do if the company cannot respect it. This is why the keyword here is “advise.” The airline could offer vouchers and other compensation methods, but there is a good chance it could take some time until it does that (if it ever does).

departure airplane flying

How to Protect Yourself and Get EU Airline Compensation

Getting reimbursed for a bankruptcy-caused ticket is not as easy as getting a European flight delay compensation. You have no airline to argue with since they ceased operations. However, you can protect yourself and get your money back by taking the proper steps at the right moment. This can include:

Buying Tickets with a Credit Card

If you buy your tickets with a debit card or cash, there is a good chance that you might not be able to get your money back. However, if you purchase them with a credit card, you might be reimbursed. Many credit cards come with travel insurance, but you have to file as soon as you get the news.

Get Travel Insurance

You can protect yourself using travel insurance if you do not have a credit card. Just make sure that the one you get also covers airline failure.

Use Flight Compensation Services

Some flight compensation services can assist passengers if their flights get cancelled, even if the cause is bankruptcy. You should discuss matters with them to see if they can help you get justice.

The Bottom Line

When an airline goes bankrupt, there is a good chance your flight will get cancelled, with no option for a refund. It’s up to you to ensure you eventually get your money back. If your flight has been cancelled and you wish to seek compensation, you can contact StopDelay and we’ll take the necessary steps for you.

Do All Airlines Cease Operation Once They File for Bankruptcy?

Not necessarily. Some airlines may choose to file for bankruptcy and shut down operations completely, while others will continue while restructuring their business. This is why keeping an eye on the news is a good idea.

Do I Get a Refund If My Airline Goes Bankrupt?

It depends on each airline if they include this in their policy. Some of them may decide not to give you a refund, so you can only get EU airline compensation with the help of flight claim companies.

What Happens to My Booked Flight If the Airline Goes Bankrupt?

If the airline goes bankrupt and ceases operations, the flight you booked will be cancelled. Should they continue operation, the ticket will likely remain valid. If not, you’ll have to look for other options to return home.