Your rights if your travel company goes bust

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The travel company is the latest travel company to go bust, leaving thousands of people having to make other plans for their holidays. What are your rights if your travel company goes bust?

Q. I’ve got a holiday booked with Lowcostholidays, can I claim against one of the travel organisations?

A. Low Cost Holidays used to be based in the UK, but in 2013 it relocated its headquarters to Spain. That means that it does not hold an ATOL (Air Travel Organiser’s Licence) and so it is not covered by the ATOL protection scheme.

SAVVY TIP: The ATOL scheme has a fund which can be used to make sure holidaymakers can complete their holiday or, if they’ve not yet left, get their money back.

Low Cost Holidays’ website says that if you’re already on holiday with them, your flight home has been paid for and should be taken as normal, although some people may experience problems. However, other services, such as hotel and car hire may ask for payment directly from you. You should keep any invoices and receipts to show what you’ve paid.

However, there are several other options that may mean you get your money back. Low Cost Holidays says that if you booked a flight plus accommodation, you may be able to claim against the Spanish organisation called Govern des Iles Balares, which regulates travel companies based in Spain.

If you booked a holiday starting from Ireland, you may be able to claim against the Irish Commission for Aviation Regulation, as this organisation holds and insurance bond for Irish customers.

You should also register your claim with the receivers, who are Smith & Williamson. You can do this by emailing

Q. What can I do if I don’t qualify for a refund with these organisations or if I can’t get my money back?

A. Your other option is to claim against your travel insurance or, if you paid the deposit or for the holiday by credit card, against your credit card provider, citing Section 75 of the Consumer Credit Act. Read more in my article called Ten tips on getting the right travel insurance policy for less. There’s information on how to claim against your credit card provider in my article: Understanding your credit card rights under Section 75

Q. How do I know if my travel company is covered by the ATOL scheme?

A. Most holidays abroad where you travel to the destination by air, and use a UK-based travel company, are covered by ATOL. For a holiday to be covered it must include a flight and something else – such as hotel acommodation or something like car hire.

You should be told whether or not the company you’re booking with is covered by the ATOL scheme before you book. You can normally find this information on the holiday company’s website, in its brochures or in its high street stores.

SAVVY TIP: You must be given an ATOL certificate as soon as you pay any money towards a holiday where the company is covered by the ATOL scheme.

Q. Which travel companies are not covered by ATOL?

A. In general terms, if the company is based outside the UK (even if it has a website ending in, its holidays will not be covered by the ATOL scheme.

Q. Do I get any protection if I book through a travel agent?

A. If the travel agent is an ABTA (Association of British Travel Agents) member, you will be protected if you book a package holiday that’s not covered by the ATOL scheme. Many ABTA members also sell additional insurance for flights or hotels that may not be covered by either ATOL or ABTA.

Q. Will my travel insurance pay out if I can’t claim from one of these organisations?

A. Your travel insurance may pay out if your travel company goes bust, but even if it does, you will be expected to try and claim from any scheme that offers protection (such as ABTA or ATOL) first.

If you’re the kind of person who prefers to book your hotel independently, look out for ‘end supplier failure’ or ‘supplier failure protection’ when you buy travel insurance. This is specifically designed to pay out if your hotel or scheduled airline goes bust.

Some travel insurance policies include ‘scheduled airline failure’ cover, which specifically protects you in the event of a scheduled airline goes bust. However, it won’t pay out if your hotel goes bust.

SAVVY TIP: If your travel insurance doesn’t include end supplier failure or scheduled airline failure cover, you may be able to buy this as a separate add-on.

Related articles:

How to complain about a holiday you’re not happy with

What ombudsman schemes are there? Who can you complain to if there’s a problem?

Ten ways to save money on your holiday

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