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Travel Insurance: Financial Default and Bankruptcy of a Carrier


Imagine this:

You are in the airport waiting for your flight home. The stress of packing, checking out of your lodging, getting to the airport on time and then through the infamous lines at the security gate seem far behind you now. But, just before you are ready to hop onto your flight -- it’s cancelled. You reach out to the airline only to find out that not only has your specific flight been cancelled, but that the entire airline is no longer in operation.

Unfortunately, this seemingly farfetched situation has become the reality for thousands of passengers as multiple airlines have filed for bankruptcy or gone into financial default over the last two years. Recently, on September 30th, Primera Air announced that it was closing up, halting all flights and leaving thousands of passengers grounded.1 This has not been the first time in recent history that a European airline has suddenly ceased operations. In 2017, Monarch Airlines, one of the largest air carriers in the United Kingdom, filed for bankruptcy -- stranding over 110,000 passengers across Europe and the Middle East.2 Monarch’s fall was the result of various circumstances- from a tough market, a weakening pound value due to Brexit, and an increase in terrorist activity across the globe.3

According to Business Insider, ‘legacy’ airlines have struggled against the rise of low-cost, budget airline carriers, who have had a large impact on not only how people in the developed world fly but also in countries where air travel may not have been otherwise possible.4 These legacy carriers have pushed back against the low-cost carriers by creating their own economical carrier lines. For example, Air France launched the line Joon in 2017, which reportedly targets the younger generation of travelers.5 However, despite best efforts to compete cost-wise and with a growing selection of low-cost carriers available to travelers, many airlines continue to struggle and sometimes end up filing for bankruptcy or having to shutdown services for a time. This can be quite problematic to travelers, who are inundated with options, yet may be concerned about getting stranded without the resources to continue their trip in a timely fashion.

So, what would you do if your airline suddenly went under? Hopefully, those stranded by Primera had travel insurance. Here at Travel Insurance Services, we have you covered. When purchased within 21 days of your initial trip deposit, our Travel Select Plus and Elite plans offer protection for your travel investment should your airline or cruise line file bankruptcy or go into default.

You can find this clause (below) under the “Trip Cancellation- Other Covered Reasons” section of a Travel Select Plus or Elite policy:

Bankruptcy or Default of an airline or cruise line, tour operator or other travel provider from whom You purchased Your Travel Arrangements causing a complete cessation of travel services more than 14 days following Your Effective Date. Benefits will be paid due to Bankruptcy or Default of an airline only if no alternate transportation is available. If alternate transportation is available, benefits will be limited to the change fee charged to allow You to transfer to another airline in order to get to Your intended destination. This benefit only applies if the Plan has been purchased within 21 days of the date Your initial deposit/payment for Your Trip is received; and You insure the full cost of Your Trip subject to penalties or restrictions…

In other words, if your trip is cancelled because the airline or cruise line you booked with goes bankrupt or into default and you are unable to secure another form of transportation, you are eligible to receive your travel insurance benefits for the trip.

Be Prepared

Next time you plan your trip, make sure to pack your travel protection plan. Visit to view our travel insurance plans and get a free quote. You can also call Travel Insurance Services customer service Monday through Friday, 9 am – 7 pm Eastern Time to get your questions answered and enroll by phone: (800) 937-1387.





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