Canceled flight? Don't contact a bankrupt airline for a refund
Several defunct airlines recently told travelers to go directly to their credit card issuer.
When an airline first drops the news that it is filing for bankruptcy, what follows is an immediate rush of panic from travelers who booked travel with the carrier.
While most airlines will continue operations as usual as they seek Chapter 11 protection and look for investors to help them improve their finances, there are also situations in which airlines suddenly cancel all flights and leave those who need to take them scrambling for alternative transportation and refunds.
On June 11, Florida-based budget airline Silver Airways told travelers to "not go to the airport" after a bankruptcy auction failed to find investors and the stalking horse bidder chose to proceed with liquidation to recoup losses to investors.
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'Credit card company or travel agency': What to do for that refund
"All credit card purchases should be refunded through your credit card company or your travel agency," the airline's statement said further.
When Mississauga, Ontario-based airline Canada Jetlines suddenly shut down in August 2024, travelers were similarly told to contact their credit card company. Over in Europe, the defunct Air Belgium recently shifted responsibility for any unrefunded tickets to the court that was liquidating its assets after it ceased to make payments on its loans.
Related: Troubled airline files bankruptcy, travelers may not get refunds
"Thousands of passengers are unlikely to receive refunds for their cancelled flights, with the remaining claims now part of the bankruptcy proceedings," the European Travel Agents' and Tour Operators' Association said in a statement that also called for legislation to better protect agencies in such situations.
While calls to "contact your credit card" may sound fatalistic and like an "eff off, you're not getting your money," this is in fact the soundest strategy in situations where an airline is so broke that it is forced to shut down operations.
When this happens, it is usually already millions of dollars in debt. In Silver Airways' case, it owes everyone from plane parts manufacturers and airport authorities to bank creditors. Individual travelers are considered unsecured creditors that are at the very bottom of the repayment list for a bankruptcy court to address. Image source: Getty Images
Want that refund? Be sure to book travel with a credit card
With most travelers ending up out only several hundred — or at most, several thousand — dollars over the disrupted travel, both individual and even class-action lawsuits are usually more trouble than they are worth.
More on travel and bankruptcy:
- Troubled airline files bankruptcy, travelers may not get refunds
- Airline that filed for bankruptcy selling off parts
- Famous restaurant files for Chapter 11 bankruptcy
Credit card providers like Visa (V) and Mastercard (MA) , meanwhile, will typically offer travel protection on flights bought with them and are also subject to consumer protection laws against fraudulent purchases.
While travel agencies that are not in bankruptcy proceedings are also legally required to provide refunds to their customers in events where an airline suddenly ceases operations, a dispute of the credit card charge is often the fastest and easiest way to get that refund.
This is the reason travel experts will often recommend not to book flight tickets any other way.
"My thoughts? People are still gonna show up to the airport demanding to speak to someone about a refund," one traveler wrote in the /Flying forum on Reddit after news of the Silver shutdown broke.
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