Passengers advised to insure travel against airline failures

Passengers have now been advised to check if their travel insurance also covers airline failure following the collapse of Scottish airline FlyGlobeSpan. An advisory has been issued to alert passengers to check if their insurance covers their finances in the event that an airline goes bust and prior bookings have already been made.

Passengers are protected in case a travel agency falls through but usually not in the case of airlines, especially if they have booked independently online. Travelers can obtain a certain kind of travel insurance that protects them from scheduled carrier failures.
Most travelers opt for cheaper online booking without realizing that these tickets fall out of the scheme that provides a bonding agreement. In this case the traveler can take the reported travel agency to court if they fail to comply with the deals offered.

Most passengers, however, are not aware that a few insurance companies provide protection against scheduled airline failures. It is predicted that next year will see a rise in airline failures and it is feared that passengers will face inconveniences unless they chose to insure themselves. Reportedly, E-Clear, a payment processing firm withheld a part of the money that was used for securing bookings at FlyGlobeSpan. The firm is partially blamed for the airline’s liquidity issues.

The value of money held on by E-Clear was reportedly more than 34 million pounds and was mostly made up of online payments made by passengers for bookings at FlyGlobeSpan. By UK law, if more than a hundred pounds have been spent via a credit card then the payee is entitled to a full refund. E-Clear is hence being investigated for holding on to that money.