On Monday 2 October, Monarch (the UK’s fifth largest airline) entered administration after discussions with the Civil Aviation Authority (“CAA”) to renew its licence to sell package holidays failed. The airline reported a loss of £291m last year, citing terrorist attacks in Egypt and Tunisia and a collapse in the market in Turkey as the primary reasons for the drop in profit. But what does this mean for customers already abroad and those who have had their holiday bookings cancelled?
Customers already on holiday
The UK government has asked the CAA to charter aircraft to bring home the 110,000 customers already overseas within the next two weeks at no additional cost. Customers affected will also be able to claim for certain expenses incurred as a result.
Future bookings cancelled
All bookings with Monarch have now been cancelled and customers will need to make alternative travel arrangements.
By law, every UK-based travel company that sells holidays including flights is required to have an ATOL licence. Broadly, the ATOL protection scheme only covers the flight when it is booked with either accommodation and/or car hire (which are also covered under the scheme) or where the flight is booked with a travel company but a valid airline ticket is not provided straightaway. Therefore, all such package holidays booked through Monarch will be protected by the ATOL scheme and ATOL-protected customers will be able to claim a full refund.
Further details of the ATOL scheme are available here.
However, customers who only booked flights with Monarch may not be ATOL-protected, in which case, the affected customers have the following options to try and seek recourse.
- Credit card payments - Consumers who made their booking with Monarch by credit card (costing between £100 and £30,000) can claim for a refund from their credit card provider under section 75 of the Consumer Credit Act 1974. This provision makes credit card providers jointly and severally liable for purchases made within the threshold values set out. The same protection does not apply to bookings outside this threshold value or bookings made by debit card. However, some debit and credit card providers (such as Visa) offer a chargeback service on purchases of up to £100 for goods or services not delivered, albeit there is no statutory obligation for them to do so.
- Travel insurance - If the credit card protection above is unavailable, customers should check the terms of their travel insurance policy with a view to obtaining a refund.
- Claim in the administration - Finally, any losses to customers not otherwise recovered can be claimed within the administration as a last resort. However, most customers will be unsecured creditors and will rank equally alongside all other unsecured claims. Given the apparent financial situation of Monarch and the number of affected parties, the prospect of any return payment to unsecured creditors is likely to be minimal if anything is paid at all.