Can I get a holiday refund from ATOL?

airline credit cards

"Will I be covered by ATOL if I pay for a holiday and the company goes bust?"

If you bought a package holiday and the travel company went bust you may be able to get your money back through ATOL.

If you paid by credit card you may be able to claim back the cost through section 75 or chargeback.

Let's take a closer look at both options.

Am I ATOL protected?

Many holidays are protected under the Air Travel Organisers' Licensing scheme (ATOL) especially since changes to the scheme in April 2012.

Whether you'll be covered depends on two factors.

1. Are you booking through an ATOL member?

The Civil Aviation Authority (CAA) introduced ATOL as a way to protect the some 26 million people in the UK who buy flights and holidays every year from being stranded abroad or losing their money.

Quick check: are you covered
To be covered a holiday has to be:
Booked through an ATOL member: check here.
AND
A package deal: so a flight and either a hotel, car hire or both, booked together.

ATOL is the largest travel protection scheme in the country. All travel firms who sell air holidays and flights must hold a licence issued by the CAA. If a company then goes under, the CAA assumes responsibility for making refunds and repatriating holidaymakers.

These monies come from the Air Travel Trust Fund which is made up of a £2.50 per person contribution known as the ATOL Protection Contribution. Licensees must pay this fee on every booking they receive.

All package holidays from tour operators that hold a license from the CAA should be covered by ATOL, then.

Most high street travel agents are members and so are the big travel booking sites like Expedia.

However, there are exceptions.

Airlines, for example, aren't covered because they're not travel agents so if you book your flight through, say, Ryanair and then succumb to that extra page in the booking process and add a hotel, that won't be covered.

Double check then triple check

In short, always double check before assuming that a holiday will be ATOL protected.

The CAA site here has a list of all ATOL members, checking this when booking online is more important than ever because many sites are scams and some even have fake ATOL numbers, according to a 2014 report.

Holidaymakers can also triple check after they pay by getting an ATOL receipt.

The ATOL holder or their agent must give their customers a receipt for the scheme once they've paid for a protected flight or a package holiday.

That's the case even if the customer is just paying a deposit so look out for the receipt in with holiday paperwork and be sure to keep hold of it.

The receipt will include the name of the licensed firm the holidaymaker made the booking with and their ATOL number.

2. Is it a package?

So any package deal booked through an ATOL member will be protected.

But what counts as a package deal?

A package must contain a flight and at least one of the following:

All the elements must be booked through the same company and, for those booking in a local travel agent, that seems pretty simple: pay one fee for two to three parts of a holiday and it's covered.

However, holidays booked online through big sites like Expedia, Lastminute and Ebookers can also be covered.

In this case the customer might not buy the flight and the hotel in one transaction but that's fine, it can still be covered as long as the two parts are booked on two consecutive days.

Booked a flight at 9am Monday? You've got until midnight Tuesday to book from the same place to ensure cover.

Beware 'hidden multiples'

From what we've said above, it's easy to assume that anyone who pays for a holiday in one transaction will be covered.

That's generally true but be careful.

Some travel agents advertise 'tailor made', 'pyramid' or 'dynamic' holiday deals where the agent makes multiple transactions from different places.

For the reasons above, these don't count as 'real' package holidays so they're not covered.

Not covered by ATOL: how about EU compensation?

Those that aren't covered by ATOL, and even some that are, may also want to take a look at the EU compensation available when holidays go awry.

The EU offers cash compensation to air passengers for cancelled and delayed flights based on where they're flying (within the EU or outside) and how far.

We have all the details of that scheme over here: go check it out if you think you might be entitled.

Not covered by ATOL: how about section 75?

Section 75 of the Consumer Credit Act 1974 says that credit card providers and retailers are equally responsible for seeing that customers get what they've paid for.

If a travel company goes bust, meaning that they can't fulfil the part of a holiday that's already been paid for and can't refund the customer, this is a classic instance where they may be able to claim the amount back from the credit card provider under section 75.

Purchases between £100 and £30,000 are covered and cardholders can contact the card issuer to begin compensation proceedings.

However, there are a couple of important exceptions to this.

More on section 75

1. Is there a direct relationship?

Buy tickets by credit card but through a travel agent sometimes means that cardholders aren't entitled to section 75 compensation.

The travel agent constitutes a third party between the cardholder and the supplier of the goods or service and, for section 75 to apply, there needs to a simple relationship between the customer and the retailer.

This is the same reason that section 75 doesn't apply to purchases from third party payment sites such as PayPal and Amazon Marketplace.

This one can sometimes be a little complicated, though so don't assume that you're not covered.

For example, buying a holiday through a tour operator would be covered under Section 75 as the tour operator is providing the packaged holiday.

2. Is the purchase really over £100?

Additionally, complications can arise when purchasing airline tickets.

Often return flights are actually sold as two single tickets and, while the total transaction charge may be over £100, the individual services bought could be less.

In this case, section 75 wouldn't apply if the single tickets cost less than £100.

This really depends on how the flight is sold, however, as specifically sold return flight tickets that cost over £100 should be covered.

It's a situation that's affected by a Section 75 rule that states items bought together as a set, where singles cost less than £100, but the set costs £100 or more, are covered.

However, airline flight tickets, even when bought together and, confusingly, even if technically one ticket is out and the other is the return, may not necessarily be considered a set.

Not covered by section 75: chargeback

For those not covered by section 75, there is another option.

More on chargeback

Chargeback schemes are the way card providers give refunds to their customers.

The financial providers look into the claim and negotiate with the bank of the retailer with whom the cardholder has a disputed transaction.

There's no guarantee that they'll be able to return the money, however, and, unlike section 75, there's no opportunity to reclaim additional costs.

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