 |
 |
By David Stevens Personal Finance Correspondent
Wednesday, 17 September 2008
|
#1 Lesson from XL: Use a Credit Card
Lessons in a nutshell:
- Booking a holiday through a tour operator is much safer than doing a DIY holiday
- Travel insurance almost never covers for airline or tour company failure
- Use a credit card to book any flights - at least you'll get your money back if the airline goes bust
 Compare Air Miles credit cards
Compare credit cards offering travel discounts
Related Money News
See our other recent related news stories:
The 5 Lessons We've Learned from Zoom Going Bust
David Stevens shares the most important lessons to be learned from an airline collapse, not least that you should always, always book your airline ticket with a credit card.
Credit cards the only way to book DIY holidays
Don't say we didn't warn you! Donna Jennings explains why the only way to book non-package holidays is with a credit card. It seems some Zoom customers may not have heeded this advice.
|
UPON the collapse of Zoom airlines just two weeks ago we warned of the dire need to book flights with a credit card rather than a debit card, especially with rumours flying around that at least a few more airlines would not be, ahem, flying around much longer.
No sooner had the ink dried when one of the UK’s largest tour operators and popular low-cost holiday airline XL Leisure Group went into administration on Friday, leaving 67,000 holidaymakers stranded abroad and 200,000 advance bookings useless.
While the numbers were greater than the Zoom collapse in August, the impact was less so because of the way tour operators – rather than airlines – are covered.
So what can be learned from the collapse of yet another large UK travel industry player?
Lesson 1: A holiday booked through a tour operator is infinitely safer than a DIY holiday
The collapse of XL has left 67,000 holiday-makers abroad, but for most of them, a flight home with a different carrier is guaranteed.
This is because under Air Travel Organisers’ Lincensing (ATOL) protection, holidaymakers who booked through XL Leisure Group are fully protected.
In most cases, the ATOL protection scheme will continue paying staff abroad so that affected holidaymakers do not have to cut their trips short.
For those who booked their airline tickets with XL and arranged the rest of their holidays on their own, it is a sorrier affair.
They’ll have to find their own way home at great expense with little or no chance of any compensation.
Lesson 2: Travel insurance will likely be useless
The Association of British Insurers has confirmed what we stated a few weeks ago: your travel insurance most likely does not cover you for airline or tour operator failure.
In most cases this is not an issue as the ATOL protection afforded to all holiday makers whose entire trip was purchased through XL Leisure Group should ensure that holidays are not cut short and a return flight is arranged seamlessly.
For those falling outside of ATOL protection, very few travel insurance policies will offer any sort of cover – so check the small print carefully.
Lesson 3: Credit card companies will re-imburse your transaction amount
The 200,000 customers who already have an advance booking with XL, and who paid by credit card, are entitled to a full refund under consumer credit law.
This does require that the transaction was over £100, but in the case of these flights, it is unlikely they were less than that.
Your credit card company however will not reimburse you for any cost incurred in getting back, should you be stranded abroad, nor will they reimburse the outbound journey of the flight if that was already taken.
Bookings made on a Visa debit card, could in theory, be claimed back. However this would be up to your bank to reclaim the money from XL – something highly unlikely to happen as the company is now formally in the hands of administrators.
So as we warned back in the early summer, using a credit card to book a DIY holiday is the only way to go.
Debit card and cash-paying holiday makers who didn’t heed the advice will be rueing the decision on their £2,000 emergency flight home.
|
