Scheduled airline failure insurance - what to do if your airline goes bust

What is Scheduled Airline Failure Insurance?

Scheduled Airline Failure Insurance (SAFI) allows you to get your money back for the cost of your flights if your airline goes into administration.

When an airline collapses, all its flights will be cancelled. This can either leave you without flights for your holiday, or you could find yourself stranded abroad.

SAFI is a type of standalone travel cover designed to protect you if this happens. Many travel insurance policies don’t include this as standard, so it’s important to check the policy wording carefully.

Where can I buy this insurance?

SAFI may be included in higher-rated and more premium travel insurance policies, or it can usually be added as an optional extra. Alternatively, you can buy it as a separate policy.

To check whether it’s included in your policy, look for sections about flight cancellation cover or scheduled airline failure, as well as anything that mentions end supplier failure insurance.

Comprehensive policies that include SAFI will usually cost you more, but it may be a price worth paying if you want extra peace of mind.

What does SAFI cover?

If your airline goes into administration before you’ve used your flights, SAFI can cover you for:

• The cost of buying new flight tickets, up to an agreed limit
• Reimbursing any unused tickets
• The cost to book replacement flights home if your airline collapses while you’re abroad
• Replacing your flight arrangements with a similar standard of transport

If your policy includes SAFI, you should always check that the airline you’ll be using is covered. If you’re not sure, contact your insurer.

What isn’t covered?

SAFI doesn’t cover every eventuality and typical exclusions can include:

• Flights not booked in the UK before your departure
• If the threat of failure of your airline was known about when you took out the policy
• Any losses that you can claim back using another policy or type of cover
• Any consequential costs from your flights being cancelled, like losing money by not being able to reach a pre-booked hotel

Why do I need scheduled airline failure insurance?

In 2020, following a big reduction in air travel as a result of the Covid-19 pandemic, over 40 airlines went out of business.

If your airline fails and your flight is part of a package holiday, it should be covered by the ATOL scheme. This guarantees you a full refund for the affected parts of your trip if your travel company, or a service it sold to you, goes under.

Unfortunately, ATOL doesn’t apply to flights booked directly with the airline. Although if you paid by credit card you might be able to claim through your card provider.

However, SAFI provides peace of mind that the cost of your flights and any replacement travel arrangements will be covered if your airline folds unexpectedly.

What if I've booked different elements of my holiday independently?

If you haven’t chosen a package holiday, and instead have booked your trip independently, you’ll need to make sure you have the right cover.

You won’t be able to rely on ATOL or ABTA schemes if you’ve made individual arrangements for your transport and accommodation.

If you’re booking flights independently, check if your insurance covers airline failure.

But if you want more comprehensive cover for other elements you’ve booked, you should consider taking out a policy that includes ‘end supplier failure’ insurance.

This type of cover provides protection against the failure of a number of different suppliers, including hotels, excursion providers, theme parks and car hire.

Is end supplier failure insurance the same as SAFI?

End supplier failure insurance provides the same cover as SAFI, but it also allows you to claim for the collapse of various elements of your holiday that you’ve booked separately.

Cover varies by insurer, but can extend to:

• Coach and railway tickets
• Car ferries
• Villas
• Car and camper van hire
• Trips and safaris
• Theme parks
• Excursions

Scheduled airline failure and credit cards

If your airline fails and you’ve used a credit card to pay for your flights, you should be able to claim the money back through your card provider.

You may be covered under section 75 of the Consumer Credit Act if the cost of the flights was more than £100, however exclusions will apply so check exactly what is covered.

And if you paid for your flights with a debit card, you may be able to use the Visa chargeback scheme to make a claim if your airline has folded.

How do I claim with SAFI?

SAFI only allows you to claim for the cost of your flights if your airline goes out of business.

If your flights were booked with a travel agent or you paid using a credit card, you’ll need to try and get a refund through ATOL or your card provider first.

If you can’t be reimbursed for your flights from another source, you can make a SAFI claim.

You’ll need to provide your insurer with receipts or invoices for the costs you want to claim, as well as proof of any claim rejection from your bank or credit card provider.