What Do Credit Cards Cover When an Airline Collapses?

WOWair collapsed today after facing months of financial turbulence, leaving thousands of passengers stranded and on their own. What are your options? and what does a credit card cover in the event that an airline carrier shuts down?

Online Travel Agencies

If you booked a trip through an online travel agency, check to see if they’ll help you cover your losses.

For WOW Air, Hopper is eating the cost and refunding all passengers in full, in addition to paying the full cost of re-booking stranded passengers.

If you aren’t as lucky and the online travel agency isn’t offering any help, move on to the next scenario.

Credit Card Travel Protections

Chase and Citi travel credit cards typically have trip delay/cancellation/interruption protection. Be sure to check your credit card benefit guide for the most accurate information.

To use the credit card travel protections, you must use the respective card to pay for a portion or all of the flight/trip expenses.

For example, the Chase Sapphire Preferred benefits guide specifically outlines an airline collapse as a covered scenario:

“Financial insolvency of the Travel Agency, Tour Operator, or Travel Supplier whose services you booked.”

If a trip cancellation occurs, be sure to contact the Benefits Administrator as soon as possible to start the claim process. You or an immediate family member (on the same reservation) can get up to $10,000 for each claim on the covered trip.

American Express

For American Express cards issued in the United States, you do not have any free travel insurance or protections.

Even though the Amex Platinum earns 5x points on flights booked directly with airlines, I don’t recommend using it since the card doesn’t offer any travel protections.

Europe: “Package Travel Directive”

If you booked airline tickets while in Europe, you might be protected under the Package Travel Directive.

From the WOW Air site:

“Passengers who bought their ticket from a European travel agent (within the European Economic Area) as a part of a package tour (a package which includes flights and accommodation or other services) are protected by the Package Travel Directive. Those passengers are advised to contact their travel agent to arrange an alternative flight.”

Excerpt from the EU Package Travel Directive:

Money-back and repatriation in case of bankruptcy: Organisers of packages must take out insolvency protection. This guarantee covers refunds and repatriation in case organisers go bankrupt.  This guarantee applies also to linked travel arrangements.”

Learn more about the Package Travel Directive on their site: https://ec.europa.eu/info/law/law-topic/consumers/travel-and-timeshare-law/package-travel-directive_en

Credit Card Chargeback

Since the airline collapsed and did not deliver on what you paid for, I recommend contacting your credit card company ASAP to start the chargeback process.

One important note is that you need to file a chargeback within 60 days of purchase, and you should not pay the balance for the disputed charge.

When you start a chargeback, credit card companies will usually temporarily remove the charge from your balance while they start the investigation.

Debit Cards

If you used a debit card to book a flight, you’re unlikely to have any coverage. I recommend calling the bank to explain the situation to see if you can get anything back, but it’s not likely.



Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airlines or hotel chain, vendors or companies, and have not been reviewed, approved, or otherwise endorsed by any of these entities. 

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