Booking a holiday? How to make sure your plans are secure

With Thomas Cook going out of business, impacting hundreds of thousands of travellers across the world, and cancelling the holidays of many more, how can you make sure you and your holiday aren’t next?

What’s certain is that, even after WOW Air, Monarch, Airberlin and others, Thomas Cook won’t be the last airline or travel provider to go bust, and may not even be the last one this year. With worries about a global recession, a lack of airplanes for next summer’s schedule with the ongoing grounding of the Boeing 737 MAX, and the perennial instability of the airline industry, it’s not unreasonable to be concerned.

Believe me, I get it: it’s complicated, and hard to figure out. So I’m going to recommend that you take a few relatively simple precautions. This advice is tailored for UK readers and I’ll be talking about the ATOL (Air Travel Organiser's Licence) package holiday protection scheme, but especially in the EU you may well be covered under a similar scheme.

Do your research online if you’ve never heard of the airline (or if you’ve heard some rumours…)

For a start, run a web search along the lines of “is [insert the airline’s name here] going bust”. You’ll need a bit of web literacy here, because this are always rumours and speculation. Avoid websites where anyone can contribute like Q&A pages or tabloids. Instead for go reputable news sources, the better frequent flyer blogs or industry insider sites.

This isn’t always helpful: Alitalia is perennially going bust, for example, and most major US airlines have declared bankruptcy at one point or another. But if it’s a budget airline or travel company, and particularly if it’s one you haven’t heard of, be careful and book with care. As ever, if a deal sounds too good to be true, it probably is. And don’t rely on reassurances from the airline or company: even if they are going bust, they’re going to say they aren’t right up until the staff are locked out.

Always buy tickets with a credit, not debit, card

Whether or not you’re worried about your airline or travel company going bust, you almost always get extra protection by booking with a credit card rather than a debit card (or, for that matter, paying in cash in person). You just call your credit card company if the airline fails and you should get all your money back. (Note: I’m an aviation journalist, not a financial advisor or lawyer, and I’m certainly not providing you any official legal advice in this article.)

The debit card companies also have a system called Chargeback, but it’s not quite as good. As a rule, I always use credit cards rather than debit cards for purchases, especially online, not least because if the card number is stolen, the thieves are playing with the bank’s money and not yours. My debit card is solely for taking money out of ATMs.

I know not everyone’s financial situation means that credit cards are a possibility, and it’s important to be a responsible user — pay them off every month, don’t carry a balance over that charges you interest, check your statement every single month for weird charges or forgotten subscriptions, get help if you get into trouble — but this is the number one simplest thing you can do to protect yourself when booking.

Consider buying a package holiday for ATOL protection

Especially if you can’t use a credit card for protection, consider whether a package holiday might be sensible, because booking a package with a UK-based agent gives you ATOL protection. Crucially, this must be done at the same time, and does have to include flights, but doesn’t have to include accommodation: booking flights plus car hire covers travel. For instance, British Airways explains that booking a holiday flight and adding car rental as an extra does give you ATOL protection for those parts of your trip.

These days, though, in many cases accommodation will be as much or more as the cost of the flights, and you’re only ATOL protected for the parts you book at the same time as your flights. If you really can’t find a package that works for you, I always recommend booking directly with the airline or hotel rather than using a travel agent.

I’ve seen too many airlines say “nope, sorry, we can’t do anything with your ticket, call your travel agent to make changes”, and been standing at enough hotel reservations or car hire counters when there’s some sort of problem with a booking voucher, to ever want to chance that with even the most stable of airlines or travel agents. The exception is holiday homes, villas or apartments where you’d be sending cash money directly to an owner. This gives me the heebie-jeebies, to be honest, so I’ll often book via a service like Airbnb specifically so that I’m paying with a credit card, and that third party holds my money safe (AKA “in escrow”) until I confirm that I’ve checked into the place safely and all is as it should be.

Never buy gift cards or vouchers

Whatever you do, never buy gift cards or vouchers from an airline or travel agent, or (unless you are a real frequent flyer mile expert) ask for miles as a present. This is giving airlines an entirely unsecured loan, and if they go bust you are completely out of luck. This doesn’t apply just to airlines, of course; if you’re not going to use a gift card or voucher immediately on receipt, don’t buy them.

Check your travel insurance carefully, and take reasonable precautions

Always take travel insurance. As you might expect for an aviation journalist, I have annual multi-trip worldwide coverage, and I go for a pretty good policy, although I don’t think I’ve ever had to make a claim. It costs me (a thirtysomething single nonsmoker) just under €150 for the year, which is a pretty good investment.

But make sure you take the time to read it, including the relevant small print. Ten minutes while shopping for insurance on one of the many comparison sites is a good investment of time. Mine, for example, notes in the small print, that it does cover “the financial failure of the transport provider”, which should cover situations like Thomas Cook or WOW Air going bust.

However, it also states that it doesn’t cover “any claim where the circumstances giving rise to the claim were a matter of public knowledge prior to your departure for that area.” One other note: my insurance declines cover “for a claim caused by a strike if it had started or been announced before you arranged this insurance or booked your trip, whichever is the later.” So perhaps give “[insert the airline’s name here] strike” a quick search, especially if it’s one of the airlines that’s often in the news for strike action.

Make sure you have a printout of your insurance tucked away, that you know how to get in touch, and if you’re worried before departure perhaps ensure you can call them via some means other than feeding coins into a payphone at 3am, whether that’s a calling card or a voice-over-Internet phone option. If you do get caught up in a company collapse, keep all your receipts and, crucially, be “reasonable” in what you expect to be reimbursed for — literally. Many insurance contracts have a “reasonable expenses” clause, so don’t spend more than you can afford to cover if the insurance refuses to pay out, unless you fancy having to take them to small claims court.

Questions? Concerns? Thoughts? Aviation journalist John Walton writes regularly on travel for Lonely Planet and a variety of aviation magazines. He welcomes questions and discussions from readers on Twitter or Instagram (he’s @thatjohn)