Travel Agency's Bankruptcy vs Passenger's Rights

If the first scenario occurs, you are covered under the provided security guarantees and under legal provisions on the Travel Guarantee Fund, which is an additional security in the case of organisers’ or tour operators’ insolvency. I

Travel Agency's Bankruptcy vs Passenger's Rights

The last few days have not been easy for the travel industry. The bankruptcy of the travel agency Thomas Cook and its Polish subsidiary Neckermann Polska has drawn GIVT’s attention to the (mis)fortunes of thousands of customers whose holiday was cut short or cancelled. What you should remember and what to look for when enforcing your rights if your travel agency goes bankrupt?

If a travel agency goes bankrupt, you are faced with either of the two distinct scenarios:

you have purchased a package trip at the agency, or

you have only purchased a charter flight at the agency (excluding the stay).

If the first scenario occurs, you are covered under the provided security guarantees and under legal provisions on the Travel Guarantee Fund, which is an additional security in the case of organisers’ or tour operators’ insolvency. If a travel agency goes bankrupt, its customer may, depending on their circumstances, claim payment of costs of continuing the holiday, or claim reimbursement of costs of the cancelled trip. Furthermore, customers who are abroad when the agency ceases to operate are covered by the relevant Province’s Marshall with their return home secured. If it were not for the Travel Guarantee Fund, it would be extremely difficult to recover any amount from a company that becomes bankrupt.

‘If a company is declared bankrupt, usually tax or other public law liabilities are satisfied first. The list of creditors is usually long, with state institutions having the priority in the debt collection procedure. Therefore, the company’s assets might already be exhausted before claims of individual customers are satisfied. However, we should not give up,’ says Elżbieta Tyszka, Main Attorney-at-Law at GIVT Legal, a company that helps obtain compensation for delayed and cancelled flights.

If the charter flights with an airline owned by a travel agency that has been offered for sale individually (i.e. without a package trip) cannot be completed as a result of bankruptcy of the agency, the claim procedure is different.

‘Charter flights operated by air carriers purchased via a travel agency are covered by Regulation (EC) No 261/2004 which gives passengers the right to seek compensation, among others, if their flight has been cancelled,’ adds Elżbieta Tyszka.

In this case, you have to submit a complaint with an air carrier, specifying the charter route and flight number in the justification. According to Regulation (EC) No 261/2004, passengers may be entitled to between €250 and €600, depending on the length of the flight route. You can find more information on the conditions to be met to obtain compensation in the passenger’s rights section.