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A recent spat of travel provider closures has left many travelers wondering what to do if an airline goes bankrupt. Did the Thomas Cook collapse take you by surprise? Even if you didn’t, it’s wise to know what potential reimbursement looks like if your plane tickets end up only being worth the paper they are printed on.

airline goes bankrupt
It’s possible to get reimbursed from your credit card if an airline goes bankrupt — but it’s not always easy. Photo by Miguel Montejano from Pexels

Airline Goes Bankrupt? A Few Items to Look For

Of course, you can’t be sure or know ahead of time if an airline is going to go bankrupt. But, sometimes there’s talk of airlines having trouble. One airline that’s on most people’s caution list now is Norwegian Airlines. Other airlines that can be at risk as well, including Alitalia and FlyBe.

Generally, when booking travel, it’s always best to use a credit card. Using some of the best miles credit cards not only earns travel miles or another rewards currency on every purchase, but you may also have special travel protection benefits debit cards may not offer.

Credit Card Trip Cancellation Benefits

You should first try contacting the airline to see if there’s a remote possibility of getting compensation or booking alternate travel. Either option is highly unlikely as the airline is bankrupt and couldn’t afford to operate their currently scheduled flights. As a result, your next option is to check with the credit card you used to pay for the flight.

Unfortunately, complimentary trip cancellation and delay benefits are highly unlikely to cover non-refundable costs if an airline goes bankrupt. In the recent past, some credit cards still covered airline insolvency. Some of the most extensive coverage benefits currently belong to the Chase Sapphire Reserve® and the Chase Sapphire Preferred® Card. Business travelers can get similar coverage with the Chase Ink Business Preferred® Credit Card.

All three Chase cards are some of the best credit cards with travel insurance. You can get up to $10,000 per person and $20,000 per trip in reimbursement for non-refundable travel purchases.

However, Chase won’t issue reimbursement for some of the following events:

  • Financial insolvency of the Cardholder’s travel agency, tour operator, or travel supplier
  • Trips that exceed 60 days in duration
  • Travel arrangements changed or canceled by a common carrier, tour operator, or any travel agency unless the cancellation is a result of severe weather or an organized strike affecting public transportation

Airline bankruptcy falls under the “financial insolvency” section.

Thankfully, you may have other options to potentially claim reimbursement.

Related article: Flight Canceled — Chase Sapphire Reserve Trip Delay Saved Me

Dispute the Purchase

There’s a chance that you can dispute the airline purchase with your credit card or debit card company. However, you will need to file a dispute with 60 days of purchase. Note that reimbursement isn’t guaranteed. However, you can make a strong case that the merchant (i.e., the airline) didn’t deliver the product or service.

If you bought your tickets over 60 days ago, you most likely won’t be able to file a dispute. Credit cards offer a 120-day dispute window but that’s normally for defective purchases and services you have received. It can still worth contacting your credit card company to discuss your options. The only asset you have to lose is a few minutes of your time.

You can start the dispute process online inside your credit card dashboard. Calling customer service is also possible.

Although it may seem like you’re waiting until the last minute, the best time to book a flight can be between 21 days and 60 days from departure. You may need to be more flexible with your travel times and seat selection, but the ticket prices are usually very competitive still.

Travel Insurance Benefits

An optional travel insurance policy may also cover airline bankruptcy. You will need to read the fine print or speak with an agent to learn the specifics. Basic policies are less likely to cover this event.

Your policy will need to include scheduled airline failure insurance (SAFI) to claim reimbursement for bankrupt airlines. This coverage may only be available for high-end policies or one of the best travel insurance providers.

If your policy has SAFI, you can receive reimbursement if you haven’t begun traveling yet. Your benefits can help you book alternate return travel if the airline goes bust after you have already left home.

EU 261

A last-ditch effort for European carriers operating within the European Union is EU 261. You might be able to claim up to 600 euros in compensation for your canceled flights. Reimbursement isn’t guaranteed.

Even if you have a legitimate claim, it may be up to the airline to provide compensation. Since the airline is bankrupt, is there any cash remaining when they don’t issue an immediate refund?

Request Reimbursement Before Booking New Travel

Before booking new travel, exhaust the above options first. For example, your travel insurance company may book alternate travel. If you buy a new plane ticket, they most likely won’t reimburse that purchase.

You will likely know what your reimbursement chances are within a matter of hours if you contact the airline, credit card, and travel insurance provider right away.

You may have no choice to book new travel at the last minute. Verifying your rebooking options first at least lets you compare your options before you spend more to complete your trip.

Depending on your situation, you may consider calling your credit card travel concierge service. The support team offers free assistance, though you will still need to pay any third-party fees. This can be the quickest and least stressful way to book alternate travel.

Research Airlines Before Booking

You might be able to find current financial information for an airline you’re thinking about flying. At the start of 2020, Norwegian Airlines is the best-known airline on the brink insolvency. Alitalia is another airline struggling to pay the bills. Declaring bankruptcy doesn’t mean either airline is suddenly going out of business, but booking a flight is riskier than, say, a legacy carrier.

To be fair, even the largest U.S. carriers have all declared bankruptcy within the last 20 years. This is one reason why Delta, United, and American have absorbed other airlines including Northwest, Continental, and U.S. Airways.

Another way to reduce a flight cancellation risk is to fly with an airline in a major alliance like Star Alliance, SkyTeam, or oneworld (who is adding Royal Air Maroc to its alliance). You at least have the possibility of booking alternate flights with an alliance member if your go-to airline goes belly up.

Flying with a major airline means you’re less likely to have a flight canceled due to insolvency. But, your flight might require more points or cash to book a ticket.


When an airline goes bankrupt, reimbursement isn’t guaranteed. You will need to contact your credit card company or travel insurance provider to review your options. Waiting to book your flight with a credit card within 60 days of departure can be the best hedge for most travelers.


Can you get your money back if an airline goes bankrupt?

You might be able to get your original ticket purchase refunded if an airline goes bankrupt. However, the answer depends on how long ago you bought the ticket and what travel insurance policy you have.

The airline most likely won’t reimburse your purchase. Your credit card or debit card company may approve a chargeback if you purchased your tickets within the last 60 days. You will need to dispute the transaction to start the refund request.

If you can’t get a chargeback, your only other option is any travel insurance policy you may have purchased. Even then, the travel insurance policy must offer Scheduled Airline Failure Insurance (SAFI). This coverage doesn’t come standard with every policy. You may need to purchase a more deluxe policy or purchase an optional rider.

Does Chase Sapphire trip cancellation cover airline bankruptcy?

The Chase Sapphire Reserve benefits, the Chase Sapphire Preferred benefits, and Chase Ink Business Preferred trip cancellation benefits do not cover financial insolvency for common carriers, travel agencies, or tour operators. In the past, Chase would reimburse non-refundable purchases related to insolvency.

Now, you will need to dispute a transaction within 60 days of the purchase date to receive reimbursement.

Does travel insurance cover if an airline goes bust?

Your travel insurance policies might cover non-refundable plane tickets if an airline goes bankrupt. However, your policy needs Schedule Airline Failure Insurance (SAFI) for this to happen. SAFI is usually only found on more expensive policies. Before purchasing your policy, you should read the policy terms and conditions or contact customer support to verify your policy covers airline insolvency.

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