What happens if Flybe goes into administration and can you get compensation for booked flights?

Europe’s largest regional carrier Flybe is reportedly on the brink of collapse, leaving around 2,000 jobs at risk.

It is understood the airline held crunch talks with the Government over the weekend to see whether emergency financing could be found to rescue it.

Moves to turn around the loss-making carrier have apparently fallen short, as it continues to face issues including falling demand, rising fuel costs and the weakening of the pound.

The airline operates more UK domestic flights than any other, flying around eight million passengers a year to 170 destinations across the continent.

If it collapses, it would be the second UK airline to fail in four months, following the shock demise of Thomas Cook.

So, if a solution can’t be found to Flybe’s troubles and the airline cannot be saved, what does this mean for passengers? 

Here’s what we know so far about the alleged crisis, and what customers can expect if the firm does fall into administration.

What’s gone wrong?

Flybe has been in trouble for some time. It was bought by a consortium consisting of Virgin Atlantic, Stobart Group and Cyrus Capital in January 2019 following poor financial results.

The consortium, known as Connect Airways, paid just £2.2 million for Flybe’s assets but pledged to pump tens of millions of pounds into the loss-making airline to turn it around.

However, the reported holding of rescue talks with the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Transport (DfT) suggests the financial burden on Connect Airways has become unmanageable.

What has Flybe said?

The airline’s flights operated as normal on Monday morning as news of the alleged Government crunch talks began to surface.

So far, Flybe has refused to comment on the reported crisis. Instead, it issued a statement on Twitter saying: “Flybe continues to focus on providing great service and connectivity for our customers, to ensure that they can continue to travel as planned.

“We don’t comment on rumour or speculation.”

What will happen to existing bookings if the airline collapses?

Passengers will not be able to travel. 

All Flybe flights will be cancelled and bookings will not be transferred to another airline, if standard protocol is followed.

Defunct airlines have previously advised passengers to look out for reduced fees – so-called “rescue rates” –  from former competitors. 

Customers due to travel on a code-share flight should contact the partner airline directly to check their status.

Will passengers be entitled to a refund or compensation?

That depends on how the booking was made.

Some travel insurance companies will cover cancelled flights if they are the result of an airline collapse, but not all.

Customers should check their policy to see if it includes Scheduled Airline Failure Insurance (SAFI) or End Supplier Failure. 

Passengers might also be covered if they paid for all or part of their flight with a credit card and it cost more than £100.

If you paid with a debit card, you may also be protected by the chargeback scheme.

Contact your bank or card firm to find out if you are eligible for a refund.

Are Flybe passengers ATOL protected?

Flights bought directly from Flybe are not ATOL protected.

However, if you bought the holiday through a separate travel agent then you may be covered.

What is the ATOL scheme?

ATOL provides protection to holidaymakers when a travel firm collapses.

The scheme protects most trips booked as a package, such as flights and accommodation, or flights and car hire. 

It also applies to some flight-only bookings, particularly when the tickets are not received immediately.

How can my travel agent help?

If you booked flights as part of an ATOL-protected package holiday, your travel agent or tour operator should offer you an alternative flight or a change of date for your trip.

If this isn’t possible, you should be entitled to a full refund.

If you booked a flight only through a travel agent, the sale might be covered by ATOL and this means that you can apply for a refund. 

If this is the case, you should have received an ATOL certificate at the time of booking.

This scenario means it’s likely your holiday will be delayed but you might not lose out financially.