I have bought a package holiday, is it protected?
Thomas Cook is covered by the Air Travel Organiser’s Licence financial protection scheme, which protects package holidays sold by travel businesses based in the UK.
Atol protection means that if the package company you bought your holiday with collapses, then you are covered as the Government will look after you.
The Civil Aviation Authority, which runs Atol, says Atol protection will make sure you can finish your holiday and return home if the businesses collapses while you are away.
If it collapses before you travel, then Atol protection will either refund you or find you a replacement holiday. This should keep disruption to a minimum.
You can check if a holiday is Atol protected by looking for the logo, which you can find at the bottom of Thomas Cook’s website.
Are flights covered?
If you have paid for flights and received the tickets then you are not covered by Atol.
If you have bought flights that cost £100 or more on a credit card, then under Section 75 of the Consumer Credit Act you can make a claim to your credit card provider for a refund if a flight provider goes under.
Section 75 covers purchases up to £30,000, but that upper limit is unlikely to kick in when buying flights.
Travel insurance may also cover you, provided the policy has the correct clause.
You should look out for provisions in your insurance covering ‘scheduled airline failure’ and ‘financial failure’, though these are not always a standard.
While This is Money normally recommends paying with a credit card, under a chargeback scheme operated by Visa and MasterCard you could potentially get money back on a debit card booking.
To try and use this system, you need to contact your bank within 120 days of a breach of contract and ask them to dispute the transaction you’ve made.
However, chargeback does not cover you if an airline has given you advance notice that your flight has been cancelled.
Should I consider booking a holiday now?
While Thomas Cook is currently in the midst of some financial turmoil and could potentially see a change of ownership that could lead to disruption, the Atol protection still applies and those who booked a package today would be covered.
If you’re booking flights, then make sure you use a credit card if they cost over £100 and buy comprehensive travel insurance.
As we note above, not all policies cover airline failure so make sure you check the small print.
How is ATOL funded?
Atol was first introduced in 1973, as the popularity of overseas holidays grew. It currently protects around 20million holidaymakers and travellers each year.
According to its website, the scheme is designed to reassure consumers that their money is safe, and will provide assistance in the event of a travel business failure.
It is funded by contributions from Atol holders, who must pay £2.50 into the schemes back up fund, the Air Travel Trust, for each person they book on a holiday.
This money creates a fund that is used by the CAA to ensure consumers either complete their holiday or – if they cannot get away – receive a full refund.
What about gift vouchers?
Unused vouchers are not covered by Atol if Thomas Cook goes bust.
If you have spent a voucher, you receive the same protection as if you’ve spent cash – if you’ve used it on a protected holiday booking.
What if I’ve only paid a deposit?
This covered in the same way as paying in full.