Airline bankruptcies: what are your rights?

On 29 September 2025, Icelandic low-cost airline Play stopped flying overnight. About 1,750 passengers were stranded at Keflavík Airport that day alone, and thousands more were left holding tickets for flights that would never leave. Weeks later, 2 UK regional airlines, Eastern Airways and Blue Islands, collapsed too.

If your airline has gone bust, or you're worried it might, there's still a lot you can do. You can usually get home, and you can often get your money back. Which route works depends mostly on how you booked and how you paid.

What happens when an airline goes bust?

Usually, everything stops at once. The airline cancels all its flights, its website shrinks to a short statement, and there's nobody left to answer the phone. Tickets for future flights become effectively worthless, because the company that sold them can no longer fly you.

Not every airline bankruptcy ends like that. Some airlines keep flying while they restructure, so their tickets stay valid. Air Berlin, for example, kept operating for more than 2 months after filing for insolvency in 2017, and we explain what that meant for passengers in our post on what Air Berlin's insolvency meant for your claim.

The bigger problem is that in the EU, there's no general protection scheme for flight-only tickets when an airline collapses. Airlines that only sell flights don't have to insure against insolvency. That's why how you booked and paid makes such a difference.

Stranded abroad? How to get home

Start with the airline's website and social media, then your airport's website. When an airline fails, other airlines often offer discounted "rescue fares" to stranded passengers. After Play shut down, easyJet and Icelandair were reported to be offering them. When Blue Islands collapsed, Aurigny moved passengers holding Aurigny tickets onto its own flights.

If no rescue fare works for you, book a new flight yourself and keep every receipt. Then use the options below to try to recover what you paid for the original ticket.

One warning: don't cancel or rebook while your airline is still flying. If your original flight goes ahead, you're unlikely to get that money back.

How to get your money back if an airline collapses

If you paid by credit or debit card

This is often your best bet. Ask your card issuer for a chargeback, which reverses a payment when a service you paid for isn't delivered. Chargebacks can work for debit cards as well as credit cards, so it's worth asking either way. Act quickly, because banks set time limits. If the payment hasn't left your account yet, ask your bank to stop it.

If you booked a package holiday

You're in a much stronger position. Under EU package travel rules, the organizer is responsible for your whole trip. If the airline collapses before you travel, the organizer has to offer you a suitable alternative or a refund. Organizers must also have insolvency protection, so you're covered even if the organizer itself runs into trouble. You'll find more detail in the EU's Your Europe air passenger rights FAQ.

If you booked through a travel agent or booking site

Contact them first. They'll likely have other customers in the same situation, and they may be able to rebook you or tell you how refunds will work.

If none of these apply

You can register a claim with the airline's administrator, the court-appointed person who winds the company down. Play, for example, told passengers to send their claims to its administrator. Be realistic, though: passengers are usually far down the list of creditors, and the process can take a long time.

Hotels and other bookings

If your trip can't go ahead, contact your hotel, car rental company, and anyone else you've paid. Some bookings can be canceled for free, and some providers will be flexible. If not, check whether your travel insurance or card issuer can help with those costs.

Does travel insurance cover airline collapse?

Only if your policy specifically includes it. Many standard policies cover cancellations for illness or bad weather but exclude an airline going bust. Look for cover called scheduled airline failure insurance (SAFI), or a clause that mentions airline insolvency. Check the excess too, so you know what you'd actually get back.

Timing matters. Insurers may refuse to cover a collapse that was already in the news when you bought your policy, so it's best to get insurance soon after you book. Our guide to when you need travel insurance and when you can skip it explains what to look for.

Can you still claim compensation from a bankrupt airline?

If your flight was delayed or canceled before the collapse, you may have been owed compensation of up to €600 under EC 261. Once the airline is insolvent, though, that claim joins a long queue of creditors, and payouts are rare. Play told passengers that EU passenger rights may still apply, but that claims had to go through its administrator.

There's one important exception. Compensation is owed by the airline that actually operated your flight. If your ticket was sold by the airline that collapsed but the flight was run by a partner, for example on a codeshare, that partner is responsible, and a claim may still succeed.

If you're dealing with an airline that's still in business, a cancellation is a normal claim, and our guide to flight cancellation compensation covers it. For the bigger picture, see our overview of air passenger rights.

How to protect yourself from an airline collapse

There's no reliable way to predict which airline will fail next. Some struggle for years and survive, while others stop overnight. These habits give you the best chance of getting your money back if it happens:

1. Pay by card. It's often your fastest route to a refund.

2. Get travel insurance with airline failure cover, and buy it soon after you book.

3. Consider a package for bigger trips. Package holidays come with the strongest protection under EU rules.

4. Keep your booking details. Save confirmation emails, receipts, and payment records.

5. Watch the news, but don't panic-cancel. If an airline is rumored to be in trouble, plan a backup route, but don't cancel a flight that's still scheduled.

It also helps to hear about disruption the moment it happens, so try the free AirHelp app.

Recent airline collapses in Europe, and what happened

Airline failures aren't as rare as they feel. Here are some of the collapses that hit European travelers hardest, including the Primera Air bankruptcy.

Frequently asked questions about airline collapses

What happens to my ticket if an airline goes bust?

If the airline stops flying, your ticket is effectively worthless and won't be honored. You'll need to book a new flight and try to recover the original cost through a chargeback, your travel agent or package organizer, your insurer, or the administrator.

Can I get a refund if I paid by debit card?

Often, yes. Many banks offer chargebacks on debit cards as well as credit cards. Contact your bank as soon as possible, explain that the airline has collapsed, and ask how to claim.

Will another airline honor my ticket?

Usually not. Other airlines sometimes offer rescue fares, which are discounted new tickets for stranded passengers, but they rarely accept tickets issued by the airline that collapsed.

What's the difference between airline bankruptcy and airline collapse?

An airline in bankruptcy or insolvency proceedings may keep flying while it restructures, and its tickets stay valid. An airline collapse means it has stopped operating completely, and its flights are canceled.