Thomas Cook collapse: What are your rights?

By Kevin Peachey
Personal finance reporter

Image source, Reuters

Thomas Cook has collapsed, triggering the biggest ever peacetime repatriation aimed at bringing more than 150,000 British holidaymakers home.

The company, its customers and staff had hoped for a rescue deal, but now that last hope has gone, they will be looking at the practicalities for the near future.

About 800,000 British people had future bookings and the company had 9,000 employees in the UK.

Will I lose my holiday booking?

Anyone who has bought a package holiday will be covered by the Air Travel Organiser's Licence scheme (Atol). You would have received an Atol certificate when you booked.

This means you will not be going away, but the cost of the holiday will be refunded.

The Civil Aviation Authority (CAA) will be launching an online service to manage all refunds on Monday, 7 October. It has asked people not to submit anything to the CAA before then.

The CAA said all refunds should be processed within two months of a claim form being submitted properly. Customers who were paying by direct debit should be refunded within 14 days,

The majority of Thomas Cook holidays are packages.

Does the refund cover everything?

Stating the obvious, everything that was paid for as part of the package - such as flights, accommodation, and excursions - will be refunded.

Some holidaymakers might have paid separately for airport parking or car hire while away. In this situation, they would need to make a claim from their travel insurer for the cost.

In more extreme cases, such as a wedding, there may be a host of other things that could be affected. Specialist cover, such as wedding insurance, may be the only route for those left out of pocket.

Image source, PA Media

Could I switch to another holiday?

No. Holidaymakers with package deals get a refund, as that is what the Atol protection states. Booking a new holiday in the very near future might have got more expensive.

Only part of my holiday is with Thomas Cook, what do I do?

Some other operators which used Thomas Cook flights will try to switch their customers to an alternative at no extra cost.

Others may be on cruises organised and paid through Thomas Cook. It is best to contact those operators directly as they will be prepared to explain the status of the holiday.

I have only booked a flight with Thomas Cook. What are my rights?

The Atol protection covers packages, not flight-only deals. So that means you would not get an automatic refund.

The main alternative is claiming a refund from the provider of the credit or debit card you used, so-called section 75 rules.

Otherwise you may need to make a claim on travel insurance. That is why it is always advised to buy travel insurance at the same time as booking a holiday. Analysis by data company Defaqto shows that 45% of travel insurance policies do not cover the collapse of an airline, so not everyone will be covered.

A spokesman for the Association of British Insurers says: "As a last resort, travel insurance with scheduled airline failure cover can cover the cost of a flight when the airline has gone into administration. A travel insurance policy with travel disruption cover will cover the cost of new travel arrangements."

There may be a little more protection if the hotel you booked was linked to the flight, such as a click-through when booking the flight. That could be covered by the Atol scheme.

Anyone who bought a Thomas Cook package that did not include a flight may be covered under the separate Abta scheme.

I'm on holiday now, what do I do?

At the moment, enjoy your break as much as you can - do not cut it short. That said, the repatriation operation will only run up to and including Sunday 6 October. After that, travellers would have to make their own plans, although those covered by Atol will be refunded.

Hoteliers will be paid via the Atol scheme, so they should not ask for any extra payment from holidaymakers.

UK package holiday customers will be brought home "as close as possible" to their booked return date, the Department for Transport (DfT) has said. They must take their original ticket information with them and will be issued with a fresh boarding card for their flight.

Customers will be on special free flights or booked on to another scheduled airline at no extra cost, with details of each flight to be posted on a dedicated CAA website as soon as they are available, up to 72 hours before its scheduled departure.

The CAA said some people might be flown to different UK airports from the ones originally scheduled, but free transfers would be provided.

The DfT added that a "small number" of passengers might need to book their own flight home and reclaim the costs.

Thomas Cook had 600,000 customers on holiday from around the world, including more than 150,000 from the UK, so it will be a huge logistical challenge.

When the Monarch airline collapsed, there were arguments for a better repatriation system, but nothing has been implemented as yet.

I'm paying for next year's holiday via direct debit. Should I continue?

It looks like any direct debit to Thomas Cook is pointless, but most people will not need to cancel it.

If a direct debit is due to be taken on Tuesday, then you should cancel it straight away with your bank, according to banking trade body UK Finance. Any payments from other customers at a later date will not be processed owing to the insolvency.

Any money that has been paid towards a package holiday already should be refunded via the Atol scheme, so you will need to make a claim for it in due course. The same is true of a deposit.

I've been given a Thomas Cook gift card. Will it be of use?

Nothing is clear on that yet. It is highly likely that gift cards or vouchers will be worthless, consumer experts say.

Image source, Thomas Cook

It will depend on what happens to the company - whether it is rekindled and whether any vouchers would then be honoured. If they are useless, then the person who bought it might be able to make a claim to their credit card provider if it was a generous gift of more than £100, or their debit card provider for less.

There is better news for those with a pre-paid Thomas Cook currency card, as any funds held on that are protected separately from the company, so will not be lost.

What about other services, such as sport packages?

As the business has ceased trading, they would no longer be valid, although anyone with trips planned could try contacting the destination direct.

For example, Thomas Cook would have sold 360 hospitality packages for home matches at Liverpool football club's Anfield ground.

"We are currently assessing the impact of Thomas Cook ceasing trading and the impact for those supporters who have purchased packages from Thomas Cook. Once we have those details from Thomas Cook, we will update supporters," the football club said.

Some people had booked travel and tickets for the forthcoming American football games in London through Thomas Cook. The NFL said it was investigating and would give further information soon.

As most people would not have any insurance cover for such a trip, a refund claim would probably have to be made to the provider of the credit or debit card used to pay.

What should I do if I work for Thomas Cook?

While customers will be worried about their holidays, staff will be heartbroken about their livelihoods.

Staff are being informed about what has happened to their jobs, with written confirmation to follow.

A group of special managers, from accountancy firm KPMG, have been appointed and will contact staff with a case reference number which will allow them to make a claim for redundancy payments.

The Pension Protection Fund (PPF) should step in to protect the more than 13,000 members of Thomas Cook's four pension schemes.

Workers who are over the age of their normal retirement will get full benefits, while those who have not yet reached normal retirement age will be paid 90% of their promised pension, up to a cap of £40,000. Members with bigger pensions will get at least 50% of their old age pensions, under PPF rules.

Meanwhile, the 3,000 or so retired members of Thomas Cook's pension schemes will continue to have their pensions paid in full by the trustees.

Were you a member of staff at Thomas Cook? Do you have questions about what happens now?

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