Thursday 3 September 2009

SKY Europe’s failure warns passengers to check their travel insurance policy

In light of budget airline Sky Europe going into administration it is time for travellers to double check their travel insurance policies to make sure that it includes some type of financial protection.

Right up to last week Sky Europe were sending e-flyers detailing an ‘Autumn Sale’ for flights between €9-€99 guaranteed. Now it looks as though those who booked directly with the airline will have lost their money whilst others are stranded overseas and having to pay several times their flight ticket cost to get back home.

However, some Sky Europe passengers will be able to claim on their travel insurance as their policy will include either Scheduled Airline Failure Insurance or End Supplier Cover (extends airline cover to include other parts of the booked itinerary).

Financial Protection is big news not only in the travel community but also with consumer protection lobbyists. Just last week, while on a visit to Dublin, the EU foreign affairs commissioner, Meglena Kuneva, spoke of the need to address consumer protection stating that they receive a ‘large number of complaints’ about the holiday sector, and ‘it seems incomprehensible, when two people sitting next to each other on the same plane, even going to the same hotel, find that they have totally different levels of consumer protection simply because the bookings were made in different ways.’

However any measures will be tricky to legislate and take a long time to implement.

In the UK there has been talk of extending the ATOL to include flight only bookings but with the fund already £46.5 million in debt, questions are being asked as to whether it is prudent for the CAA to be extending cover into such a high risk environment. In addition, further duties will be vehemently fought by the airlines who already have to contend with the increased APD while cost cutting to combat record losses.

Credit Cards have financial protection under section 75 of the Consumer protection Act however there is usually a minimum spend of £100 which most budget flights will fall below plus they are unlikely to cover the additional costs to return home which can cost many times the ticket value.

It looks as though Insurance is the only answer to consumers booking directly with airlines, either as a section on a retail travel insurance policy, or through a dedicated on-line solution such as where passengers can pick and choose their required cover for all of the component parts of their trip.

It is anticipated that up to 60% of retail travel insurance policies will cover financial risk in some respect by the end of 2009 which is up form around 10%-15% at the start of the year.

Source 2nd September 2009

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