What to do when your airline goes bankrupt

Mar 25 2025 MFR travel team

Let’s imagine this situation, you’ve saved up finally for that one dream vacation or maybe you have to go on extremely important business trip. Everything seems about right, but then a new surprise hits you! The airline sends an email that they can’t carry on the flight, because they filed for bankruptcy. The feeling is terrible, like the rug’s been pulled out from under your feet. Now your travel plans are destroyed and you have to quickly find a solution, wondering what to do next. But don’t you worry! We’re going to dive into exactly what your rights are and what steps you can take if your airline goes under.

What does airline bankruptcy mean for passengers

When airline declared bankruptcy it usually means they’re out of finances and struggling to keep things run smoothly. This leads to cancellation of multiple flights, suspended operations and a whole lot of confusion of passengers. Depending on the type of bankruptcy (Chapter 7 or 11, or international equivalents) the airline might either completely shut down their operations or try to reorganize its finances to keep operating. Some even merge with other airlines that can buy them out and cover the debt.

To translate it in simple terms for passengers: will your flight take off? It depends on what they are about to do. Or are you left to figure it out yourself? Most likely, yes.

What are your legal rights as a passenger

First and foremost, your rights vary depending on where you are and where the airline is based. In Europe, for example, regulations like EC261 offer strong protection for your rights. If your flight is cancelled, you could be entitled to compensation or refund of your flight. Plus, you’re entitled to rebooking on a different flight.

However, in the US the rules aren’t so strong. Refund pretty much depend on whether the airline can actually fulfil its obligations by contract. If they can’t do that, then getting money back might be a little hard to achieve.

How to get your money back if an airline files for bankruptcy

But what do you do if your airline bites the dust? Here are some steps you can take:

So, what do you do if your airline bites the dust? Here are a few steps you can take:

Contact the airline: Sometimes airline might give you refund or rebook you. It never hurts to ask!

Credit card chargebacks: If you booked with a credit card you might be able to initiate a chargeback. Many cards offer purchase protection. So, give your card issuer a call and see how they can help you in this case.

Travel insurance: Always buy travel insurance, but remember it’s truly important to check their fine print too. Some policies of insurance companies cover airline bankruptcy.

Seek help from third parties: Companies like MYFLYRIGHT specialize in passenger rights and will guide you through the whole claim process, just to make sure you’re getting what you deserve.

What about stranded passengers

Now, if your airline goes belly up while you’re already travelling, things will probably get a bit more complicated. You might need to book a last minute flight home which can be a hit on your bank account. In some cases other airline may offer “rescue fares” which are discounted prices that help passengers that got stranded.

If you’re stuck, it’s for the best to bet on contacting your country’s embassy or consulate. They might be able to help you or at least point you to the right direction.

Dealing with airline bankruptcy is very frustrating and the last thing you need is more stress. That’s where MYFLYRIGHT comes in. We know the ins and outs of passenger rights and can help you navigate the tricky process of getting refunds or compensation. Whether it’s dealing with complex claims or negotiate with the airline, we’ve got your back!