The Fair Credit Billing Act

Tracy Stewart, April 20, 2007
Fares from Washington DC:

    Q: What happens if you buy an airline ticket and the airline goes belly up?  Does travel insurance protect you?

    A:  The Fair Credit Billing Act requires that if you buy something with a credit card and don't receive what you paid for and you dispute the charge in writing†with your credit card issuer within 60 days of the charge appearing on your credit card statement, then the credit card company must delete the charge from your bill. This also applies to airline tickets. You may be thinking, hold the phone! What if I buy an airline ticket four months ahead of travel, pay off my credit card bill, and then the carrier goes kerplunk. Well, yes, then under the law you're out of luck. It's also important to buy the ticket directly from the airline, not a travel agency or tour operator. It's not the travel agent who is going to go bankrupt, it's the airline, so buying through any channel other than the airline itself will complicate your claim. Of course, another airline could take over the routes and obligations of the defunct one and might honor your otherwise worthless ticket. Also, Federal law requires that under certain circumstances a competing airline must honor the ticket of a bankrupt carrier on a space available basis, but this law is in effect only until November 18, 2005. Most travel insurance policies wonít cover certain airlines that they think may go bankrupt, so read the fine print.