With travel restrictions within Australia starting to ease, many of us are planning our next domestic trip. But unfortunately, there are some high-profile cases of travel businesses struggling right now, for example Virgin Australia going into administration. As a result more customers are asking the TravelCard team what’s covered if a travel service provider goes into administration or even liquidation.
Every travel insurance policy is different, but it’s common for financial default (i.e. the appointment of an administrator or going into liquidation) to be excluded. This means travel insurance may not cover any fares or deposits you have paid.
You may not be covered, so book with caution
One of the most high profile examples of a travel business in administration at the moment is Virgin Australia. Thinking of booking a flight? It’s important you consider some of the implications of doing so while they’re in administration:
- Virgin have recently released a new refund policy
- If your flight is cancelled and you did not receive a credit or refund prior to Virgin Australia entering into administration, you will be eligible for a Conditional Credit.
- Conditional credits are only valid up to the end of the administration period (currently expected to be in mid-August)
- After this any new owner may honour these credits – but it is important to be aware that they can also choose not to do so.
- If the airline is not sold and instead goes into liquidation, you will become an unsecured creditor and may not get all of your money back.
For full details of their refund policy, visit Virgin’s website.
If you’re willing to accept the risks outlined above, there are some great deals available. One member of the TravelCard team found return flights from Sydney to Byron Bay, departing in September, for just $89! Check their Book Early Fares
What’s the difference between administration and liquidation?
There is a difference between the appointment of an Administrator and a Liquidator. During administration, it is possible for businesses to continue trading. Virgin Australia are a good example of this. The various Virgin companies currently have an administrator appointed as they work through offers from potential new owners. The administrators are also currently running the Virgin operations day-to-day. However, ultimately the creditors may determine that it is in their best interests to liquidate Virgin and sell off their assets. At the moment we will have to wait and see what happens next.
If you have any Virgin credits it important that you read the fine print under which they have been offered and when would be the best time that you use them. The examples of Virgin credits that the TravelCard team has seen were valid during the period of administration. If that applies to you, now could be a good time to think about using them.
TCA Insurance Services Pty Ltd (TCA) ABN 76 621 476 220 is an authorised representative (AR 1262773) of the Insurer, The Hollard Insurance Company Pty Ltd (Hollard) ABN 78 090 584 473 (AFSL 241436). Any advice provided by TCA in relation to the TravelCard Real-Time Insurance products and the TravelCard is general advice only. Please consider the Combined Financial Services Guide & Product Disclosure Statement and the TravelCard Terms & Conditions (available at www.travelcard.com.au) before deciding whether they are suitable for you.