Previous years were very rough for the aviation industry. Many airlines have gone bust in recent years, and 2025 shows that this risk has not disappeared. So how does an airline go bust – and what can you do in those circumstances?
Airline bankruptcies: how do they happen?
How does an airline go bankrupt? Let’s look at some examples.
Germania was launched in 1978 and stopped its operations on February 5 2019. It could not pay out salaries in January before closing its doors a month later. Germania, first crippled by rising fuel prices, high fleet maintenance costs and compensation it had to cover for disruptions, failed to attract investor interest. It closed abruptly, with German airlines offering discount flights for stranded passengers.
WOW air, founded in 2011, also collapsed in 2019 after failing to secure new investment. The airline faced stiff competition in Northern Europe and tried operating flights till the last possible second. At one point, passengers on a delayed flight were even provided with pizza before the airline ceased operating altogether.
Thomas Cook Group started out in 1841 with the aim of carrying temperance supporters by railway between Leicester, Nottingham, Derby and Birmingham. Thomas Cook Airlines came to be in 2001. And when it fell, it made its passengers suffer probably the biggest fallout of all recent bankruptcies. As the parent travel company Thomas Cook Group went under, so did the airline. It stranded 600,000 travellers worldwide, with the British CAA organizing repatriation flights for UK citizens as well as working to reassure hotels that it will reimburse them the money the tour operator owed them.
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In May 2023, the Icelandic virtual airline Niceair suspended all operations and filed for insolvency after less than a year in the skies.
Other airlines, like Norwegian, have managed to survive by restructuring debt, but the financial pressure on the sector remains high in 2025. Rising fuel costs, volatile exchange rates, and fierce competition continue to affect many carriers.
In April 2025, Air Belgium was officially declared bankrupt, leaving approximately €8 million in unpaid passenger refunds. The European travel industry called for stronger insolvency protections following the collapse.
Airline bankruptcies in 2024:
- Air Vanuatu
- Bonza
- JetAir Caribbean
- Canada Jetlines
- Nordica
- iAero Airways
- OTT Airlines
- FlyEgypt
What to expect when an airline collapses
So, what happens if you find yourself with tickets to a flight operated by a bankrupt airline? If you’re stranded, the best you could hope for is repatriation organized by your country’s CAA. UK’s “Operation Matterhorn,” organized to bring back people stranded by Thomas Cook’s collapse in 2019, is the biggest peacetime repatriation effort. It actually turned out well for some passengers, as Britons holidaying in Spain and Baleares got the rare chance to fly back home on an Airbus A380 jumbo.
Other times, you may not be so lucky, as it happened when WOW Air collapsed and repatriation tickets were offered at a measly 25% off. When Thomas Cook went bankrupt, some passengers accused airlines like Jet2 of price gouging. And when Aigle Azur shut down, at least one woman was stuck in São Paulo, unable to afford the ticket to Paris that cost between €750 and €1750. More recently, airline failures in 2023–2024 in Europe and Asia have again shown how suddenly carriers can disappear, leaving passengers with little warning or support.
The airline went bust. What can you do?
When it comes to getting your money back, passengers from the UK are probably the luckiest, as ATOL and associated Air Travel Trust Fund exist to cover reimbursement and repatriation for travellers affected by the bankruptcy of an ATOL member. For those travellers that don’t have such protection offered at the state level (such as passengers from the US), the best hope is travel insurance, which should be ensured before you fly. A lot of policies in the US don’t cover airline collapse, so you have to be really careful when choosing your policy.
Credit card holders may be privileged in this case, as some of them have premium travel protection. Make sure to find out if your bank hasn’t dropped it and maybe seek a new card. Another benefit is that credit card holders can request charge-back as the bankrupt airline has clearly failed to prove the agreed-upon services. Again, this isn’t guaranteed to work every time, but it’s something.
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How to Claim Flight Compensation Before It’s Too Late
There’s also Regulation (EC) 261/2004, which protects passenger rights. However, asking a bankrupt airline for flight compensation isn’ the easiest of tasks.The process of claim compensation is far more effective when the airline is still operating. If your disruption was linked to delays, cancellations, or overbooking for reasons under the airline’s control, you can claim now rather than risk your eligibility expiring.
The safest step is prevention: buy solid travel insurance, book with stable airlines, and keep payment methods that offer extra protection. Remember, airlines often operate flights right until the very last moment before collapse, and they rarely disclose Delayed Flight Compensation or other debts to shareholders.
“With the accelerating pace of airline bankruptcy, something has to be done to protect the air passengers. However, regulatory bodies aren’t even playing catch up,” said Lukas Raščiauskas, CEO of Skycop. “We have previously stated that Regulation (EC) 261/2004 is not enough for dealing with regular flight disruptions. Now you can add airline bankruptcies to its list of blindspots.”
If your issue wasn’t a collapse but a delay, cancellation, or overbooking, there are still ways to check your rights. Skycop offers tools to help you see if you may be entitled to Cancelled Flight Compensation, Denied Boarding Compensation, Delayed Baggage Compensation or even Missed Connection Compensation. It only takes a few minutes to see whether your case applies, and you might discover you could still get compensation.
