​Lowcost Holidays goes under – Is my holiday protected and can I get my money back?

​Lowcost Holidays goes under – Is my holiday protected and can I get my money back?

When booking a holiday you have enough to worry about – Where to go? When to go? How long for? Where to fly from? Which travel insurance to get? How much time to book off work? When considering all these questions, what you don't need is your travel Company to cease trading and for you to lose that dream summer holiday you'd booked.

On the 15th July 2016, Low Cost Holidays ceased trading. The Company employed 120 people in its West Sussex office who has now been made redundant. The administrators for the travel company, Smith & Williamson and CMB Partners blamed the UK's Brexit vote, the subsequent drop in value of the pound and the growing threat from terrorism.

Aside from the redundancies involved, the Company had 27,000 customers on holidays abroad with 110,000 forward bookings at the point it ceased trading. So, what happens to those bookings? In the UK travel companies operate under the UK's Air Travel Organisers' Licence (ATOL), a scheme which protects money customers have paid in advance for package holidays. Unfortunately, as Low Cost Holidays is a Spanish company, it will not be covered under this scheme. Further to this the Company was not a part of travel trade organisations like Abta or Aito which would have helped protect customer's money. This creates a very worrying situation for customers of Low Cost holidays.

For those currently on Low Cost Holidays the Company have assured travellers their return flights have been paid for although there could be issues with travellers having to pay again. It is important to keep all the relevant documentation on this in case you can claim this money back.

For those with prospective holidays booked with Low Cost Holidays, it looks pretty bleak. If your flight has not been confirmed with your airline, you will have lost your flight. If you booked a hotel only holiday, the likelihood is you will need to repay for this. The best steps if you are affected by this is to phone the airline directly and see if your flight has been confirmed. If it hasn't, then in reality you may have to accept that your booking has been lost.

The complications have arisen because Low Cost holidays is a Spanish Company operating under EU and Spanish law. This means the UK legal system cannot protect the customer's money. Spain should have implemented the Package Travel Directive of 1992 which protects customer's money. It is now a waiting game to see if this system has been adopted. Furthermore, this is the first case of UK tourists being affected by a Spanish travel company.

The big question is can you get your money back?

There are only limited situations when this can occur. Low Cost Holidays recommend if you are looking to make a claim you consider reclaiming in the following ways:

  • If your holiday was booked by credit card and it cost more than £100.00 then through your credit card company you should be able to reclaim the money you paid for the holiday. This is because under section 75 of the Consumer Rights Act 1974 your credit card company are equally liable for your loss. This protection means if you are unsuccessful making a claim against Low Cost Holidays, you can reclaim the money through your credit card provider. This applies even if you have since closed your credit card account.
  • If your travel insurance covers financial failures then to make a claim. Although this is extremely rare, it is still worth checking your policy in case it covers these situations.
  • If Spanish law has properly implemented the 1992 Directive then package holiday costs should be refunded. Unfortunately for accommodation only or flight only bookings this won't be applicable. Low Cost Holidays are governed and regulated by Govern de les illes Balears, please check their website for further details (www.caib.es).
  • You could also make a claim to the liquidators Smith & Williamson. If the liquidators can find assets to give refunds then this could be a way to get a partial refund. It is unlikely that the liquidators will be able to consider all claims. Claims can be registered by emailing lowcosttravelspain@smith.williamson.co.uk.

If you need any further information on any of the above issues please do not hesitate to contact our enquiries team on 01603 693500 and we would be happy to help! Additionally if you need legal advice on liquidation or redundancy our enquiries department can give you direction and refer you on to the relevant department.

For more information on Clapham & Collinge Solicitors Business Support team and the services offered, please see our dedicated webpage following this link.