Could a Thomas Cook-like travel nightmare happen in the US? Here's what you need to know.

NBC News Lifestyle 1 month ago

On Monday, the British travel firm Thomas Cook collapsed, leaving hundreds of thousands of travelers stranded around the globe. The 178-year-old company, which ran hotels, resorts and airlines in 16 countries, had been experiencing financial turbulence for some time, and, unable to secure funding to repay its creditors, declared bankruptcy. The legacy brand’s demise may have been inevitable, but for so many people now left desperately trying to get back home, the end of Thomas Cook feels nothing if not terribly abrupt.

“It’s not a surprise that Thomas Cook went under, but what is surprising to us is how suddenly it all just stopped,” Ben Mutzabaugh, senior aviation editor, The Points Guy tells NBC News BETTER.

Mutzabaugh asserts that though the Thomas Cook affair is deeply disconcerting, this kind of situation isn’t likely to occur in the United States.

“The collapse of an outfit like Thomas Cook just won’t happen here. In the U.S., we don't have any major airlines like Thomas Cook, which was kind of an anachronism in our modern economy," says Mutzabaugh

“We do have tour operators here that bundle travel, but it’s a little bit different in structure,” Mutzabaugh explains. “Those operators tend to combine packages — hotel and tours — with airfare, but the airfare is provided by a stand-alone and separate airline. Thomas Cook had all of those things under one roof. It didn’t own the hotels, but it leased/owned the planes under the same roof as travel agents who put together the hotel and tour packages. Think of it as something like Carlson Wagonlit or AAA, but with airplanes, or, for the internet era, Priceline or Expedia — except if they also owned their own airplanes and sold their own tickets. That’s more or less what we had with Thomas Cook's model.”

Additionally, Mutzabaugh says, “none of our major airlines are operating under deep stress — all are fairly profitable.”

Another distinguishing factor is that bankruptcies play out differently in the U.S. than they do in the U.K. and other countries. Even if a U.S.-operated airline were to tank, it wouldn’t just halt operations without some kind of plan in place.

“We have seen airlines declare bankruptcy in the U.S. and continue to fly,” says Mutzabaugh. “[Our system] is pretty well-regulated around what airlines owe you or not if they go out of business.”

Sara Rathner, travel and credit cards expert at NerdWallet, adds that though rare, airlines have closed up shop in the U.S. “seemingly overnight”, and stresses that it’s important for travelers to take necessary measures to ensure they won’t risk getting stuck abroad should such an unlikely scenario occur.

What steps can consumers take to protect themselves should their airline nosedive while they’re traveling? It comes down to one surprisingly simple move: Book with a credit card that offers travel protection.

“When you book future travel, book everything with a credit card thatoffers coverage if your trip is canceled or delayed, which can help soften the financial blow of your plans falling apart,” says Rathner.

Mutzabaugh also recommends booking with a credit card that touts travel coverage. Doing this is not only crucial when facing the “the really high stakes failure of an airline, which again, is unlikely in the U.S.,” Mutzabaugh says, it’s common sense for more run of the mill travel snafus.

“If your flight is delayed or canceled and you have a pre-paid hotel you can’t make it to, your credit card will reimburse you for some or all of that amount,” says Mutzabaugh.

The catch? Credit cards that offer premium protection in the case of a travel emergency tend to tout a hefty annual fee.

Both Rathner and Mutzabaugh recommend the Chase Sapphire Reserve Travel Rewards as a credit card with robust travel protection coverage. The annual fee for this card is $450.

“Even people who travel just two to three times a year should definitely consider this credit card,” says Mutzabaugh. “You can find some with cheaper fees, but with this one, you can earn back a $300 [travel credit]. It’s a very popular card.”

As we’ve already stressed, a Thomas Cook situation isn’t likely to go down in the U.S., but should you be left stranded by an airline for any reason, here’s what to do, courtesy of Rathner:

“Contact the airline and see what they’re doing to rebook passengers. They may be able to get you on another flight. If the airline isn’t able to rebook you, you can try three things with the credit card you used to book your travel:

When booking air travel online, we typically have the option of adding insurance to our trip. A scroll through the fine print reveals that usually, these insurance plans are teeming with loopholes that could leave you uncovered, rendering them a waste of money in many cases. The insurance sold by American Airlines, for instance, won’t cover a trip cancellation due to a preexisting medical condition, pregnancy or childbirth, or if there’s “any problem or event that could have reasonably been foreseen or expected” when you purchase the ticket, nor will it cough up a reimbursement in the event that a natural disaster interrupts your travel plans.

But if you’re worried that airline is going to go out of business while you’re traveling, then definitely get that travel insurance either from the airline or from an independent provider. Just make sure it includes bankruptcy coverage.

“Travel insurance that covers bankruptcy and insolvency can help,” says Rathner. “Be sure to save receipts for every trip-related purchase in case you need to file a claim.”

Want more tips like these? NBC News BETTER is obsessed with finding easier, healthier and smarter ways to live. Sign up for our newsletter and follow us on Facebook, Twitter and Instagram.

Source link
Read also:
The Guardian › Finance › 1 month ago
Failure of world’s oldest travel company leaves bosses facing tough questions over their pay and performanceFormer Thomas Cook bosses under fire for excessive payUK ministers accused of sealing Thomas Cook’s fateMonday: Thomas Cook travel chaos...
The Sun › Traveling › 1 month ago
THOMAS Cook staff were left in tears after finding out their jobs were saved when Hays Travel snapped up 550 stores. Hays Travel has agreed to buy all Thomas Cook stores, saving up to 2,500 jobs that were lost when the travel group collapsed. In a...
Business Insider › Lifestyle › 1 month ago
Thomas Cook, the once-illustrious British travel company and airline, declared bankruptcy early Monday morning. Before failing to secure $249 million in emergency funding and leaving 600,000 travelers stranded, Thomas Cook was one of the oldest and...
The Guardian › Finance › 1 month ago
Holiday firm has faced costs due to grounding of Boeing 737 Max and Brexit uncertaintyThe boss of travel company Tui has said it will fly home customers who are booked on Thomas Cook flights.The collapse of Thomas Cook, the world’s oldest travel firm...
Reuters › Finance › 1 month ago
More than half a million holidaymakers were stranded around the globe on Monday following the collapse of Thomas Cook , the world's oldest travel firm.
The Sun › 1 month ago
HAYS Travel has agreed to buy 555 Thomas Cook stores and has confirmed it will also re-employ some former employees. David Chapman, Official Receiver, said: “I am pleased to announce we have reached an agreement with Hays Travel to acquire Thomas...
The Sun › Traveling › 1 month ago
YOU can still book Thomas Cook hotels despite the UK tour operator going bust last week. The holiday provider’s new adult-only Cook’s Club and Casa Cook resorts are still available for bookings on the website. The new hotels were launched in a bid...
The Sun › Traveling › 1 month ago
A NUMBER of Thomas Cook stores have re-opened today after being bought out by travel company Hays Travel. Five of the collapsed firm’s shops opened to the public this morning. Hays Travel confirmed they had bought the entire retail chain from the...
The Sun › Traveling › 1 week ago
FAILED holiday firm Thomas Cook could be back soon as an online-only travel agent. The news comes a little over a month after the travel giant’s collapse, which sparked the biggest repatriation since World War Two. Fosun, the Chinese company that...
The Sun › 1 month ago
THOMAS Cook’s collapse is thought to leave Tui as front-runners in the package holiday business, experts claim. And travel analysts at Bernstein say that Tui is a “far more resilient business” than Thomas Cook, thanks to stable cash flows from...
Sign In

Sign in to follow sources and tags you love, and get personalized stories.

Continue with Google