Travel insurance: Is it a fiddle when Rome airport burns?

The man who pays his way

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The Independent Travel

British travellers hoping to go to southern Europe had a miserable time earlier this month. A pilots' strike at TAP Portugal reached its unhappy conclusion, plunging the cash-strapped national airline into a deeper crisis and disrupting tens of thousands of passengers who were booked to Lisbon and beyond.

Over in Italy, a fire devastated Terminal 3 at Rome's main airport on polling day (ours, not theirs). Thankfully no one was hurt but British Airways, easyJet and all other airlines using Fiumicino airport were told to cancel a proportion of flights until full capacity is restored.

Whether you are due to fly to the Italian or Portuguese capital, the financial impact of a cancelled flight depends on how you booked your trip. Debra McAllister, from Essex, is one of many passengers whose flight to Rome was cancelled (and promptly refunded) by easyJet. Alas, she had bought the hotel and flights separately.

Losing out with pre-paid travel arrangements is easy, as I found on a trip to Vienna with Buzz (the Stansted-based low-cost airline that is now, God help them, part of Ryanair). The captain turned the plane around over Belgium because of a technical problem. The airline refunded the fare, but I was still £100 out of pocket. My pre-paid room in the Austrian capital was ready and waiting – I just couldn't reach it.

Ms McAllister had invested much more: a whacking €678 for a two-night stay in Rome. She asked: "The hotel, booked through, refused to cancel due to lack of notice, and is charging the full amount. Our insurance will not refund us. Must we lose our money through no fault of our own?"

Sadly, yes – because if your insurance does not cover this unfortunate combination of circumstances, no one else will. I asked easyJet whether it would make good such losses, and was told: "We are unable to provide compensation against pre-booked overseas accommodation which is not part of easyJet Holidays."

A fiddle as Rome airport burns? No. The airline, the hotel and are sticking to the rules that applied when Debra booked. If you are tempted to book separate flights and accommodation for a city break, choose a property that allows cancellations up to the evening of arrival. You might also book direct with the hotel, rather than through an intermediary. With Debra's inadvertent no-show, stands to earn €100 in commission.

Package up your travels

For gold-plated consumer protection, package up your travels. It's easy: just buy flights and accommodation in a single transaction from a tour operator. And how will you recognise one of those? Well, it could be a big company such as Thomson, Thomas Cook or Expedia; an airline's tour operation, such as BA or Virgin Holidays; or a smaller specialist like Sunvil or Kirker Holidays.

The Package Travel Regulations 1992 provide an excellent cure for insomnia. But among the hundreds of clauses is a simple obligation: the tour operator must deliver the holiday you booked and to fix almost any aspect that isn't right apart from the weather. So, if a pilgrimage to Rome is grounded by an airport inferno, the operator must ideally sort out a replacement flight and if that's not possible give a full refund.

Don't confuse the coverage you get under the Package Travel Regulations with Atol protection. The Atol scheme is but a small element of the consumer protection you acquire when you buy a package holiday. An Atol certificate is effectively an insurance policy for the risk that your holiday company might go bust. Last year, nearly 11,000 package holidaymakers in that position got full refunds, and were recompensed to the tune of £3.8m. But that should be set against the 22m holidaymakers who stumped up the £2.50 fee for coverage but didn't need to make a claim.

Holidaymakers are much more likely to call upon the other benefits. The most extreme current example concerns British travellers who booked to go to Nepal before the dreadful earthquakes. When the Foreign Office advises against travel, as it currently does for the Himalayan nation, tour operators cancel imminent departures and issue full refunds. But people who organised flights and ground arrangements separately – typically finding a cheap flight and a trek with a local company – may find it impossible to reclaim their money. Some airlines and/or agents are saying, in effect: "The Kathmandu flight is operating. The fact you don't want to be on board isn't our problem."

Check before you click

Online travel agents such as On The Beach and Travel Republic do not sell package holidays, as the front pages of their websites stress. Happily, holidaymakers putting together trips through such "OTAs" could soon get the same protection.

The European Parliament believes that if a holiday looks like a package, with flights and hotels booked in a single transaction, it should come wrapped in proper package protection. New rules won't be in effect until the summer of 2017 at the earliest. Until then, if you're unsure, ask if it's a package before you commit. As they used to say in Rome: caveat emptor – buyer beware.