750,000 face fight for a flight refund in Monarch chaos

THREE quarters of a million Monarch customers face a fight to get their money back, it emerged last night.

The stricken airline’s administrators KPMG warned just 10 to 15 per cent of Monarch’s 860,000 customers are protected by an official compensation scheme – far fewer than previously thought.

The remainder will either get nothing or have to battle with their credit card company or travel insurers to get their money back.

The airline’s collapse on Monday triggered the biggest ever peacetime repatriation of passengers stranded abroad. It had been thought many more would be protected by the Air Travel Organiser’s Licence scheme (Atol), which provides compensation to travellers when firms go bust.

But Monarch decided to stop offering Atol cover, which costs £2.50 per person, on flight- only bookings last December in a desperate bid to cut costs. This means only those who booked a package deal are protected – although the Civil Aviation Authority, which runs the Atol scheme, admitted they may have to wait until Christmas to get their money back as they will have to fill in lengthy forms.

Those who are not Atol protected and who booked flights costing more than £100 using a credit card can claim a refund under the Consumer Credit Act, but that too is a lengthy process.

Those who bought cheaper flights or used a debit card may have to rely on their travel insurance, if they have it – but many policies don’t pay out if an airline goes bust.

Meanwhile Monarch’s chief Andrew Swaffield had to defend sending staff a cheery email telling them to ‘have a good week’ just seven days before its collapse. He insisted he still thought the airline could be saved at that point.

The row intensified further yesterday as it emerged Monarch has apparently failed to pay hotels with the money it received for package bookings, meaning some customers have been hit with demands to settle hotel bills they thought they had already paid.

Holidaymakers waiting to be repatriated say they have been threatened with eviction and even arrest by hotel owners.

Last night a source said hotels are furious at being left out of pocket and that some have not been paid for several months. The CAA has phoned all 2,200 hotels used by Monarch to say they will cover any unpaid costs via Atol. But some still seem to doubt they will receive money.

Roland De Gouveia, 41, from Reading, said he and his friends have been told to pay £9,000 by a hotel in Lanzarote or they will be locked out of their rooms.

Mike Heald, 36, from Manchester, who is staying with his family at another hotel in Lanzarote, said Monarch had not paid the hotel the £3,300 he paid them months ago and that he was told staff would call the police if they left without paying.

Monarch launched a major sale of cheap flights on Friday, less than two days before its collapse. Last night a member of the Commons transport committee called for an investigation into the ‘appalling behaviour’ of both Monarch and Ryanair, which has cancelled more than 20,000 flights.

Labour MP Graham Stringer said: ‘It appears that Monarch has come very close to trading when insolvent – when they had absolutely no chance of delivering the goods they were selling. It looks like Monarch has been highly irresponsible. Package holiday customers who are being hit with hotel bills will be very angry indeed.’

Last night James Daley, founder of consumer website Fairer Finance, said CAA had to accept some share of the blame, adding that it ‘seems to be a failure of communication on the CAA’s part’.

Although the CAA has to monitor the financial strength of airlines, a source said it does not drill down into their relationships with individual suppliers, including hotels.

A CAA spokesman said it has given ‘financial guarantees’ to all hotels, and that any holidaymakers asked to pay again should do so and then later claim the money back from the CAA.

KPMG said it was not yet able confirm the ‘ extent of any arrears to specific hotels’.

By last night more than 23,000 of the 110,000 customers stranded abroad were expected to have been repatriated.

‘Highly irresponsible’