Are You Protected If A Major Travel Company Goes Under In Australia?

The short answer: well, not really.

Earlier this week, Thomas Cook -- one of the UK's longest-running tour operators, which once held several offices in Australia -- announced it had gone under, after more than 178 years of operation.

Some 600,000 people were stranded in countries across the globe. It not only left holiday-goers with no place to go, but more than 20,000 workers were suddenly without jobs.

Now, the travel operator has begun the complex process of trying to bring those people home. While most are trying to get back to the UK and Europe, others -- including, inevitably, some Australians -- have also been left stranded.

Thomas Cook tourists wait at counters to be repatriated in Crete. Photo: Getty Images

While it's a headache for tourists who have spent thousands on packaged dream holidays, most of them are protected under the UK government-backed scheme ATOL -- Air Travel Organisers' Licensing -- which protects holidaymakers if their tourist operators collapse.

The scheme, first established in 1973, requires ATOL holders -- such as Thomas Cook -- to pay a small fee for each traveller, to prevent travellers from being left stranded without assistance or financial loss if the company goes bust.

The money is held in a trust-managed fund and is only used to refund, repatriate, or reimburse travellers, for the cost of repaying the affected parts of the trip, ATOL said on its website.

The European Union has a similar policy, first established in 2015.

Senior lecturer in Tourism at UTS Business School, David Beirman, said the idea behind the scheme is that people will at least be able to get home from where they are and compensate them for the loss of their holiday.

An ATOL representative helps stranded tourists in Crete. Photo: Getty Images

"As you can imagine, this particular collapse is an absolute doozy," Beirman told 10 daily.

"Here we are talking about 150,000 Britons and 450,000 on the rest of the continent."

He said even with this protection, it's likely there will still be thousands of horror travel stories.

"There's going to be a lot of sad stories and naturally too it's very distressing, if you've been saving up your whole life to do this holiday and you find out this tour operator which should've been around forever suddenly collapsed, it's a dreadful experience," Beirman said.

Thomas Cook had been one of the UK's most trusted brands for decades, he said. Beirman said the collapse may be, in part, due to growing challenges including its attempt to be "all things for all people".

An airplane of Condor, the German airline subsidiary of the British travel giant Thomas Cook. Photo: Getty Images

Unfortunately for Australians however, no scheme similar to ATOL exists on our shores.

While Australians caught up in the Thomas Cook collapse may be covered by ATOL, in general, Australia has no government assistance to protect travellers from company insolvency.

"The problem we have here in Australia is that travellers are told to get themselves travel insurance, which is good advice, but most travel insurance companies don't protect against this," Beirman explained.

Photo: Getty Images.

He said only a dozen or so insurance companies were protected in the case of operators going under.

"If you want that kind of protection, you will pay a lot more for your premium, but the whole idea of insurance is peace of mind, and I wouldn't blame anybody if they do that."

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Angus Kidman, editor-in-chief of financial services comparison service Finder, said some insurance policies in Australia do cover company insolvency, but not all of them.

"It is something they would definitely have to check," Kidman told 10 daily.

He said the first step for any stranded traveller would be to check with their insurer, to see if they are protected for any expenses.

Kidman believes there is likely not a similar government-backed scheme in Australia because package holidays are not as popular here, so there hasn't been a need for that kind of protection.

But Beirman said with the Thomas Cook collapse, and the woes of two smaller Australian companies in recent years, that could change -- as more and more people try to better protect themselves.

PHOTO: Getty Images

"I think its more just a reminder that even if you have booked travel with a really big and reputable brand, there's always a chance that something might go wrong," Kidman said. 

Thomas Cook has begun the process of returning stranded travellers back home.

Qantas has been approached to help in the process, but in a statement to 10 daily said that they have reached out to determine how they might be able to assist.