What Happens When Your Flight Gets Canceled Because Of An Airline Bankruptcy?

Few things are as frustrating as messed up travel plans. Once you look at the departures board and realize your flight has been delayed, it's groans all around. But even delays long enough to warrant venturing out of the airport to sightsee are better than a cancellation. And even then, some kinds of cancellations are better than others. If an airline cancels a single flight in the course of normal operations, customers are guaranteed a refund – a U.S. airline, that is, not an airline like the bankrupt flyEgypt. In the case of bankruptcy, there's not even a guarantee of that.

The chain of events following an airline declaring bankruptcy is immensely complicated. Outcomes depend heavily on inner business workings that customers will never see. Individual flights might get canceled, or they might not. An airline might get liquidated bit by bit, reorganize, gradually shrink its fleet, and eventually cancel less profitable routes. This was the case with Spirit Airlines, who filed back-to-back Chapter 11 bankruptcies in November 2024 and August 2025. Then, it cut nearly 100 aircraft from its fleet and removed 11 cities from its routes. But, you can still book flights with the carrier. Florida-based Silver Airways fared worse because no one acquired it. The airline declared bankruptcy in December 2024 and simply stopped all operations by June 2025.

If your flight doesn't get canceled due to bankruptcy, then count yourself lucky and enjoy your trip. If your flight does get canceled, you have to deal with frustration, lost funds, and last-minute communiqués to parties involved in the travel plans, like Airbnb hosts. As for your refund, it relies on protections afforded by the 1974 Fair Credit Billing Act. But even then, you need to have used a credit card to book your flight.

If we could boil down our advice regarding flight refunds resulting from bankruptcy, it's this: Don't expect your money back immediately. After declaring bankruptcy, a business' value needs to be appraised, meaning that it might want to hold onto its assets — and this includes your non-refunded flight ticket costs. As a result, you might get a voucher instead of a refund. Or, you might get neither.

If you purchased your flight using a credit card, you might be protected under the Fair Credit Billing Act, so long as you bought your ticket with a credit card. Per the National Consumer Law Center, paragraph 1666d of the Truth in Lending Act requires creditors to "refund any part of the amount of the remaining credit balance, upon request of the consumer" and to "make a good faith effort" to do within six months. This means that refunds come from your creditor, not the airline. It also means that if you used cash or a debit card, your refund relies solely on the goodwill of a flagging business.

However, a "good faith effort" doesn't guarantee a refund within six months. In fact, even to get the refund, the Federal Trade Commission recommends sending a physical letter within 60 days to your creditor's inquiries/disputes department. Some creditors allow you to do this online or via phone, but a physical letter affords maximum protection. Then, the creditor has to acknowledge your letter in 30 days and refund you within 90. At the end of this winding, maddening road, your refund awaits.