What can Tigerair’s Bali debacle teach us about travel insurance?

Peter Terlato 17 January 2017

bored tired boy airport bags

Operating disputes are contentious situations for insurers.

Budget carrier Tigerair Australia continues to hold discussions with the Indonesian government after the airline was officially prohibited from flying to the island of Bali early last week, leaving hundreds of passengers stranded, confused and out of pocket.

Tigerair claims the ban was a result of "new administrative requirements" invoked by Indonesian authorities but a spokesperson for Indonesia's director general of civil aviation Agoes Soebagio told the ABC Tigerair was selling one-way tickets from Bali to Australia, a violation of its operating agreement.

Indonesian authorities granted the airline permission to operate services from Bali to Australia until Monday 16 January to help bring passengers home. Since then, all Tigerair flights to and from Bali have been cancelled until Friday 20 January. Tigerair will offer fee-free refunds for customers wishing to cancel flights booked until 13 February. The low-cost carrier has also temporarily stopped selling tickets to Bali.

However, the airline expects the issue to be resolved quickly and operations to return to normal.

Tigerair is a fully-owned subsidiary of Virgin Australia. Australia's second-largest airline will operate two replacement flights today (17 January) to assist in bringing marooned passengers home. Any remaining passengers will be re-accommodated on alternative services over the next few days.

While passengers whose flights were cancelled will receive a full refund, many travellers will likely shell out hundreds of dollars on additional accommodation, meals and other expenses. Tigerair said it would pay the difference and any extra costs for accommodation.

Passenger reactions

Australian Mark Anning told the ABC he was forced to cancel his family holiday because the alternative Tigerair offered was unaffordable and unrealistic.

Tigerair reportedly requested the family pay for business class tickets aboard Garuda Indonesia, promising to refund the $5,000 difference in four weeks.

Anning said he has been unsuccessful in receiving a refund on accommodation, while his insurer refused to honour his claim because the cancellation was initiated by the Indonesian government.

Another passenger said he was pleased with the alternative arrangements provided by Tigerair, travelling on Virgin Australia to Adelaide with an overnight stop in Brisbane, including accommodation.

What does this mean for those with travel insurance?

If you've been affected by these issues, try and get a refund through your airline for your flights. If you booked through a travel agent, contact them to see if they will be able to either refund or rearrange your travel plans. If you booked your travel yourself, contact your accommodation provider and do the same.

While you won't be able to make a claim for the costs of the cancelled airline tickets through your travel insurance, as these costs will be covered by the airline, your policy may have a provision that covers accommodation costs due to unforeseen circumstances. Contact the issuer of your policy to find out what costs they will cover as coverage varies between brands.

Administrative operating disputes are often contentious but there are a few areas where insurers may cover some expenses as a result of cancellations, delays or scheduling issues.

Insurers may provide limited coverage of additional expenses and costs for significant travel delays, typically a few hundred dollars per day over a limited period of time.

Some insurers offer compensation for missed, delayed and cancelled flights and accommodation.

The bottom line? Be sure to understand what your policy offers, and don't simply assume you'll be OK.

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