Insolvency activity in the airline business seems to be increasing in 2008, a yet another airline files for bankruptcy. Oasis Hong Kong Airlines cancelled all flights as insolvency hit and it fell into liquidation. The long-haul budget carrier is the fourth of its kind to suffer insolvency activity – little comfort for the thousands of stranded passengers in Hong Kong, Vancouver and London as a result of the airline's collapse.

Budget Airlines at risk from Insolvency

The global credit crunch means fewer people are booking flights or taking expensive holidays abroad, and businesses are cutting back on unnecessary travel expenses. But it isn't just the struggling wallets of airlines' customers that is resulting in insolvency; fuel prices have shot up in the current economic decline, leaving those airlines that operate on a low margin vulnerable to insolvency.

Insolvency warning for Airlines

Expensive jet fuel prices have seen several airlines fall into insolvency and collapse in 2008 – America which has been hardest hit by the credit crunch saw three airlines close: Aloha Airgroup, ATA Airlines and Skybus Airlines. And industry experts warn that there could be more to come as the credit crunch and high fuel prices show no sign of abating. The International Passenger Protection group are one of the leading suppliers of default and insolvency insurance to the travel industry. They say nine airlines have collapsed in the first quarter of 2008 compared to five in the whole of 2007.

Airlines under Financial Pressure

The International Passenger Protection director Paul McLean told the travel press: "There are many factors that can put pressure on an airline's finances and at the moment the current credit crunch and highest ever oil prices are simply reversing the hard efforts of many airlines who went back into profit after cost cutting exercises subsequent to September 11th. Unfortunately we expect several other airlines to come into the same difficulties during this difficult period."
As airlines suffer insolvency problems and file for bankruptcy, fliers are being offered insurance to protect them if the flight they've booked does end up being cancelled.

Speak to Varden Nuttall About Insolvency

Varden Nuttall has been established for over 15 years and is dedicated to helping people in financial difficulty find a debt management solution through an Individual Voluntary Arrangement (IVA). Employing 90 people, including trained and skilled IVA administrators, we are one of the largest IVA companies in the UK and handle over 3% of all IVA applications. To find out more about the company, or to make an appointment to talk about putting an IVA in place, call us today on 0870 977 8100 or fill in our online enquiry form.