Is our package holiday doomed if the airline goes bust?

Q We are booked to travel to India on an escorted tour with Mercury Holidays in late September. The airline that they use is Jet Airways, who I see are having financial difficulties. Should the airline fail, where do we stand regarding our tour? Are Mercury likely to cancel and offer a refund or alternative holiday or will they try to source other flights, passing any cost increase on to customer? We are tied to the dates travelling due to work commitments.

Neil C

A Jet Airways is India’s second-largest carrier, after Air India, with daily links from Heathrow to Delhi and Mumbai and a busy domestic network. But it is in a real financial muddle, with debts approaching £1bn, claims against it for unpaid bills and some aircraft grounded by the lessors. As a result, hundreds of flights have been cancelled over the past few months.

Were I planning an independent trip to India, I would be circumspect about booking Jet Airways. Wisely, you have booked a package holiday. That means any financial wobbliness is the tour operator’s problem, not yours. If the airline were to fail, then Mercury would need to source alternative flights.

There are currently plenty of options. From the UK, nonstop departures on Air India, British Airways and Virgin Atlantic are likely to be heavily booked. But the Gulf-based airlines have many seats available and Mercury could rebook on these. For domestic flights, again there is plenty of choice – although if the Boeing 737 Max grounding continues to September there could be issues, as both Jet Airways and its more successful rival, SpiceJet, have the plane in their fleets.

To find seats, Mercury may have to spend more money. My interpretation of the UK’s Package Travel and Linked Travel Arrangements Regulations 2018 is that the company can increase the price by up to 10 per cent if its costs demonstrably increase. For any price rise beyond that, you would have the opportunity to cancel for a full refund.

Every day our travel correspondent Simon Calder tackles a reader’s question. Just email yours to s@hols.tv or tweet @simoncalder