Contingency plan in the event of bankruptcy or termination of operation

Following are information on the Icelandic Tourist Board´s contingency plan in the event of bankruptcy or termination if operation of the seller of package travel and linked travel arrangements and the rights of their clients.

Further information can be found here on the website. Inquiries can be directed to the Tourist Board‘s online chat and the e-mail mail@ferdamalastofa.is.

Sellers are obliged to have sufficient bankruptcy guarantee

Sellers of package travel and linked travel arrangements are obliged to hold a valid licence, according to the Act on the Icelandic Tourist Board no. 96/2018. According to the Act on Package Tours and Linked Travel Arrangements no. 95/2018, sellers must have sufficient bankruptcy guarantee.

What does the bankruptcy guarantee of a seller entail?

The guarantee becomes active in case of the termination of operation or bankruptcy of a seller.

Bankruptcy guarantee for sellers of package travel

The bankruptcy guarantee shall cover all travel related services that are a part of a package travel contract and that are not performed as a result of the seller’s bankruptcy or termination of operation. 

  • Refund of payments for package travel that has not taken place, irrespective of whether it has been paid in part or fully.
  • The repatriation of travellers if transportation is a part of the package travel contract.
  • Enabling travellers to complete their travel in accordance with the original package travel contract. In that case the guarantee is used to pay for the travel related services that are a part of the contract and would otherwise not be provided. There is no obligation to pay for extra services purchased by the traveller. In the event that the guarantee has been used to enable a traveller to complete his travel according to the original package travel contract no further claims will be accepted.
  • The refund covers direct financial losses only, not possible inconvenience or harm.

In the event that a claim is made against the guarantee no interest or other costs incurred in making the claim will be paid.

Guarantee for sellers of linked travel arrangements

  • Refund of all payments made, by travellers, to the seller who facilitates linked travel arrangements.
  • If the seller who facilitates linked travel arrangements is also responsible for passenger transport the guarantee must also cover the repatriation of travellers

What do travellers have to do to get a refund?

Passengers must make a claim against the sellers guarantee to get a refund for the payments they have made for package travel or if applicable linked travel arrangement. The claims are to be made online through the Icelandic Tourist Board‘s service portal

The legal rights of travellers who have only bought a single airline ticket

The legal rights of travellers who buy a single airline ticket is different from the legal rights of travellers who buy package travel or linked travel arrangement since the sellers are not obliged by law to have bankruptcy guarantee comparable to that for sellers of package travel and linked travel arrangement.

The traveller can only make claims into the bankruptcy estate for the costs that he or she may incur as a result of the bankruptcy or termination of operation of an airline.

  •  A traveller who is abroad must return to his home country at his own cost unless the operation is carried on by the bankruptcy estate or the estate overtaken by another airline.
  • If the travel is paid in full or part but has not yet been made the traveller can only make a general claim against the bankruptcy estate.

The traveller can check whether his or her credit card company will refund the ticket if the payment was made with a credit card.

The process of handling bankruptcy- and termination of operation of insurance (guarantee) bound operations

When the Icelandic Tourist Board is informed of bankruptcy or termination of operations the Icelandic Tourist Board publishes an announcement to that effect here on the web.

Inquiries can be directed to the Tourist Board‘s online chat and the e-mail: mail@ferdamalastofa.is..

  • The Icelandic Tourist Board gathers information on tours in progress, the status of the tours in question and the travellers concerned, seeks cooperation with airlines and decides on the repatriation of travellers if applicable. Travellers are informed about the state of affairs and the Tourist Board‘s decision.
  • When airline travel is a part of a package travel and linked travel arrangement the Icelandic Tourist Board seeks the most economical way of repatriation of travellers from abroad and seeks cooperation with airlines. There are two possible options, either travellers repatriate at their own cost or the Icelandic Tourist Board arranges for their repatriation.
    • Travellers currently abroad
      Travellers pay for the cost of repatriation and can make a claim against the seller‘s bankruptcy guarantee. Travellers should seek to travel economically. The Icelandic Tourist Board will seek cooperation with airlines and seek to make repatriation of travellers easy in terms of priority seats, favourable pricing, travel route etc.
    • Travellers within Iceland
      Travellers arrange for the travel home at their own cost. They can make a claim against the seller‘s bankruptcy guarantee. No further intervention will be made by the Icelandic Tourist Board.
    • Repatriation of travellers
      When the Icelandic Tourist Board arranges for repatriation the travellers can make no further claims. If travellers decide to take advantage of repatriation and hence cut their travels short they can make a claim against the bankruptcy guarantee for the services that have not been provided according to the package travel contract. If the travellers, on the other hand decide not to take advantage of the repatriation arrangements and pay for the homebound travel and other costs involved they can make a claim against the guarantee.
  • The Icelandic Tourist Board publishes a call to present claims in „Lögbirtingarblaðið“, a national newspaper and on the Icelandic Tourist Board‘s web. The cost of publishing the call to present claims is paid from the guarantee´s amount
  • Those who think they have legal claims against the sellers bankruptcy guarantee can make those.
  • A written declaration of claims shall be submitted within 60 days of the publication of the call to present claims. Claims are to be made online through the Icelandic Tourist Board‘s service portal.
  • The claims shall be accompanied by necessary evidence to prove the existence of a claim e.g. travel tickets or receipts for payments. The Icelandic Tourist Board determines what data provide sufficient proof of the existence of a claim
  • After the time limit for present claims has passed the Icelandic Tourist Board inspects the presented claims, approves or refuses claims and formally informs the claim holder about the Icelandic Tourist Board´s decision according to the Act on Administration Procedures Act.
  • The Icelandic Tourist Board pays the approved claims from the amount of the guarantee´s amount to the claim owners
  • The decisions of the Icelandic Tourist Board can be appealed to the Ministry of Industry and Innovation, Skúlagötu 4, 150 Reykjavík. Appeals must be made within is 3 months.

In addition to the above travellers are advised to check their insurances with insurance companies and credit card firms.