NATS failure exposes a travel insurance protection gap

The failure of the UK’s air traffic control system in September has once again demonstrated how quickly a technical problem in one part of the aviation infrastructure can become an international travel disruption event.

More than 330,000 passengers were affected by the National Air Traffic Services (NATS) failure on 8 and 9 September, according to Airlines UK, with more than 155,000 passengers facing cancelled flights and around 180,000 experiencing delays.

For the travel insurance industry, however, the incident raises a more complicated question than simply how many resulting claims will be made.

It exposes a protection gap between the assistance airlines are legally required to provide, and the disruption costs that travel insurance policies are actually designed to cover.

Falling between two systems

The UK Civil Aviation Authority (CAA) has indicated that disruption directly caused by the NATS outage – including subsequent knock-on disruption – is likely to be considered an ‘extraordinary circumstance’.

Under UK passenger rights rules, airlines must still provide affected passengers with care, including meals and refreshments where appropriate, accommodation when an overnight stay becomes necessary and rerouting or refunds following cancellations under extraordinary circumstances.

However, where disruption results from these circumstances outside an airline’s control, passengers are unlikely to qualify for the fixed financial compensation they might receive when an airline itself is responsible for the delay and the traveller subsequently misses another element of their holiday.

Travel insurance might appear to provide the obvious second line of defence to compensate for lost expenses. In practice, however, the position is considerably less straightforward.

The two aspects of cover under scrutiny are travel delay benefits (frequently subject to minimum delay periods, specified insured events and relatively modest fixed benefits), and cancellation and abandonment cover – which may require disruption to continue for considerably longer before becoming operative.

Additional costs can also fall outside the scope of cover, particularly when the insurer considers another organisation – such as an airline – responsible for meeting them.

The NATS event highlighted cover variations even among UK insurers.

Admiral, for example, offers Enhanced Trip Disruption cover that specifically includes certain airspace closures, air traffic control restrictions and technical problems. Post Office travel insurance similarly offers enhanced Trip Disruption protection incorporating events such as failure of air traffic control or airport computer systems.

This means two travellers on the same cancelled flight could potentially experience very different insurance outcomes depending on the product they purchased.

International variations in travel disruption definition

Within the European Union, air traffic management decisions can similarly qualify as extraordinary circumstances under passenger rights rules. Airlines can therefore avoid fixed compensation where they can demonstrate the disruption resulted from extraordinary circumstances and could not have been avoided through reasonable measures.

In the US, the relationship between airline responsibility and insurance is different again. Travellers do not have an equivalent universal statutory compensation regime for flight disruption, increasing the potential importance of trip delay insurance. Some US travel insurance products treat a common carrier delay itself as an insured trigger, potentially allowing the policy to respond regardless of whether the underlying cause was within the airline’s control.

Canadian policies can also take a cause-based approach. Depending on the product, pre-departure cancellation may only respond to specified events, while travel delay benefits once a journey has begun can provide broader protection for additional accommodation, meals and transportation.

Australian consumer guidance similarly warns travellers that transport delay benefits vary substantially between policies, with waiting periods commonly ranging from six to 12 hours and additional expenses not necessarily covered in every circumstance.

There is therefore no consistent international answer to the question: ‘Am I insured if air traffic control fails?’