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The XL Leisure Group, which not only runs its own airline but also various tour companies, went into liquidation on Saturday, leaving 85,000 holidaymakers stranded abroad, some 200,000 facing the loss of their holiday and 1,700 staff without jobs. XL was the third largest travel company in the UK and is the biggest to go bust in twenty years.

It flew to 50 different countries, mainly in the Mediterranean, from 12 UK airports, although most of its flights operated out of Gatwick, Manchester and Glasgow. The company blames its demise on the rising cost of fuel, the general economic gloom and the inability to raise capital.

Although the CAA has been working hard to repatriate stranded Brits, many on specially chartered planes, those who had not booked a package holiday were less fortunate. With the ATOL protection not applying to separately booked flights and hotels, holidaymakers were very much on their own and many were facing hefty bills to fly back to the UK. Rival operators were accused of exploiting the situation, with huge hikes in prices for those trying to book alternative flights.

The demise of XL comes in the wake of trans-Atlantic carrier Zoom going into administration last month and the business-class carriers, Silverjet, Eos and Maxjet going out of business earlier this year. Meanwhile, Willie Walsh of BA warned that up to a further 30 airlines may go bust before the end of the year.

The Telegraph newspaper offered advice to holiday makers on how to safeguard their money, and gave details of the type of help that travellers could expect, depending on how they had paid and the insurance cover that they had taken out.

The Travel Insurance Guide has recommended a list of travel insurance providers who will cover you for the financial failure of your airline or accommodation provider. With the current economic climate, this is vital, so make sure you check it out before booking your essential travel insurance.