Flyglobespan: Collapsed airline's passengers told to expect just 5% refunds on tickets

• Flyglobespan's collapse last year led to thousands being stranded

PricewaterhouseCoopers (PwC) said 8,000 of the Edinburgh-based company's customers would be left with virtually nothing because their bookings had not been protected.

PwC said average bookings were 350 to 400 each – which meant such passengers would get 20 back at most. They added that it could take two years to settle the claims.

These customers had booked flights that did not have the protection of being paid for with credit or Visa debit cards.

The news was broken to some 70 passengers and other creditors of the airline at a meeting in Edinburgh yesterday.

Among them, Robert Russel paid 300 for a flight to Lanzarote with his wife Tove. He stands to receive only 15.

Mr Russel, 67, a retired biology teacher, said: "I'm hoping to get some of it back, but I have my doubts. People were pretty resigned to the news. No-one was angry, but people have lost a lot of money – one gentleman there had lost 800 on his flights."

Retired couple John and Maureen Roberts, from Livingston, paid 356 for flights to their timeshare apartment in Lanzarote in June – and have now had to fork out a further 637 for replacement flights. Even though they paid by credit card, they will lose out because they booked through a travel agent, which is among the airline's creditors. An angry Mr Roberts said: "It's an absolute scandal. To receive just 5 per cent refund is diabolical."

The majority of nearly 40,000 passengers who lost bookings when the airline went into administration in December will receive full refunds through their payment cards. A total of 12 million has so far been paid back to customers in this way. Joint administrator Bruce Cartwright said the 5 per cent refund prediction was based on nothing being reclaimed from card processing company E-Clear, whose 35m debt to the airline was the immediate cause of its collapse.

A meeting of those owed money by E-Clear, which is also in administration, is to be held in London today.

Mr Cartwright said PwC was also investigating "contractual relationships between various parties" but declined to elaborate.

Ian Oakley-Smith, also of PwC, said they had found only "relatively modest" E-Clear assets so far. He said: "There is no obvious pot of gold just yet. We knew E-Clear had cashflow problems but were shocked to find there was no money at all."

He said the maximum Flyglobespan could reclaim from E-Clear – if it existed – was 20m.

Mr Cartwright said Flyglobespan – the trading name for Globespan Airways – collapsed with total debts of some 40m.

Other creditors include about 600 staff who lost their jobs.

Mr Cartwright said the airline had some assets still to be sold, including a Boeing 737, but nothing "of the magnitude of 35m".

A separate meeting for creditors of Globespan Group, the airline's parent company, will be held in Edinburgh on 1 April. Assets include its Edinburgh head office in Colinton, premises in Glasgow and hotels in Majorca.

The group's creditors include 9,000 package holiday customers who were protected by the industry's Air Travel Organisers' Licensing (Atol) scheme, which does not cover those with flights alone.

Mr Cartwright said Flyglobespan had been in difficulties for two years since making a 13m loss, caused by the airline launching several routes "it should not have done" and having problems with leased aircraft. He said it had been on course to break even, or make a small loss, last year, after recording a 1m profit in 2008.

Brian Potter, president of the Scottish Passenger Agents Association, said all passengers should be protected, regardless of how they had booked or paid – but this would require a 1 premium on tickets.

Flyglobespan operated from Edinburgh and Glasgow airports to Mediterranean holiday destinations and other routes, including Florida in the US.