If Airline Goes Out Of Business ?

[wee-haggis]

In the USA ,is it the case that when a US airline goes bankrupt or out of business, the other airlines (if requested)are obliged to offer you a replacement flight to and from the same locations ?

 

[Obi-Wan Pinobi]

I know many of the legacy carriers (Delta, Northwest, American, United, etc) have arrangements to accomodate passengers. For example, if a Delta flight is cancelled due to something like mechanical problems and they can not accomodate all the passengers on later Delta flights, then some passengers can be boarded on another airline.

I'm not sure if that extends to an airline going out of business, though. Someone correct me if I'm wrong, but the last major airline to shut down completely was Eastern, and that was about 15 years ago. I know it's been a while since an airline the size of a Delta or an American has ceased operations.

 

[bicker]

Braniff, actually.

Here's a full summary of what would likely happen if a major airline ceased operations:

(oops ... forgot the link... here it is...)

http://www.hasbrouck.org/articles/bankruptcy.html

 

[UMTerp]

I'm wondering the same thing about Independence Air. It looks likely that they will go out of business. I don't know what's going to happen about my tickets. My current plan is to buy backup tickets on another airline (SW).

Good luck!

UMTerp

 

[bicker]

Apparently, the Practical Traveler web site is down today, so here are some highlights from a copy I downloaded a few days ago.

What happens to ticket holders if an airline goes out of business or is liquidated through bankruptcy? Ticket holders are considered "unsecured creditors". As such, they are among the last people to get paid, if there is anything left after all the secured creditors (such as aircraft leasing companies) are paid. In most recent airline liquidations, ticket holders have gotten nothing. At most, they would get pennies on the dollar, at least if they bought their tickets in the USA.

If a bankrupt airline in the USA goes out of business, will other airlines have to honor their tickets? Yes, but only other USA-based airlines flying exactly the same routes (which there aren't in many cases), only if space is available (which it probably won't be in many cases), and only until 18 November 2005.

 

[Lewisc]

If you used a credit card to buy your airline tickets you can do a dispute to obtain a refund. In some cases the 60 day rule may be waived. I'm not sure what the rules are if you used a debit card. The credit card companies sometimes delay paying the airlines until after (or at least close to) the flight in the case of airlines that are in financial problem.

 

[Obi-Wan Pinobi]

Thanks, Bicker. Eastern stuck in my mind because I was living in GA when they went under and that was big news there. I've heard of Braniff but wasn't sure when they went out of business.

The quote about "exactly the same routes" sounds like it's more advantageous for hub-to-hub travel -- Atlanta (Delta's hub) to Detroit (Northwest's hub) for example.

I hope that link is back up soon. I'm curious to read the article.

 

[n2mm]

I'm wondering the same thing about Independence Air. It looks likely that they will go out of business. I don't know what's going to happen about my tickets. My current plan is to buy backup tickets on another airline (SW).

Good luck!

UMTerp

I used FLYI for my last 4 trips, but booked United for my next 2 trips. United is having a great sale out of Dulles if you are flying by Feb. I bought my Feb tickets yesterday for $116 rt. The Wash. Post had an article about FLYI in the travel section last Sunday. It said if you have a trip planned before Jan. 4, you might be OK, if later, you need to start looking for another carrier. It appears that FLYI is not interesting in selling as much as they are interested in liquidating their company. I didn't like the sound of that. The article also said that if you buy any tickets for an upcoming trip, you need to use your credit card, just for the reasons other posters have mentioned. I didn't want the added stress for my December trip, so also bought my tickets on United.

 

[PlaneJoy1]

Airlines will normally take your ticket on a "space available" basis. They are allowed to charge a "fee" for this service (admin. fee or something). Usually $50-$100 per ticket.

As far as FlyI is concerned, make sure you are using a credit card. It's unlikely you'll get anything back from them through the courts if they cease operation.

 

[Lewisc]

Airlines will normally take your ticket on a "space available" basis. They are allowed to charge a "fee" for this service (admin. fee or something). Usually $50-$100 per ticket.

As far as FlyI is concerned, make sure you are using a credit card. It's unlikely you'll get anything back from them through the courts if they cease operation.

According to Bicker's quote that particular law is set to expire 11/18.

 

[n2mm]

According to Bicker's quote that particular law is set to expire 11/18.

You are so correct! I just read that in the paper about 2 weeks ago (again, the Wash. Post, travel section--as I've been keeping my eye on FlyI issues).

 

[CarolA]

I would expect that the airlines will continue to honor on a space avaiable. The big risk now is DL and I don't think they would shut down immediately. In that case DL would have to "write you over" to another carrier. The "bankruptcy" rules don't take effect for a strike only a total shutdown.


(Now, I am not sure DL can survive a strike so...)

 

[bicker]

I think we can assume that a strike == a shutdown. That mostly means, though, that a strike is all that much less likely.

Regardless, the law does expire this month, but Congress is thinking about extending it for a third time. The extension is tacked on as an amendment to HR 3058, so it may or may not happen. The sense of urgency seems to be gone, given that the judiciary has been generally unwilling to allow a major carrier to go out of business: If they didn't let #6 US Airways fail, despite the fact that all rational sense said they should, they're surely not #3 Delta Airlines fail.

Airlines will probably not honor the law if it is not in effect. They've already made it clear that they won't honor the law in the manner the DOT thinks they should even if it is in effect. (The law doesn't say how much the airlines could charge displaced passengers for accommodation -- it just says that the airlines can charge. The DOT issued some opinions about it, but the airlines made a very big deal about how little the DOT said they could charge displaced passengers under the law. The DOT revised their guidelines from $25 to $50. But the airlines will still likely charge more than that.)

 

[Lewisc]

Customers think the airlines should just honor their ticket plus a small fee.

Without an extension of the law the airlines might just offer a discounted fare. Charge something like an advance purchase fare as opposed to the normal walk up, full fare. Let the passengers fight with their credit card company and the bankruptcy court for their refund. Jet Blue was offering passengers a $35 discount off the normal fare.

The profitable airlines lost money matching the loss leader fares or lost passengers when they didn't match. Really a lose lose proposition. I don't think they have reasons to be overly generous accommodating passengers that grabbed a below cost fare. Those are not the type of passengers that would be expected to reward the airline for future business.

Airlines will probably not honor the law if it is not in effect. They've already made it clear that they won't honor the law in the manner the DOT thinks they should even if it is in effect. (The law doesn't say how much the airlines could charge displaced passengers for accommodation -- it just says that the airlines can charge. The DOT issued some opinions about it, but the airlines made a very big deal about how little the DOT said they could charge displaced passengers under the law. The DOT revised their guidelines from $25 to $50. But the airlines will still likely charge more than that.)

 

[bicker]

Exactly. You may see some strategic targeting, but they won't "open their hearts" (and their planes) on a wholesale basis.

 

[CarolA]

The other problem is "space avaiable" Lately planes are FULL! The airlines have cut back overall on the number of flights. Plus you have travelers like me on business who are willing and able to pay for the seat thus making it less likely you will get on flying standby.

And on this board we always have a large number of flyers who refuse to be seperated from thier kids, spouse, etc... For them I would not suggest standby!

 

[bicker]

And imagine how full the remaining flights will be if the #3 carrier ceases operations. It truly could be weeks before you can get available space, which is little consolation if your vacation resort reservation is for a specific week.

 

[PlaneJoy1]

And imagine how full the remaining flights will be if the #3 carrier ceases operations. It truly could be weeks before you can get available space, which is little consolation if your vacation resort reservation is for a specific week.

Yeah, and so much for Non-Rev travel.

 

[UMTerp]

Re: my tickets on FLYI. My tickets are for spring break.

I called my CC company yesterday and they are putting the charge in dispute now. They are going to investigate and let me know in 6-8 weeks. I don't have to pay the charge on my next statement so hopefully I have some chance of getting my money back. I've got my fingers crossed!

Thanks for all of the information everyone has provided! It prompted me to call the CC!

UMTerp

 

[CarolA]

I don't think you have much hope of getting the dispute carried forward. The airline has not yet "quit flying" Maybe this strategy will work... Good Luck.