What happens when an airline files for bankruptcy?

[Cameo]

We are landlocked in North Dakota and our only available airline is Northwest. Now Northwest is talking about possible bankruptcy. We are currently planning a March trip to coincide with my DH's convention in Orlando. I don't really want to purchase tickets now, do I? I'm also concerned that tickets in the future will skyrocket.

Once they file bankruptcy, do they continue to operate for a while or do they just stop? I assume any money spent on prepaid tickets would be lost. Is that correct?

 

[NJBlackBerry]

(Unfortunately) Airlines file for bankruptcy all the time. Generally they do not stop flying. The ones hurt most are the creditors (people who are owed money) and owners - stockholders are generally left with useless pieces of paper and bondholders left with pennies on the dollar.

Sometimes airlines will just die - like Eastern - but they had been through multiple bankruptcies and were horribly mismanaged.

As long as the employees still come to work, NWA should be OK for a little while.

 

[safetymom]

They can continue to operate and even emerge from bankruptcy.

 

[bicker]

Declaring bankruptcy isn't the event folks need to be concerned about, but rather ceasing operations which doesn't typically happen until long after bankruptcy is declared. So Northwest, at least, seems to be safe for the foreseeable future. Airlines already in bankruptcy are the ones that folks need to be concerned about, but even there, the federal judiciary doesn't seem to have the backbone to allow any major airline to go out of business, so it seems that passengers are pretty safe on any of the major airlines, thanks to the generosity of the American taxpayer.

 

[hockeybabe]

Buy travel insurance within 14 days of purchasing your flight tickets. If you buy through Disney, make sure theirs covers airline bankruptcy. If you would like to look at some FAQ's of various travel insurance companies about bankruptcy of airlines, go to www.insuremytrip.com . That's where I buy my ins, and it's in some cases cheaper than Disneys.

 

[CarolMN]

You don't need Travel Insurance just to protect against bankruptcy. Just buy your tickets with a credit card (not a debit card). If NW is unable to honor your ticket, the credit card company will make sure you get your money back.

Best wishes -

P.S. I wouldn't worry about buying a ticket on NW. I would not hesitate to buy one right now if we needed to fly somewhere. (Have ticket on SC for December, but that was purchased many months ago and based on price and schedule). If you see a price for a NW flight that seems reasonable to you, my advice is to go ahead and buy it. Not sure where in ND you may be - is driving to MSP an option? If so, you could consider options on Sun Country, AirTran and others. Some of the hotels near the airport will allow you to park there for up to a week if you stay there the night before you leave. They also have shuttle service from the hotel to the airport.

Best wishes -

 

[bicker]

You don't need Travel Insurance just to protect against bankruptcy. Just buy your tickets with a credit card (not a debit card). If NW is unable to honor your ticket, the credit card company will make sure you get your money back.

Not completely. Credit card companies promise to secure folks against failure of the service provider to provide service only if the claim is filed within 60 days of the original purchase. If you're purchasing your airline tickets earlier than that, then standard credit card policies won't help you.

In the interest of customer satisfaction (only), most, if not all, credit card companies will even try to reverse an older charge. That could provide relief, as long as there are funds to cover the reversal (which generally wouldn't be the case when an airline goes into receivership, at least not for long, since the only funds available would be those that had not yet been paid to the vendor from the bank).

Beyond that, when an airline ceases operations, other airlines will offer reduced-fare tickets to their displaced passengers.

However, that's all irrelevant for the time-being, at least as it pertains to Northwest. They haven't declared bankruptcy yet, so ceasing operations is, at the least, many many months (if not years) in the future.

 

[CarolMN]

Not completely. Credit card companies promise to secure folks against failure of the service provider to provide service only if the claim is filed within 60 days of the original purchase. If you're purchasing your airline tickets earlier than that, then standard credit card policies won't help you....(snip)....

Didn't know that. Thanks for the info.

However, that's all irrelevant for the time-being, at least as it pertains to Northwest. They haven't declared bankruptcy yet, so ceasing operations is, at the least, many many months (if not years) in the future.

ITA!

Best wishes-