Cancellations? Bankruptcies? What's an airline passenger to do? Read on.

George Hobica, April 10, 2008
Fares from Washington DC:

    It’s been bad news for air travelers the last few weeks. ATA, Aloha, Skybus, and Oasis suddenly ceased flying, and thousands of flights on Southwest, American, United and Delta were abruptly cancelled due to maintenance issues, leaving hundreds of thousands stranded or with worthless tickets. What’s next? What other airlines will go belly up without a word of warning? How can passengers act defensively? Here are some tips.



    Will there be more bankruptcies? Probably. Any airline whose stock is selling per share for the price of the Sunday newspaper looks like a sure bet to fail. Airlines exclusively flying smaller commuter jets, which are not cost effective when oil is selling at $110 a barrel, may be in trouble.

    And there’s little doubt that the current crisis, brought on by the credit crunch, oil prices, and a looming recession, will push airlines into shotgun mergers. Soon after the recent spate of bankruptcies, Delta and Northwest resumed their merger talks, and if that marriage takes place we’ll probably see Continental, United and US Air seek similar arrangements, while American may consider buying a smaller partner (Frontier? Alaska? It’s anyone’s guess at this point). And that will mean, at least until some well meaning but misguided entrepreneurs start another JetBlue or SkyBus, layoffs and higher fares.

    Use your charge card

    You can protect yourself somewhat by not buying your airline ticket far ahead of your travel date. The Federal Fair Credit Billing Act states that if you buy anything on your credit card and fail to receive what you bought, you can contest the charge with your credit card company, in writing within 60 days of the date that the bill showing the charge is mailed to you. If your airline goes bankrupt, you’ll get your money back. So if you buy your fare in April for a trip in August, you’ll be out of luck.

    However, even if you’re off the hook for the credit card charge, you may be stuck buying a more expensive fare at the last minute in order to replace the flight on your bankrupt airline.

    But what if you absolutely, positively have to get to an important meeting, wedding, funeral, or other can’t-miss event, and your airline cancels your flight or goes belly up?

    Buy a back up ticket


    If your trip is very important, you might hedge your bets by buying an additional (admittedly expensive) fully refundable fare on a backup airline. So if you’re afraid that your American Airlines flight from New York to Chicago might be cancelled, buy a refundable fare on United for the same travel dates. If your discounted American flight takes off, great: just get a refund on the United fare. But if American is a no go, you’ll get to your event on time. Sure, that refundable ticket will cost a small fortune, but so will missing your $3000 cruise or failing to close the deal of a lifetime.

    If Southwest Airlines flies where you're going, buy a backup ticket on them (assuming their recent troubles are behind them). Southwest allows passengers to re-use their non-refundable tickets on another flight within a year from purchase with no penalties, and the fare can be applied to any route, not just the one originally reserved.

    During the recent American Airlines cancellation mess, the airline did attempt to put travelers on other airlines at American’s expense. But with so many stranded, and so few empty seats on other airlines, this wasn’t always possible. A lot of vacations were impaired, a lot of business meetings, weddings, and reunions didn’t happen.

    You have no rights


    The sad fact is that in the US, airline passengers have no government-granted rights when airlines cancel flights, even if the cancellation could have been prevented by the airline (in Europe, it’s a different story, and even US passengers are protected by government regulations if they’re flying from or within the European Union).  About the only thing passengers can fall back on is something called Rule 240, a regulation that used to be enforced by the government, but now exists only in some airlines’ contracts of carriage, often in a watered down form. Alaska, Northwest, and United, for example, state in their contracts that, in the event of a carrier-caused delayed or cancelled flight, they will put you on another airline if it will get you to your final destination sooner than the next flight on their own system. But most airlines, especially those formed after deregulation, such as Southwest and Airtran, never had a Rule 240 in their contracts.

    And don’t forget travel insurance. In these perilous times, it can be a traveler’s best friend.

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