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(PRWEB) September 13, 2004

FAQ about Airline Bankruptcies (by means of Edward Hasbrouck, air shuttle an expert, consumer suggestions, and creator of the “smart Nomad” sequence of shuttle how-to and recommendation books):


Q. Which major airways based completely completely in the U.S. are in the interim in chapter?

A. United airways, US Airways, and Hawaiian airlines. airways primarily based absolutely indubitably in numerous global locations which may also be working beneath chapter safety incorporated Avianca Columbian airways and Air Canada.

Q. When did this happen?

A. United airways filed for chapter security in December 2002, and Hawaiian airlines in March 2003. US Airways used to be reorganized beneath chapter safety after eleven September 2001, and used to be once launched from chapter 31 March 2003, then again filed for chapter security for the 2nd time on 12 September 2004.

Q. The airways say that they is also in “Chapter eleven” or “reorganization”. Does this indicate they aren’t in fact bankrupt?

A. No. Reorganization below Chapter 11 of the U.S.

chapter Code is a kind of chapter. it can be not

“liquidation”, but it surely without a doubt’s not a comic story, both — it’s the

closing jail step prematurely of liquidation. in the experience that they weren’t in

danger of going out of industry, they’d no longer be in

chapter. a company is “reorganized under Chapter

eleven” absolute best if it is insolvent: its cash owed exceed its


Q. The bankrupt airways say that they’re going to proceed

to function, and will honor all tickets. must I

think about them?

A. No. They hope to reorganize, beneath the safety

and supervision of the chapter court docket docket. however they

would possibly not be successful. If the chapter court would now not

assume they’ve a wise probability of restoration, the

court docket docket docket will organize them shut down and liquidated. as a result of the actual reality

the choice of whether or not or not or to now not enable them to proceed to

function is now within the fingers of the chapter courts,

now not the airways, the airways can not make any

ensures about continued operations, honoring of

tickets, standard flyer mileage credit, and a number of others.

Q. what is going on to happen subsequent?

A. we will have wait and spot. at last, these

airways will each:

1. Reorganize, return to profitability, settle their cash owed, and be launched from chapter;


2. exit of exchange and have their property auctioned off beneath court supervision to pay as quite a few their ultimate cash owed as possible.

Q. How extended will this take? When will we all know what’s

going to occur?

A. the current airline chapter court instances will

almost definitely go on for various months, presumably for years.

Some airways, comparable to Continental airways and

the us West, have reorganized below chapter

security, and are on the other hand working. a number of others in

the U.S., and extra in plenty of parts of the world, have

prolonged long gone out of trade, every so often after being inside and outside

of chapter over and over.

Q. What happens to ticket holders if an airline is

however in alternate then again changes its agenda, cancels

flights, or discontinues routes?

A. In just about all such scenarios, the airline will

“give protection to” ticket holders on other flights, at no

extra worth. If the most important, they’re going to “advocate”

tickets, for free of charge, to different airways which have

house to be had. These will not essential be primarily one of the most

at hand or direct picks, they frequently could match with assistance from

means of an excessive amount of connecting airports. repeatedly, it can be

first come, first served: for those who hear that the flight

you’ll have tickets for has been cancelled, contact the

airline as fast as imaginable to have them e-e e-e book you on

alternate flights.

If a agenda or flight alternate is unacceptable to the passenger, the airline should supply a full and unconditional refund — despite the fact that the ticket was once in another case completely nonrefundable. particularly if

to obtain your ticket straight away from the airline, this will also be your very good probability to get out of the danger of conserving tickets on a bankrupt airline. (for many who sold the ticket by means of a shuttle firm, you may well be

must on the other hand should pay any penalty or refund price charged all through the go from side to side firm, which could be huge.) If tickets are alternatively on hand for a similar value on some other airline that’s no longer bankrupt, refuse to easily settle for any agenda modifications. Take your tickets again to the airline, and demand on a full refund.

Q. i do not need to fly on a bankrupt airline. am i able to

get my a compensation?

A. aside from there’s an unacceptable agenda or flight

trade (see above), usual refund techniques and

penalties however observe. you may also want to put up your

refund request (with the bodily tickets, you almost certainly have

paper tickets) to the airline or shuttle company from

which you acquire them, and wait for a refund. As

always, refunds may just take in fact intensive time, and

could be afflicted by way of irrespective of transpires throughout the

duration in-between.

Q. What happens to tickets holders if an airline goes

out of alternate or is liquidated thru chapter?

A. Ticket holders are regarded as “unsecured

collectors”. As such, they may be among the many many closing other folks to

receives a commission, if there is the rest left finally the

secured collectors (identical to airplane leasing corporations)

are paid. In most contemporary airline liquidations, ticket

holders have gotten nothing. At most, they’d get

pennies on the buck, ultimately within the event that they offered their

tickets in the us. (the U.S. has extremely inclined,

“laissez faire”, aviation client law. folks that

geared up tickets in several world places harking back to Canada and

the U.sufficient. on an airline that due to this fact goes out of

trade, together with an airline based totally in the usa, might

have significantly higher security than people who

provided tickets in the United States.)

Q. If a bankrupt airline in the us goes out of

alternate, will totally totally completely different airways will have to honor their


A. certain, on the other hand easiest u.s.-primarily based airways flying exactly the

related routes, outfitted that house is to be had, and easiest imaginable

except 18 November 2004.

beneath the us Aviation and Transportation security Act of 2001 (Public ideas 107-seventy one, 19 November 2001) and the Century of Aviation Reauthorization Act of 2003 (P.L. 108-176, 12 December 2003), other airways based totally absolutely in the united states are required to supply transportation to

holders of tickets on totally different u.s.-primarily based totally airways which have ceased operations by reason of insolvency or chapter, “to the extent potential”, provided that the passenger makes preparations with each other airline inside of 60 days of the shutdown of the ticketed

airline. the us division of Transportation has interpreted this in a series of steering letters (administrative rulings) to point that totally totally different u.s.-based totally completely undoubtedly airways flying the exact same route had been required to

honor tickets of a the united states-based definitely airline that shut down, on an area-to be had (standby) foundation, for no longer more than US$ 25 per specific particular person per flight, one-way. (See the complete ruling from the division of Transportation within the case of forefront airways.)

completely absolutely completely different airways have filed a federal lawsuit tough the $ 25 per flight limit as exceeding DOT’s authority: they want to value as a minimum their popular $ 100 per individual minimal re-ticketing value. That

lawsuit is pending, however within the size in-between DOT has reiterated that totally totally different airways shouldn’t be going to value better than US$ 25 per flight.

The element of the law requiring airways to accommodate passengers maintaining ticket on bancrupt airways was to begin with scheduled to run out on 18 may 2003. Congress has prolonged it twice, most at the present time

by the use of 18 November 2004, however each time with a “sunset” provision to be able to result in it to expire mechanically with the exception of Congress takes new movement.

Q. Does this legislation imply i’ll however rely on attending to

my trip spot?

A. No. there is no assure there it will be any house

available on each and every other airline, namely supplied that an

airline confronted with the opportunity of having to maneuver

a bankrupt airline’s passengers for US$ 25 every would

have a powerful lead to to lower its costs to fill these

seats with its private passengers for US$ 26 every. even if

seats are to be had, you will have to head from side to side a substantial amount of

days prior or later than you had deliberate. On some

world routes, there’s additionally no other the U.S.-based completely completely

airline that serves the route, or good very constrained

performance on u.s.a.-based totally airways. airways primarily based absolutely totally in

totally different international locations have never had any responsibility to help

holders of tickets from bankrupt or insolvent


Q. I already have tickets on an airline which is in

chapter. what is going to will have to I do?

A. you’ll have to:

    1. Wait and spot. which you wish to have to’t get retroactive

    insurance protection, now that they’re already in


    2. Be ready for time table adjustments, flight

    cancellations, or different disruptions of your plans,

    earlier to or in all places your go back and forth, most no doubt with little

    or no warning.

    three. if if you have digital tickets, take into consideration

    going to the airline’s ticket counter at an

    airport, or one in all its town ticket offices,

    and paying to get your tickets revamped to

    paper tickets. (you’ve gotten obtained got offered a significantly better

    likelihood of getting some other airline to easily accept a

    paper ticket than of getting them to simply accept an

    digital ticket, particularly if the airline

    has shut down. Paper tickets are verifiable,

    alternatively e-ticket receipts are simple to forge, and

    to that end do not existing sure proof of cost.)

    4. If you do not want to pay to have your

    e-tickets transformed to paper tickets, you may also

    nonetheless have the ability to get a printout on airline

    ticket/boarding transfer stock of the “passenger

    receipt” coupon of your e-ticket. (Some

    tourists need these for value compensation

    and/or tax capabilities, and there will have to be no value

    for a “passenger receipt” coupon.) This isn’t

    a ticket per se, alternatively is a ways extra applicable proof

    of getting a ticket, and additional further more more likely to be

    useable on each and every other airline, than an extraordinary

    itinerary or affirmation discover.

Q. What about tickets on “codeshare” flights which have

a flight collection of a bankrupt airline, however are

operated by means of some other airline, or have some other airline’s

flight quantity however are operated by way of a bankrupt airline?

A. felony responsibility for tickets on codeshare

flights depends on which airline is the “validating”

or “issuing” airline — no longer which airline operates the

flight, which airline’s flight quantity seems for your

tickets, or from which airline to procure your


To decide the validating supplier, seem to be inside the “Issued by way of” container to your tickets. if if you have an e-ticket, get a printout of the “passenger receipt” coupon of your e-ticket, and appear to be throughout the “Issued by way of” container. Itineraries and web and e mail affirmation

notices virtually by no means set up the validating carrier. remember the fact that, this isn’t principally the similar for the reason that airline that operates the flight, whose title and amount appears on the flight, or from which you acquire

the tickets.

The validating or issuing airline identified to your ticket is the airline with which you’ve got gotten gotten gotten a contract. If the ticket was once issued by the use of an airline that’s nevertheless in change, they’ve a contractual duty to prepare transportation — in spite of whether or not or not an

airline that was once as soon as, in influence, their subcontractor to supply the transportation has lengthy gone out of alternate. alternatively, if the ticket was issued by means of the usage of an airline that has long past out of alternate, it is not vital that the transportation was once alleged to be

geared up by means of an airline which is however flying.

sure, that’s sophisticated and counterintuitive. making an allowance for most ticket product sales websites don’t prepare the validating airline previous than tickets are supplied, it can be virtually not that you can imagine for pals to make an skilled

picks about what monetary probability they may be taking. These are some of the an important the it’s because i consider codesharing is inherently fraudulent, as I’ve mentioned elsewhere.

Q. i’ve common flyer mileage credit ranking on a bankrupt

airline. Are they constant?

A. No. which you could additionally recall to mind mileage credit score as “cash in

the monetary establishment”. but they aren’t. consistent with the phrases and

stipulations of these applications, airways can trade or

eliminate them at any time, whether or now not or no longer or no longer or not they are

bankrupt. Bankrupt airways will presumably try and preserve

their established flyer applications provided that they’re

then again flying. but some airways in, or inclined to,

bankruptcy are already rising the numbers of miles

required for awards. and naturally, inside the experience that they shut down

definitely, mileage credit it will likely be worthless.

Q. If a bankrupt airline is liquidated, will some

different airline take over their standard flyer instrument?

A. probably. most likely no longer. additional that you can think of ordinary flyer

information may also be sold to an knowledge mining or direct

selling firm. you want to suppose that information about

you and your shuttle and shopping for historical previous belong to

you. In Canada or the ecu Union, that’s actual –

on the other hand not throughout the U.S.. beneath present legislation in america,

“your” not ordinary flyer and shuttle information belong to the

airline, and are theirs to advertise. If the airline is

liquidated, these purchaser knowledge it would doubtless be provided on the

chapter public sale. No associated consumer database –

identified by means of set up, computerized, extending once more for

an awfully very long time, and with information on tens of tens of tens of tens of tens of millions of

people — has ever been auctioned. however the regular

flyer and client data of an airline like United

or American are most likely price US$ 50-250 million –

higher than each completely completely different money-strapped airline would possibly

find the money for. geared up that Congress passes a Federal go back and forth or

information privateness law may just any such sale of go back and forth information

about you be averted.

Q. what will have to I do about my current normal flyer

mileage credit on bankrupt airways?

A. Use them up as speedy as that you can imagine, even as you then again


Q. must I care about collecting additional miles in

these applications?

A. No. do not waste cash paying additional for tickets in

order to earn extra credit in a universal flyer utility

that can disappear or be devalued at any time, with out


Q. should I keep away from in search of tickets on bankrupt airways

for future shuttle?

A. positive. All else being equal (at the side of value), use

each completely different airline that is not bankrupt.

Q. outfitted that they may be however flying, should I care

that they’re bankrupt?

A. sure. they’ll cease flying with little or no

warning. within the adventure that they do, it will be a big inconvenience

to make alternate preparations to shuttle on another

airline. you will need to pay further for tickets, or

seats is probably not on hand at any worth on for sure completely completely different

airways. you need to lose the entire money you paid for

tickets. before of you purchase tickets on a bankrupt airline,

think about slightly about how rather a lot it is value to you to

steer clear of these dangers and imaginable payments.

Q. Are there any eventualities when it might probably then again

make experience to buy tickets on a bankrupt airline?

A. sure, but equipped that all the following are precise:

    1. the related fee or routing is commonly

    larger than each and every different airline that’s now not


    2. that you just need to pay for the tickets with a credit score

    card, and the charge is frequently made instantly with the assist of the

    airline (this ideas out just about all consolidator

    tickets, as talked about underneath);

    three. you need to use your whole tickets within at

    most 60 days of even as you buy them, so that you’ll want to be get

    your a reimbursement from the financial institution card firm

    if the airline shuts down or cancels the


    4. Your shuttle is inessential, so it’ll be

    might not be going to be a tremendous drawback if which that you may’t take

    the go backward and forward in any respect given that flights are cancelled

    and no totally completely different airline has house readily available;

    5. Your plans are very versatile, so you don’t

    in point of fact care what time of day, or exactly what

    day, you fly; and

    6. you have not made any non-refundable

    preparations that require you to be on

    explicit flights, or to fly on a particular day

    (e.g. you are not assembly a cruise or tour

    that departs on a specific date, or connecting to a

    flight on every absolutely totally different airline).

Q. What will have to I do to give protection to myself if i’m searching for

tickets on a bankrupt airline?

    1. Pay for your tickets with a financial institution card. If

    you pay by means of financial institution card, you will be able to get your

    a refund, in spite of everything, from the financial establishment card

    company, even supposing the airline goes out of

    industry. (See “the good Nomad data to

    the online shuttle market” for an in depth

    dialogue of bank card chargeback rights

    and techniques.)

    2. make it possible for the monetary establishment card value might be

    made, and might appear to your monetary institution card statement,

    within the arrange of the airline, not right through the title the

    go from side to side agency, consolidator, or tour operator. (In

    usual, best tickets at printed fares will also be

    charged straight away by means of the airline. must you pay for a

    consolidator ticket with a monetary establishment card, the charge

    ceaselessly have to be made during the travel firm or tour

    operator, now not the airline. This reduces your rights

    and protections, and may just make it difficult, continuously

    no longer conceivable, to get larger the money out of your credit rating ranking

    card agency if the flight is cancelled or


    three. Get paper tickets every time that you can think of.

    think about paying further, if crucial, for paper

    tickets. should you purchase e-tickets, try to get a printout

    on airline ticket inventory of the “passenger receipt”

    coupon of your e-ticket. (See above.)

Q. What about different airways? Will they go bankrupt


A. most likely.

Q. Which absolutely definitely totally different airways would possibly go bankrupt?

A. just about any of them may just. I don’t know which of them

will. there isn’t a airline that’s sure to not go

bankrupt, particularly if there may be also extra extended or

in style struggle, or more terrorist incidents involving


Q. i am looking for tickets on each and every completely different airline that is no longer

(then again) bankrupt. What am i able to do to protect myself?

A. that it’s worthwhile to:

    1. Get shuttle insurance coverage safety (shuttle cancellation and

    interruption insurance protection coverage) even as you purchase your tickets

    that covers “provider default”, i.e. airline

    chapter. to find out concerning the improbable print carefully — some

    shuttle insurance protection policies most efficient quilt certain

    airways that the insurers assume are a lot less

    more vulnerable to head bankrupt. bear in mind also that

    that you want to be’t often get insurance coverage protection protection protection for tickets on an

    airline that’s already in chapter, so this will not

    will allow you to if you have already got tickets on a bankrupt

    airline, and didn’t buy insurance coverage protection protection in the past of they went

    out of alternate.

    2. Pay to your tickets with a monetary institution card.

    (See above.)

    three. Get paper tickets every time that you can imagine.

    imagine paying extra, if crucial, for paper

    tickets. (See above.)

Q. what is going on to happen to airline ticket prices as a

outcomes of these bankruptcies?

A. no individual is aware of understand that. Most airlines need to cut back

the availability of airline seats, in order in order that it is advisable

elevate prices to a hit tiers. If bankrupt

airways inside the cut price of their flights, totally completely different airline will

most indubitably attempt to deliver up prices. on the other hand when other folks avoid

shopping for tickets on bankrupt airways, they will need to

reduce costs sharply. And without a doubt different airways that serve

the an identical routes could actually feel they’ve to take a look at these

value mark downs. the top consequence could neatly be a extra

extreme yo-yoing of prices than basic, with a typical

upward sample in ticket costs punctuated with assistance from “fare

wars” began out by way of determined bankrupt airways.

Q. So what must I do? How do I get one of the most crucial vital best prices?

A. look forward to brief-lived alternatively most certainly excessive

rate reductions, in particular on routes served with the aid of the utilization of bankrupt

airways. while you get a just right price, purchase tickets

right away, as prices are reasonably additional unstable than

normal, and charges are always subject to alter with out


If a bankrupt airline bargains a tempting deal, try to

to seem out an airline that’s not bankrupt which is matching

the cost.

airways are however selling tickets under value. within the

medium to long run, there’s often fewer flights per

capita, and charges it’s going to doubtless be better. go backward and forward now, while

that you might want to nonetheless come up with the money for it.

newest edition of this FAQ:


latest shuttle knowledge updates from Edward Hasbrouck:

http://hasbrouck.org/internet newsletter

Contact the creator for added knowledge, interviews, speak about displays, or public appearances:

[email protected]

further necessary points in regards to the creator:


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