Flying Chapter 11 : Many Accept Risk of Shaky Airlines for Cheap Fares

When Robert Steinbrenner booked a recent Trans World Airlines flight to St. Louis, finances figured heavily into his decision: His own, not the airline’s.

Finding a bargain was more important to Steinbrenner than the fact that TWA is in the throes of bankruptcy reorganization. “It doesn’t make any difference to me at all,” he said. “Whoever has the cheapest price is the one I take.”

The Chapter 11 label is one that TWA--along with America West and Continental--go to great lengths to downplay. But a bankruptcy filing is no longer the stigma it once was in the airline industry. While a hint of financial trouble is enough to send some fliers packing, nearly 20% of all airline travelers still fly on the three Chapter 11 carriers.

Many passengers accept the risk of an airline going out of business in return for cheap fares and convenience. Conversely, the airlines strive to maintain a “business-as-usual” image that often belies the behind-the-scenes struggle to emerge from bankruptcy.

“The people don’t think about it,” said Thomas A. Jackson, president of World Travel Bureau in Orange County. “They see the plane. They get on it, and they go.”

Perhaps those most troubled by Chapter 11 are travel agents. Angry travelers left stranded by failed carriers often take their vengeance out on the travel agents who sold them their tickets.

Agents at Uniglobe Travel in Rancho Cucamonga seek other alternatives before using a Chapter 11 carrier, owner Jim M. Roberts said. But if the price is right, he said, the financial condition of the carrier doesn’t seem to matter much to customers.

America West Airlines passenger Don Reed didn’t know his carrier was in Chapter 11 when he booked a recent flight to Phoenix. After arriving at Hollywood Burbank Airport for the afternoon flight, Reed received his seat assignment from a smiling ticket agent, sat down in a clean and comfortable waiting area and then boarded Flight 548 for an on-time departure.

There was nothing at Gate 8 to remind the 32-year-old stand-up comedian and other waiting passengers of America West’s status. But even after being told of the airline’s bankruptcy filing, Reed said it made little difference to him.

“I’ve heard about so many airlines that have folded that it doesn’t really shock me,” he said.

The fact that many airline passengers are so blase about the Chapter 11 also says a lot about the turmoil in the airline industry.

Within the last two years, six of the nation’s major airlines--America West, Continental, Eastern, Midway, Pan American World Airways and Trans World Airlines--have operated as wards of a bankruptcy court. Three of them--Eastern, Midway and Pan Am--failed to get out of court alive.

But if many passengers do not fear flying a Chapter 11 carrier, they do not entirely trust them, either.

“The fact that they are in Chapter 11 does not preclude me from using them,” said Dave Marshall, a New Jersey research manager who flew Continental on a business trip to Los Angeles. “But I’m careful when I buy a ticket . . . in case they go belly up.”

Marshall protects his investment in airline tickets by purchasing them with a credit card, a practice recommended by consumer and travel experts. Credit card companies usually will refund the purchase price of a ticket if an airline fails before a passenger’s flight.

“Anybody who buys a ticket on a bankrupt carrier with cash or a check is a bloody idiot,” said Donald L. Pevsner, an attorney and aviation consumer advocate in Miami. “It’s free insurance.”

Chapter 11 travelers take other precautions as well.

Torrance insurance executive Tom Keogh had no hesitation in buying a TWA ticket for an upcoming business trip. But he is not sure he would put up money for a ticket in the distant future.

“I would not want to travel with them because I could get stuck,” Keogh said. “People have been stuck before.”

But even passengers who are ill at ease flying on a struggling airline say the don’t always have a choice. Ann and Ray Hayley of Capistrano Beach wanted to fly nonstop to Cleveland to attend a class reunion and visit family. They would have preferred United or American, but only Continental offered direct service.

“You don’t know whether you’ll be coming back or going,” said Ann Hayley as she waited in line at the Continental ticket counter at Los Angeles International Airport. Added her husband: “We will keep worrying until the 19th (of August) when we get back home.”

Even the slightest worry about an airline’s financial health and safety is enough to keep other passengers off a Chapter 11 carrier. Duke Millican, a 42-year-old metal engraver from Connecticut, originally booked tickets on Northwest Airlines for a family vacation in California. But after hearing of financial problems at Northwest, Millican switched to Delta Air Lines.

“I would not even go near one,” said Millican of a Chapter 11 carrier. “They might cut corners anyway they can. They probably won’t be staffed right.”

You’ll never catch Dallas banking consultant Stewart Rix on a struggling airline either. What would happen to all his frequent flyer miles if his carrier went broke, asked Rix, who flew more than 200,000 miles last year.

“That last thing you want to do is put (the frequent flyer miles) at risk,” said Rix, who prefers to fly American or Delta airlines. “So, you go looking for a rock solid carrier.”