It's a dicey time for airlines, but you can still take to the skies

Times Staff Writer

Fear of flying seems less like a phobia and more like a rational calculation these days.

Falling passenger totals have already helped drive at least two major airlines, US Airways and United, into Chapter 11 bankruptcy protection. In the last year, National, Vanguard and Midway airlines quit operating. The latest headache is soaring fuel prices.

And that's just the beginning, says the Air Transport Assn. trade group. War with Iraq could bring "serious risk of chaotic industry bankruptcies and liquidation," it said in a March 11 report. Seven airlines filed for Chapter 11 around the time of the 1991 Persian Gulf War, when the industry as a whole was in better shape, the report says.

What's a nervous passenger to do about booking a flight?

The consensus from experts I've consulted is: Keep traveling. But travel smarter.

In their view, the chances of the whole U.S. airline network collapsing are nil. If an airline the size of United or US Airways stops flying, the federal government will almost certainly rush in to rescue such a vital industry, they figure.

As for "bankruptcy protection," the term sounds scary, but airlines frequently keep flying, reorganize under court supervision and, in time, emerge from Chapter 11. Among those that have recovered are America West and Continental, which stumbled in 1990-91.

"In the airline business, 'bankruptcy' just means they're paying the lawyers a lot of money," jokes aviation analyst Mike Boyd, president of the Boyd Group in Evergreen, Colo.

Here are some ways to avoid trouble if an airline stops flying:

* Know your rights: If you're stranded by an airline that quits operating, other airlines must accommodate you on standby, subject to space, under a ruling last year by the U.S. Department of Transportation. They may charge you no more than a $25 processing fee each way to do so.

Congress recently extended the law on which the DOT ruling is based to February 2004; it had been scheduled to expire in May. An airline suit challenging the $25 limit has been dropped. (The rules are posted at

The extension is "the best news consumers have had in a long, long time," says Terry Trippler, air traveler advocate for the Internet site But it's not a panacea.

"Picture United going out of business and everyone rebooking on another flight," he says. "Not everyone is going to get on. It's going to be a mess." The law does not require airlines to provide a confirmed seat under these circumstances.

Be persistent, he suggests. If an airline agent isn't helping, call again. You may get a different agent with a different attitude.

* Follow the news: Read a newspaper, log on to or scan the stock analyst reports on brokerage Web sites for signs of trouble with your carrier's company. Is the stock falling? Is it losing money?

Discounters Southwest and JetBlue are among the few airlines that have made a profit in the last 12 months. Because they "can provide a product at a price people want to pay and still make money," they'll probably weather the industry's storms, says Ron Kuhlman, vice president of Unisys R2A, an airline consulting firm in Hayward, Calif. Logically, they are safer choices to book.

United and US Airways have lost money, but Kuhlman has more confidence in US Airways because he thinks it's better managed. A key question to ponder before booking: Is the company recognizing its problems and quickly adapting?

Kevin Mitchell, president of the Business Travel Coalition consumer group, recommends finding a travel agent who "is really on top of it and watching all the latest developments."

* Don't book too far out: You can probably confidently buy an airline ticket up to six months ahead, Mitchell says -- "plenty of time to get an advance warning if something is going to happen to any of these carriers."

Other precautions: Don't book a flight that arrives the same day as your cruise or tour departs. Plan to arrive the day before, at least -- a good practice whether your airline is troubled or not. Pay with a credit card, preferably 60 days or less in advance. (Many card companies will credit you for a canceled flight, depending on the circumstances.) Use frequent-flier miles. (If your carrier quits, at least you aren't out a fare.)

* Buy insurance: There are countless travel insurance policies out there. This is a case where a knowledgeable travel agent can be invaluable.

If you want to buy a policy on your own, look for one that covers "supplier default" or "financial default" under provisions for trip interruption and cancellation. Some insurers stopped covering bankruptcies after the Sept. 11 attacks. Those that still do follow various practices.

Travel Guard, for instance, issues a list of companies it won't cover for financial default, which as of March 11 included United and US Airways. (See Access America lists companies it will cover; United and US Airways were not on the list March 11. (See Global Alert Travel Protection,, covered United and US Airways as of March 11 because, although in Chapter 11, they were still flying, a spokeswoman said.

Typically, insurers require what they call a "complete cessation" of services or operations to pay claims under supplier default -- in other words, the airline stops flying. But some may pay on a partial cessation or also require a Chapter 11 or Chapter 7 (bankruptcy) filing.

Some cover you as soon as a day after you buy the policy, some not until two weeks later. None of the insurers I spoke with covers war per se, but they generally said they would cover a war-related bankruptcy. A useful site for comparing policies is, run by

Of course, no step you take can entirely remove the risk of flying or of any other travel.

When I asked airline analyst Boyd how to avoid being on a bankrupt carrier, he replied, "Take the train."

Jane Engle welcomes comments and suggestions but cannot respond individually to letters and calls. Write Travel Insider, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail

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