A few precautions for fliers in financially turbulent times
It’s deja vu all over again: For the second time in two years, US Airways has filed for Chapter 11 bankruptcy protection.
United Airlines, the country’s second-largest carrier, has been in Chapter 11 for more than a year; so has Hawaiian Airlines. These carriers are still flying, as are America West and Continental, which paid visits to bankruptcy court in the 1990s.
“Customers should notice no changes to flight operations or customer service programs because of the filing,” US Airways said in a press release earlier this month.
So no worries, right? Not necessarily. This time around for the country’s seventh-largest airline may be different, and that’s why travelers should take notice -- and take precautions.
US Airways has already been bailed out once, with $900 million in federal loan guarantees.
At the Travel section’s press time Tuesday, US Airways’ unions were balking at a second round of concessions, totaling $800 million, that the airline says it needs to survive.
And it’s not just US Airways that’s having trouble. Low fares and high fuel costs have driven the whole industry into crisis.
“It’s uncharted territory,” said Mike Boyd, industry analyst and president of the Boyd Group/Aviation Systems Research Corp. in Evergreen, Colo., noting that among major airlines only Continental has gone into and out of bankruptcy twice and survived.
Adding to uncertainty for travelers: A federal law that protected passengers will soon expire. It requires airlines, “to the extent practicable,” to re-ticket passengers stranded by a bankruptcy.
Congress enacted the little-noticed law in November 2001 as Section 145 of the Aviation and Transportation Security Act after the Sept. 11 terrorist attacks. It was renewed in December 2003 and is scheduled to expire Nov. 19.
“We have not heard of any efforts to extend it,” said Steve Hansen, communications director for the House Transportation and Infrastructure Committee, in mid-September.
The law, as interpreted by the U.S. Department of Transportation, requires airlines to honor tickets of passengers stranded by a bankruptcy “on a space-available basis” on the date of travel. Airlines can’t charge more than $25 each way for this accommodation.
Section 145 has critics.
“It gives consumers a false sense of security,” said Edward Hasbrouck, author of the Practical Nomad guidebooks and “travel guru” at www.air treks.com, an online travel agency specializing in around-the-world tickets.
“Space available” is a meaningless guarantee if there is no space, which would likely be the case on many routes if a big airline such as US Airways stopped operating, he said. After the much-smaller Vanguard Airlines went out of business two years ago, some passengers waited for days to be re-ticketed.
Further, according to DOT guidelines, the airline that accommodates you must “operate on the route for which the passenger is ticketed.” That may not be much help if you’re, say, flying abroad from Charlotte, N.C., where US Airways is the sole U.S. operator on many international routes, Hasbrouck noted.
But some protection is better than none, especially considering the DOT’s January 2003 notice recounting arguments that airlines filed against the $25 limit:
“American argues that in a deregulated environment passengers should assume the risk in booking with a financially weak carrier,” the DOT said. Further, it said, Delta and American contended that the marketplace should determine the re-ticketing fee -- in this case, the $100 or so that many airlines charge passengers who voluntarily change their plans.
After Vanguard went out of business, the DOT said that it received “numerous consumer complaints” about treatment of Vanguard ticket-holders and that some carriers charged as much as $100 each way to re-ticket customers of the bankrupt airline.
Write your congressman.
Meanwhile, here are some steps to reduce your chances of being stranded at the airport:
* Avoid buying tickets on a troubled airline. Look for a stronger competitor flying the same route or another airline flying out of or into a nearby city.
This is easier said than done. Many major airlines are struggling financially, even if they’re not in Chapter 11.
Several industry watchers said they would feel comfortable booking US Airways for travel through the end of the year but not beyond that.
“We’re still booking US Airways,” said Bob Kern, president of the PNR Travel agency in Los Angeles. “We’re just making customers aware of the situation.”
Although companies typically don’t issue a warning before they stop flying, cruising or touring, signs of their financial pain may pop up in news reports. You’ll need to follow the news and make your own decision.
* Use a credit card and book no more than 60 days before you plan to travel. Under the Fair Credit Billing Act, you may be entitled to a credit refund if a business doesn’t deliver the product or service you paid for. But you must dispute the charge, in writing, to arrive within 60 days after the bill containing the charge was mailed to you.
* Document your e-ticket. Some stranded Vanguard customers had problems getting onto other airlines because they didn’t have enough proof that their electronic ticket existed, Hasbrouck said. In comments to the DOT, airlines said they had trouble verifying the validity of e-tickets issued by other airlines. If you’re worried about this, Hasbrouck recommended getting a coupon receipt from your travel agent or going to the airport and asking the airline for a printout of the ticket on its own paper stock.
* Start using up frequent-flier miles you’ve earned on a troubled airline by booking award trips on its alliance partners.
Hear more tips from Jane Engle on Travel Insider topics at www.latimes.com/engle. She welcomes comments but can’t respond individually to letters and calls. Write to Travel Insider, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012, or e-mail jane.engle@latimes .com.