For years, the airline industry has suffered from relatively poor economic health. To be sure, there are many success stories. But there are also many failures and many others that are operating on very shaky financial margins.
In the United States, most major carriers have declared bankruptcy. They've reorganized under the terms of bankruptcy laws, but some have had to negotiate wage cuts and eliminate both jobs and routes.
If the airlines are somewhat shielded by bankruptcy laws, what exists to protect the budget travel consumer?
If an airline goes under before you can use prepaid tickets, you become what is known as an unsecured creditor. That's legalese for "creditor at the very back of the reimbursement line."
The obvious advice is to do business only with healthy airlines or travel companies. But many times, the route or trip you want to take involves no such option.
In such cases, you don't have to be hesitant -- just cautious.
Here are some techniques for protecting yourself in a rough-and-tumble economic climate:
If a suddenly defunct airline cannot provide the service you purchased, most credit card companies will refund your money. Usually, all that's required is notification in writing. Beware: Most credit card companies allow only 60 days from purchase to make claims. So it's best not to book such trips too far in advance, and to make your complaints promptly.
Although a cash refund is unlikely, you'll receive a credit on your bill that should enable you to purchase another trip, a new recliner, or whatever else you should desire.
Travel agents usually do the "dirty work" for you, requesting the refund as a secured creditor. Many secured creditors come up just as empty as their unsecured counterparts, but larger companies have more leverage in these situations.
If you pay the agent with a check or cash, refunds are also possible. Don't expect it to happen quickly.
Use a credit card and a travel agent for maximum protection. Beyond these keys, there are a few other points to consider as well:
If your money goes directly to an airline that ceases operations, you become an unsecured creditor the moment the company folds. Chances are good that you won't be at the top of the settlement list.
Larger airlines that are reorganizing under Chapter 11 statutes are a different story. They usually offer discounts for booking online, and you're relatively safe doing so. Just take all the usual precautions: sales are final, so be careful what you click. No one is going to be sympathetic if you hastily booked the wrong flight.
You want another carrier running the same route to take you wherever the grounded airline was going to fly. Are former competitors required to do so?
The answer, increasingly, is "no."
At one time, there was something called Section 145 of the Aviation and Transportation Security Act. It was an attempt to obligate surviving carriers to honor tickets from insolvent airlines "to the extent practicable." It has expired.
The surviving carriers will want your business and will be motivated to work with you. But consumers who expect the U.S. government to step in with legal safeguards might wind up disappointed.
The odds of your flight being canceled because of a bankruptcy are fairly remote, even during a time when many airlines are struggling.
But to be safe, take common-sense precautions.
