The Wall Street Journal
THE MIDDLE SEAT
By SCOTT MCCARTNEY
When Airlines Fail, Fliers Have Few Protections
Law's Lapse Leaves Carriers With Little Incentive to Honor Tickets From Defunct Rivals
April 8, 2008; Page D1
Airlines have a new attitude toward customers of failed carriers: It's your loss, not ours. With more airlines folding these days, the impact on consumers can be severe. Passenger carriers are no longer required to honor tickets of failed competitors because Congress let a government protection for travelers expire in 2006. So when Aloha Airgroup Inc., ATA Airlines Inc. and Skybus Airlines Inc. all shut down last week, some airlines, including the nation's two biggest, refused to accept stranded ticket-holders.
That is a big change for consumers. They used to be able to buy tickets on struggling airlines with reasonable expectations that either the airline would keep flying if it went bankrupt, or other airlines would honor tickets for a small fee. Now, consumers need to be far more careful in picking airlines, especially for tickets bought months in advance. AMR Corp.'s American and UAL Corp.'s United, struggling themselves under high oil prices, said they would accommodate Aloha, ATA and Skybus ticket-holders only if they purchased a new ticket for their travel. The carriers said they did offer tickets at discounted prices rather than full-fare, last-minute purchase prices. United said it offered a one-way fare of $275 from Honolulu or Maui to Los Angeles with no advance-purchase requirements, for example, and $475 from Honolulu to Chicago. American said it waived advance-purchase requirements so Aloha, ATA and Skybus ticket-holders could get discounted inventory if available. But the reality is that at least some customers paid very steep prices. The Maui News reported several customers at Maui's airport said they had to pay $900 each for one-way tickets from Maui to Los Angeles on American.
(snip)
The lack of government safeguards, coupled with more-frequent failures, makes struggling airlines riskier for consumers. Carriers that run out of money are finding no new cash is available to keep flying during a restructuring because of the credit crisis and lack of airline investors. So they have to shut down.. Congress had protected airline passengers against disruptions such as these shutdowns, but that ended in November 2006, according to the Department of Transportation. Now, a DOT spokesman says, "We encourage other airlines to honor tickets when they can."
That's something airlines have historically done. But when tough times threatened to kill that tradition, Congress wrote it into law. In November 2001, after the Sept. 11 terrorist attacks, Congress required airlines to rebook passengers from failed airlines for a handling fee, which the DOT set at $25 one-way and raised to $50 one-way in 2005. The law also gave consumers 60 days to ride standby at $50 each way. But after lobbying by airlines, Congress let the requirement expire. Airlines argued they shouldn't have to suffer financially from failed competitors.
ose customers.
Travelers who bought tickets on now-failed airlines with credit cards do have some protection under the Fair Credit Billing Act. If the airline doesn't deliver the service you bought, your credit-card company has to refund the ticket purchase -- you must dispute the charge within 60 days. Credit-card companies are prepared for refunds -- they require troubled airlines to maintain cash reserves so there is a pool of money available to cover refunds. Travelers who bought tickets through code-share arrangements have more options -- the airline that sold the ticket should accommodate you. If you bought a United ticket for travel on its partner Aloha, United will rebook you free (but not if you bought the same flight from Aloha). Southwest Airlines Co. sold tickets for flights actually flown by ATA, its code-sharing partner, and promised to re-accommodate customers holding Southwest tickets on Southwest or other airlines.
(snip)
URL for this article:
http://online.wsj.com/article/SB120761638090996823.html (subscription)
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
