All You Need to Know about Airline Bankruptcy

There are things you need to know when an airline files for bankruptcy--and when one goes completely bust

With major airlines making headlines by losing billions of dollars and entering bankruptcy protection, passengers are justified in being a little concerned about their next flight.

Filing for bankruptcy doesn't mean a carrier is about to shut its doors. Heck, an airline could survive the process without inconveniencing a single passenger. But invoking Chapter 11 is not a good sign. In the early 1990s, America West, Continental, Pan Am, Midway, and TWA all filed for bankruptcy; America West and Continental are the only two still around. And while TWA was sold with little disruption to travelers, Midway went belly-up overnight, stranding customers with few options. No one knows if a major carrier will cease operations anytime soon, but at the very least a period of consolidation among airlines seems imminent.

Be aware before you buy: Airlines enter Chapter 11 to reorganize debt--and to give them leverage when it comes to agreements with creditors and labor unions. It's a more dire situation when a carrier goes into Chapter 7 bankruptcy, when planes and other assets are liquidated and routes are often canceled. There are no telltale indications that an airline will be OK, but getting concessions from labor unions is generally considered a good sign (if not for the workers). When unions refuse to budge, it often spells trouble.

Pay with a credit card: The Fair Credit Billing Act gives credit card customers the right to dispute charges for services not received. People who never get the chance to use tickets can at least get reimbursed by the bank that issued their card.

Use miles sooner rather than later: Your frequent-flier miles might be safe if your airline files for bankruptcy or is bought by a competitor. Then again, they could become worthless overnight. Airlines can change, or even eliminate, miles programs at a moment's notice, so use miles whenever you have the chance. Another safeguard: If you're a frequent flier with an airline in financial trouble, reserve through that airline but fly on one of its stable code-share partners.

Know the law: The Aviation & Transportation Security Act stated that passengers holding tickets on a defunct airline are entitled, within 60 days of cessation of services, to go standby on any U.S.-based airline that flies that route, for a $25 fee. The law was passed as a temporary measure in the aftermath of 9/11, but expired Nov. 19, 2004. Congress expects it to be reinstated, but as of December 2004 passengers with tickets on defunct airlines have little recourse than seeking reimbursement from their credit card companies. 

Have a worst-case-scenario plan: If you're at the airport when your airline ceases operations, rather than simply waiting for a standby seat on another carrier to open up, use your cell phone or laptop to research flight schedules. It's a good idea to know which airlines fly to your destination and whether alternative airports offer similar connections. Airport flight guides are usually available in booklet form, or they can be downloaded from the airport's website.

Note:This story was accurate when it was published. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.
 
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Travel Tips

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Hotels
427322

When I'm packing to leave a hotel room, I turn the bedding down to the foot of the bed so that the white sheets are facing up. This way, items placed on the bed are clearly visible. I once left a camera behind because I couldn't see it against a very dark bedspread.

— Fran Schaak
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Planning
370258

Love researching your destination online, but don't know how to organize all those printouts, maps, guidebooks, and tips? I get a 5 x 7" spiral notebook (Mead makes one with a sturdy cover and a pocket insert), a set of index tabs, and some glue. Divide the notebook into sections with the tabs (sights, maps, currency converter, restaurants, etc.). Photocopy—in reduction mode—all the info you want to bring, and glue it into the appropriate section. I leave plenty of pages for my journals. This creates an all-in-one personal guide that you can read again years after your trip!

— Michele Graves
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Planning
376291

Don't save the best for the last day. If you wait until the end of your trip for "must-do" activities, you won't be able to reschedule if something unforeseen happens. I planned a snorkeling excursion for my final day in San Diego, but the waters were too rough, and the trip had to be canceled.

— Melissa Coplak
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Dining
355265

I carry bilingual takeout menus when traveling to countries like China, Korea, and Vietnam. When I'm at a restaurant with no menu (or one that I can't read), I give mine to the waiter so he can point to dishes they can prepare. I've learned to pack a few extra menus, as the restaurants often like to keep a copy.

— Charles Locher
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Safety
443303

Place a coin over the veins on the inside of your wrist (about two finger widths from the base of your palm) and secure it in place with a rubber band or ponytail holder. The gentle pressure of the coin will stimulate nerves that control nausea, just like the motion-sickness bands that are sold at drugstores.

— Connie Crusha
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Cruises
459597

Internet phone services like Vonage can be programmed to send transcribed voice mails to your email in-box. That way, you can check your home answering machine quickly at an Internet cafe without paying insane roaming fees on your cell. The transcriptions won't always be perfect, but you'll get the gist.

— Martha and Ken Wiseman
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Planning
353245

We're active travelers but find guided bike tours from companies like Backroads too expensive. Our advice: After rolling into town, ask at a bike shop for the best routes. Better yet, call or e-mail before you leave home (search the Web). We've found group rides and races this way, and have made a lot of friends. We're instant locals!

— Glenn and Michelle Schultes
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Packing
360272

Pack a couple of mountaineering carabiners. Clip one through the handle or strap of your bag and secure it to something solid wherever you may be (to a bench in the park or in a train station, to the railing of an overhead compartment on a bus, etc.).The carabiner adds a bit of security, especially if you're snoozing.

— R. Bryan Simon
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Packing
372260

Restrooms abroad rarely have hooks on stall doors. Our solution: Pack a small S hook in your shoulder bag and make use of a hole in the wall, a pipe, etc., to hang purses, jackets, or anything else you want to keep off the floor. S hooks can be found in most hardware stores, near the screws and bolts.

— Arthur and Marie Lloyd
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Car Rentals
363261

When parking in a crowded garage, don't settle for the first space available on a lower level. It's probably a half-day hike from the elevator. Instead, drive to the upper levels, where you can usually park right next to the elevator. This tip was very useful in Las Vegas, especially when checking in and out of hotels with our luggage.

— Shane Kays
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Packing
484613

Every year, I get address labels from numerous charitable organizations. I keep them with me when traveling because it's the quickest way to provide my address to new friends, enter prize drawings at shops, sign guest books, etc. It's not only efficient; it can also help spread the word about worthwhile charities.

— Carole Wilk
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Hotels
440361

If you can't sleep due to the heat in your non-air-conditioned hotel room, take a cold bottle of water and place it on your pillow, in the crook of your neck. It will cool your whole body down.

— Tony van Hasselt
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Planning
372271

If you're headed to a country that requires a visa, ask the consulate of that country, in the United States, whether visas are also issued at the airport there on arrival. In many cases (like Turkey and Egypt), they are. Obtaining the visa on arrival is a much simpler procedure and a real money-saver: You do not have to have photographs taken (they figure your passport already has a photo), you do not pay a hefty fee to the U.S.-situated consulate of the country, you avoid the expense and risk of mailing your passport to that consulate in advance of departure, and you avoid the expense of using a visa-acquiring company in the United States. But be sure the consulate is correct that the visa can easily be obtained on arrival.

— Carmencita Soriano
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Cruises
373323

If you go directly from the air-conditioned ship out onto the open-air deck (which is usually warmer and more humid in most cruise destinations), your camera's lens is likely to fog up. Warm the camera with your cabin's hairdryer on a low setting or briefly leave it out on your balcony so it can acclimate to the weather.

— Martha and Ken Wiseman
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Packing
389320

There's nothing worse than trying to fall asleep under a mosquito net and then realizing that the bugs are finding a way inside. So next time you're heading someplace tropical--where you know you'll be sleeping under mosquito netting--remember to toss a roll of Scotch tape into your suitcase. It's perfect for quick repairs.

— Christopher Swain
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Hotels
436340

Need a place for a laptop in your hotel room? Take the largest drawer from the bureau and put it upside down on the bed with the drawer front away from you. This creates a perfect-height desk for while you're sitting comfortably on the bed (you can even lean back on pillows), plus there's side space for papers, and the top leans toward you for easy typing or writing.

— Linda Diebold Johnson
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Planning
367268

If you book a package over the Internet, print out all the details of what's included and take it with you. When a hotel desk clerk in Paris said that the breakfast buffet we had enjoyed for the previous seven mornings was not included in our package, I was able to show him the printouts and prove him wrong. He apologized profusely and wiped the breakfast charges from our bill.

— John Lavelle
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Planning
381259

When I'm planning a trip, I almost always call the hotel concierge before I arrive, and if my hotel doesn't have one, I call a hotel that does. Recently, I asked for advice on what to see since I only had four days in a new city. I told the concierge what I thought I should try to do, and she said I had too many things packed into four days. She gave me a list of hot spots to visit and places to avoid, and even recommended a florist to call on for fresh flowers. With her help, my trip was far more enjoyable than it would have been otherwise.

— Brian Berg
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Planning
369268

Scuba-diving vacations can get expensive. As I start planning a trip, I call one of the local PADI dive shops and ask the employees about accommodations nearby. They give me hotel connections I couldn't find on my own, and I often save enough to pay for my dives.

— Lyle Bennett
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Planning
361277

I unpacked a pair of black slacks recently to find them covered with white fuzz. I didn't have a lint brush handy, so I used the luggage sticker from my bag--the gummy side took the lint right off.

— Joyce Barbatti
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Transportation
346252

My husband and I always travel around Europe by train. When we arrive in any city, we first stop at a ticket window and get all the information we'll need for the next leg of our journey. This gives us plenty of time to find an English-speaking ticket agent who'll print out departure times and platform numbers for us. Before leaving the station, we can note the location of the platform we'll be looking for that morning. One wrong move when you're rushing for a train and you could end up in the wrong city!

— Betty Lynn
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Air Travel
370289

If your flight is canceled, don't just wait patiently in line to be booked on another flight; call the airline's 800 number. They'll answer your call faster, and you won't be waiting with other stranded passengers from that flight. (Or cover all bases by calling while in line.)

— Karen LoPresto-Arbaugh
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Planning
380250

Before leaving for a vacation, I print out all our reservations and directions, and I create a contact sheet for emergencies. Then I gather all the papers together, punch some holes, and place them in a folder that has a middle section for three–holed papers. The side pockets hold brochures, business cards, ticket stubs, receipts, and maps that we collect along the way and want to bring home for our scrapbook.

— Sonal Gupte
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Shopping
354273

Anyone tired of the same boring postcards that are found at every roadside tourist trap should try shopping for vintage postcards at an antiques shop. They're a great addition to any photo album, as they often show what the local attractions looked like prior to development.

— Christian Galloway
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Packing
498568

If you plan to visit a theme park, always bring a few sandwich-size Ziploc bags. They'll protect your cell phone and wallet when you're riding on flumes and other water attractions.

— Jack Bell
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Family Travel
371238

If your children are old enough to dress themselves, consider this packing tip: Put each outfit (including socks and underwear) into a Ziploc bag and pack one bag for each day you'll be on vacation. It will save both time and aggravation, and may even prevent items from getting left behind.

— Robert E. Jones
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Technology
429291

Quotetravelinsurance.com gives you comparable details on more than one hundred travel-insurance plans, enabling you to make the best buy. It relies on ratings from insurance industry overseers such as A.M. Best and state insurance commissioners before allowing an insurance company into its extensive lineup.

— Marc Oppy
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Planning
355272

Before you head to the airport, stop by the front desk of your hotel or cruise ship and ask if they'll print your boarding pass for you. It'll save Internet browsing fees and time at check-in. It's worked for me at several Marriott hotels and on a Celebrity cruise.

— Rose Jakubaszek
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Hotels
455345

When I called to book a hotel room in Budapest, I was offered a rate of $75 per night. After I told the concierge that I was looking for a room in the $35 range, he agreed to the lower price without much fuss. It sometimes pays to barter.

— Julie Jensen
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Hotels
411353

Remember to check the hours of operation for your hotel's airport shuttle. In Rome,we were surprised to learn that our hotel--which touted its shuttle--only offered the service a few hours a day.

— Gail Moriarty

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