Millions In Refunds In Limbo After Direct Air Collapse
When Direct Air canceled its flights and filed for bankruptcy last month it left its customers scrambling for millions of dollars in refunds, and now the company's credit card processor and escrow bank are claiming they don't have the cash to cover all the reimbursements.
The Myrtle Beach, S.C.-based Direct Air sold charter flights and vacation packages up and down the Eastern Seaboard and in the Midwest. The company canceled its charter program on March 13, and on March 15 it filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Massachusetts.
In a company press release issued on March 17, Direct Air explained that "rising fuel costs and other operating expenses pushed the charter company into a severe operating loss position."
Following the bankruptcy filing, the U.S. Department of Transportation issued a statement for consumers impacted by the Direct Air shutdown that under federal regulations, Direct Air has in place an escrow account into which all charter participant funds were to be deposited until payment was made to the airline that was to execute the charter flight.
The DOT also noted that customers who paid for their Direct Air flight by credit card should contact their credit card company to get their money back.
But according to Bingham Farms, Mich.-based JetPay Merchant Services, the credit card processing company for Direct Air, the bank holding the escrow funds is not releasing them and is therefore putting almost the entire refund load on JetPay.
In an affidavit to the bankruptcy filing, David Chester, COO of JetPay, explained the credit card processing company's predicament.
"Without access to funds in the escrow account, JetPay is currently suffering a cash shortfall," Chester wrote. That shortfall "will likely exceed several million dollars and may reach as high as $20 million which will jeopardize the ability of JetPay to continue business."
Later court filings further question whether the bank itself even has enough funds to cover the onslaught of refunds that need to be paid out and why those funds aren't available in the escrow account.
The bottom line is that for Direct Air customers seeking to get their money back the process could be long and arduous, and there remains a great deal of uncertainty about whether there will even be enough money to cover all the refunds, and if not, who is responsible and what course of action customers will have.
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Talk of a May 1 "general strike" by the left-wing Occupy Wall Street movement has included some plans to disrupt travel, such as the goal of "blockading" one of the routes into Manhattan. What will actually happen on Tuesday is unclear, given that plans to blockade San Francisco's Golden Gate Bridge were called off over the weekend. The headlines about labor strikes in the US make for a good excuse to remind Americans who plan to head overseas this year about strikes elsewhere. In Europe, labor unions are protesting austerity cuts made by governments during the economic crisis. In the past month, days of strikes by French air traffic controllers and by workers for Spanish airline Iberia led to hundreds of flights being delayed and cancelled. But strikes aren't limited to Europe. Last Thursday at India's Delhi Airport, a strike by airbridge operators paralysed operations. Here are some highlights of threatened labor actions to come—and how to adjust your travel plans accordingly: On May 3 in Spain, workers at Madrid Airport plan to strike. On May 4 in Italy, baggage workers at Milan Airport may strike, and a strike on the intercity Trenitalia rail line is planned for May 12. On May 10 in the UK, a multi-sector strike will include members of the country's largest rail and transport union, with possible disruptions for travelers aiming to get around cities like London. On May 7 through 13 in Portugal, workers for capital city Lisbon's transport system are calling for a rolling strikes. Later in the month, a general strike is being called for nationwide, which could repeat the effect of a March strike by transport workers, which made getting around a hassle. All told, travelers on Tuesday—and throughout the peak summer travel season—should be prepared to be flexible. So if you're traveling abroad anytime soon, keep your eye on potential strikes and how they may affect your journey. These are some strategies to help you cope: Tip 1: Know the word for "strike" in the language of your destination. Search the Internet for news reports in the days before departure, looking for terms like "strike" and "airport" and "transport." Keep in mind that the English-language media often ignores foreign strikes. So it helps to look in the foreign press, too. Years ago, before a trip to Italy, I searched news articles online using the Italian word for strike, scoperto. Lo-and-behold, I found a story—which I translated using either Yahoo Babel Fish or Google Translate (I can't remember which)—learning that transport workers were going to be on strike the day my plane arrived at Milan Airport, making it impossible for me to use public transportation to get to my hotel in Lake Como. So I booked a cab from the airport in advance. The extra cost of the cab proved well worth the peace of mind. So look up foreign words for strike, too. (Case in point: Strike is "grève" in French.) Tip 2: Verify flight times prior to leaving for the airport. Labor actions may disrupt schedules, yet not all of these labor actions will be long strikes. Some will be more subtle, with greater delays and cancellations than usual, as airlines cope with disruptions prompted by workers seeking pay raises and more job security. Tip 3: Don't assume trip insurance will offer blanket protection. The typical travel insurance policy offers coverage in the event of trip interruption or cancellation, but many policies exclude labor strikes along with acts of war. So talk to your insurer to confirm any details if things start looking bad for your particular travel dates. Tip 4: Fly early in the morning when possible because that lowers the odds of problems stacking up. SEE MORE FROM BUDGET TRAVEL Strike! How to Lessen the Grief of a Paris Grève What to Do If Your Airline Shuts Down Confessions of a National Park Ranger
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TSA Misstep Causes Teen to Lose Pricey Medical Equipment
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