Bought 4 plane tix to Orlando: What happens if airline goes bankrupt?

Factual Questions
1

I’m taking little H8_2_W8_Jr and Mrs. H8_2_W8 and Mother_in_Law_H8 to Disneyworld in November and bought 4 Delta plane tickets last month.

With the airline industry in such bad shape and a couple of the carriers declaring bankruptcy, what happens if our airline also goes bankrupt (but still keeps operating like the others)? Will they honor the previously bought tickets or will they say that those are debts to be wiped clean and make us buy again?

2

I know US Airways will honor all purchased tickets despite their recent bankruptcy. From the interview I saw with an aviation industry analyst–the customer will see no difference in how the airline operates.

That may not be the case with all airlines though. I think it depends how bad their debts are and if they expect to recover from bankruptcy.

3

Bankruptcy takes a LONG time to muddle through. Bankrupt or not air carriers will continue to honor any tickets previously bought so I wouldn’t worry. If the airline had a complete meltdown to the point of stopping business on the spot (which is highly unlikely) then you’d be SOL. Having bought a ticket you could claim damages from the defunct company and seek to recover your money. However, you’d line up with all of the other creditors and people seeking payment in bankruptcy court and you’d be lucky to see a dime.

Still, I wouldn’t worry too much about it especially as Delta hasn’t even claimed bankruptcy yet.

4

Didn’t CANADA 3000 just close up shop without notice?

5

Well, it’s happened…remember Eastern Airlines? One day they just shut down. However, I believe another airline or airlines honored the tickets.

6

It depends on what chapter of bankruptcy they file under. If it is a chapter 11 bankruptcy (reorganization), you should have no problem with using your ticket. The airline is saying their current debt level is sucking too much of their cash away for them to be able to operate effectively. Therefore the debt goes on hold and they continue to operate while they negotiate with their debtors and the courts on a payment plan.

Now, if you sold them a thousand cases of pretzels for use on their flights, I would go ahead and write that off as a bad debt.

If they are filing a chapter 7 (liquidation), I would be somewhat concerned. In the past when other airlines have filed a Chapter 7, they usually make an agreement with another airline to honor the tickets (sorry, no cite).

Either way you have a good chance of using your tickets to go pester “The Mouse” for a paw print, but do not hold your breath for payment on the pretzels.

7

This actually happened to my sister.

Most of the major U.S. airlines will honor (or at least credit) tickets from each other in the event of a strike or shutdown. There are a few smaller airlines that are not part of the agreement (I belive Southwest may not be part of the agreemen, but I’m not sure) in which case, you’d be out of luck.

If you bought your tickets with a major credit card, and the airline shuts down, you can instruct your credit card company not to pay the bill (just as if you’d bought a refrigerator and never received it.) That is your best defense.

But I think Delta will be okay. I’m in St. Louis, and had to watch TWA file for bankruptcy a couple of times before they finally sold out.

8

As mentioned above, credit card purchase is your best bet. I received a rebate from my credit card company when a gym shut down overnight. Those who had paid with cash were screwed.

9

Ever try reading the economic reports at http://www.delta.com/ ?

Delta is one airline in very good financial shape, at the moment.

10

Kunilou’s answer about using credit cards is the good way, unless you buy the tickets now on a “sale” for use several months down the road and pay your credit card bill off next month. It would seem to me that some struggling carriers might use such a sale to raise quick capital, and then still go under.

How stupid can I be in this regard?:
Back in 1984, I bought 2 round-trip tickets to Hawaii at a too-good-to-be-true rate from Pacific East Air. A friend swore up and down that they flew them all the time and had no problems. I should have been suspicious when I found that:

  1. You couldn’t buy tickets for them from a travel agent.
  2. You could only get the tickets at the airport.
  3. They strongly preferred cash, and would not take credit cards.
  4. They were working out of another airline’s gate.
    As you can imagine, about 6 weeks after I bought the tickets, Pac East was nowhere to be found. I got in line as a part of a class action suit, but of course taxes are paid off first, the major debtors second, and little guys last. IIRC, I didn’t see dime one.
11

Hey when will you be there? I’ll be flying home Sunday the 3rd. I’ll be the big fat white guy with the goatee; look for me. :cool: