Bill protects ticket holders on bankrupt airlines

Passengers who buy tickets on a bankrupt carrier should sigh with relief at the recent passage by the U.S. Senate of a bill that extends bankruptcy protection for air travelers.

Since a number of carriers are operating in bankruptcy – including Aloha, ATA, Delta, Northwest and United – half of travelers will be flying on a bankrupt airline in the coming months.

At press time, the bill still needed to be signed by President Bush. That’s expected to happen by Saturday, when the current law expires.

Here’s why you should care:

The original law was passed to protect airlines struggling after Sept. 11, 2001. The act says passengers ticketed on a U.S. carrier that ceases operations have the right to get a ticket on a space-available basis on the same route.

Passengers have 60 days from the date of cessation to make alternate arrangements. The law doesn’t apply to foreign or charter carriers.

With the new bill – which will expire Nov. 30, 2006 – the price passengers pay to travel on an alternate carrier will be $50 each way, up from $25 previously.

When the original law went into effect, there was no price limit specified, just a statement that the airlines could charge a reasonable fee. However, that changed after Vanguard ceased operations in July 2002. We saw a lot of confusion when some airlines transported stranded travelers for free, some charged a nominal fee and some charged more than $100 one way.

In response to this, the Department of Transportation decided that no more than $25 one way was reasonable. A lot of airlines were unhappy with that number; even I was shocked by it. Raising the price to $50 is still a bargain, considering that on some routes you could be paying up to $599 for a one-way walk-up fare.

According to the bill, airlines must transport you on published fare routes, and connections are allowed. For example, if you’re flying from Kansas City to Dallas, US Airways would not be required to transport you, because they don’t offer a published fare on that route.

Airlines should consider travel to another airport in the same city as the same route. If your flight were from Dallas to New York’s JFK, a carrier flying from Dallas to Newark, N.J., would be expected to accommodate you. However, if you were flying to Fort Myers, Fla., travel to nearby Sarasota would be iffy. Whether this is an alternate city is the airline’s decision.

This law does not apply to an airline that is still operating but decides to cut routes. For example, AirTran recently announced the end of flights from Dallas to Los Angeles as of Dec. 6. Because AirTran is still operating, you can’t go to American and try to fly on this route for $50.

If you have reservations for travel after Dec. 6, AirTran can rebook you on a long flight from Dallas to Atlanta to Los Angeles, adding another 1,439 miles to your trip each way, or they can give your money back.

While we would be quite surprised if a legacy carrier ceased operations, it could take days to be re-accommodated from hub cities with little competition. If Delta ceased operations, flights from Cincinnati would be hard to come by because there just wouldn’t be enough seats available on alternate carriers, unless they brought in larger aircraft.