The Chapter 11 bankruptcy filings by Northwest Airlines, Delta Air Lines and Delta's low-cost carrier Song are expected to have little if...
The Chapter 11 bankruptcy filings by Northwest Airlines, Delta Air Lines and Delta’s low-cost carrier Song are expected to have little if any immediate effect on travelers.
Longer-term, travelers should watch for route and schedule changes as the airlines make adjustments to cut costs.
Fares could drop temporarily as the carriers compete to keep customers and battle discount airlines, but analysts predict the major airlines will eventually raise prices as they struggle to return to profitability.
Chapter 11 allows companies to reorganize their businesses, but not liquidate their assets as would be the case with a Chapter 7 filing.
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“As far as the operation of the airline is concerned, almost nothing changes. People keep buying tickets, the airline flights operate as usual, and travelers would be hard-put to know that the bankruptcy ever happened,” says Ed Perkins, an airline expert who writes for Tribune Media Services.
Workers and stockholders will feel the harshest effects as Delta and Northwest struggle with the jump in fuel prices caused by Hurricane Katrina, continuing labor problems and high operating costs.
With United and US Airways also operating in Chapter 11, it’s getting harder for travelers to avoid flying on an airline in bankruptcy proceedings. All have numerous flights in and out of Seattle-Tacoma International Airport. (Other major airlines, including Alaska, Southwest, American and Continental, are not in bankruptcy.)
Northwest, which recently dropped its New York-Tokyo service, flies a popular nonstop between Seattle and Tokyo. Delta’s Song recently started nonstop service between Seattle and New York.
Travelers with reservations should contact their airlines or travel agents on schedule changes that could come about as the carriers look for ways to consolidate flights.
If you are flying soon or planning to buy a ticket on Delta, Northwest or another carrier in Chapter 11:
• Pay with a credit card, which offers you protection should the airline (or any other business) fall into deeper financial trouble.
• Consider using up frequent-flier miles. Chapter 11 doesn’t directly affect airline frequent-flier programs, but as airlines look for ways to cut, they could reduce the number of seats they allocate to frequent fliers or raise the number of miles required to get a ticket.
Carol Pucci: 206-464-3701 or email@example.com