Tuesday, 4 October 2011

"Bankruptcy talk rattles American Airlines' frequent fliers"

Bankruptcy talk rattles American Airlines' frequent fliers (By Arlene Satchell, South Florida Sun-Sentinel, 4 October 2011):

The rocky financial situation at AMR Corp. -- parent company of American Airlines -- has unnerved some members of the airline's AAdvantage frequent flier program, especially those sitting on a stash of unclaimed miles.

Shares of AMR rebounded 21 percent Tuesday to $2.39 after plummeting 33 percent Monday on speculation of a possible bankruptcy filing.

Many wonder what an AMR bankruptcy, if it happened, would mean for their ability to redeem these rewards....

"People have a tendency to think of frequent flier miles as money in the bank, but it's not like that at all," said Edward Hasbrouck, author of The Practical Nomad travel books and a policy analyst with the Consumer Travel Alliance.

Hasbrouck said American has no contractual obligations to the frequent flier mileage holder and it could change or eliminate its frequent flier program at any time -- bankruptcy or not.

"If they're in bankruptcy, the decision of whether to do so will not be made with any consideration of the interest of the frequent flier holders," he added.

Hasbrouck advises customers with miles to "use them up now" if they have the chance.

For more advice, see my FAQ about Airline Bankruptcies.

Link | Posted by Edward on Tuesday, 4 October 2011, 17:35 ( 5:35 PM) | TrackBack (0)
Comments

You are probably right that AA would not be legally bound to honor frequent flier miles during/after bankruptcy, maybe the bankruptcy court's approval would be needed.

However, when all the other big airlines went through bankruptcy in the last 15 years or so, they all kept their rewards programs in place, probably because if they didn't many of their frequent fliers, especially business customers who often pay higher fares for unrestricted tickets, would never fly AA again!

What I've noticed is that all the airlines seem to be devaluing the miles so that it takes more miles to fly to a given location. They may list 55,000 miles for a round trip to Europe but good luck finding a ticket for 55k. At Delta, I've never found a seat to Europe for less that 75k, and sometimes as much as 120k, and I'm talking the cattle car coach, not first class!

Posted by: Erik, 10 October 2011, 02:12 ( 2:12 AM)
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