Friday, 15 February 2013

American Airlines is still bankrupt, and still lying

Back in November 2011 when American Airlines petitioned the courts for bankruptcy protection from its creditors, I noted that it initially spoke honestly about what it "expected" that the bankruptcy court would allow it to do -- but quickly lapsed into the usual false and misleading bankrupt-airline rhetoric about what it "will" do and about the "security" of frequent-flyer credits.

In reality, AA's management can't make any promises about what they will do, since that isn't theirs to decide: While they are bankrupt, they will do what the bankruptcy court tells them to do. And the duty of the court is to make those decisions according to what is in the best interests of the bankrupt airline's creditors, not travellers. (Ticket holders should be included on the creditors' committee, but typically aren't.)

And frequent flyer mileage credits, even with airlines that are solvent, are never "secure". No airline includes any right to frequent flyer credits in its enforceable contract terms.

But also as usual, the Department of Transportation has ignored AA's fraudulent claims and allowed them to continue.

Yesterday, AA -- which is still bankrupt, and still operating at the sufferance of the court overseeing its finances -- announced that it plans to ask the bankruptcy court for permission to merge with US Airways.

Whether or not that merger would be good for AA's creditors, it offers no benefits for travellers and many drawbacks, despite the hollow claims of the newly-betrothed airlines' publicists.

Consumers could be forgiven for not even noticing, amid the hype, that AA is still bankrupt, and still lying.

For example, this is from an e-mail message sent to AAdvantage frequent flyer program members to reassure them about the proposed AA/US merger:

Your AAdvantage® miles are secure and existing miles will continue to be honored. In addition, you will continue to earn miles ... through ... existing AAdvantage participating companies, and you will be able to redeem those miles for the same great awards - flights, upgrades, car rentals and hotels just to name a few.

This is false, both because frequent-flyer "miles" are never "secure" and because the final decision on whether they "will continue to be honored" or "you will be able to redeem those miles" rests with the bankruptcy court and will be made on the basis of creditors' interests.

This is also made to a particular group of repeat customers, with the specific intent that they will rely on these (false) statements in remaining "loyal" and continuing to pay more, and take the risks of buying tickets on a bankrupt airline, for tickets that might earn AAdvantage credits.

If that doesn't fit the definition of fraud, I don't know what does. Caveat emptor, and don't hold your breath for the Department of Transportation (under a yet-to-be-appointed new Secretary) to start enforcing the laws against airline fraud and other violations of "common carrier" and other existing consumer protection laws.

Link | Posted by Edward on Friday, 15 February 2013, 10:47 (10:47 AM) | TrackBack (0)
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