Wednesday, November 30, 2011

American Airlines' Bankruptcy

First things first: no planes are going to fall out of the sky.

Weren't worried about that? Well, then let me address the number one traveler fear about American Airline's announcement yesterday of its Chapter 11 filing: AA frequent flyer miles didn't go up in smoke either. The airline announced those will remain unchanged for now. And even if American Airlines does go out of business completely (which wouldn't happen anytime soon, by the by), frequent flyer miles would likely be transferred to another airline, if history is any guide. In the article above, Miles Maven Tim Winship talks about what's happened to loyalty programs in the past when these types of situations arise.

I was speaking with George Hobica of AirfareWatchdog yesterday and his best guess on how the bankruptcy filing will affect travelers I'll call "sticky tray table syndrome". Superficial maintenance issues on the planes may suffer. Bluntly put: the planes are going to get grungier. And flight attendants are less likely to be smiling as they try to sell you your dinner. The filing was made, after all, to control labor costs. That means everyone you encounter at American for the next several months is going to be fretting over pay cuts and even possible job losses. So it won't be the happiest of work environments.

American has also said that its going to use the filing to get out of some of its leasing arrangements. Currently the Airline leases 29% of its fleet, which means that we'll be seeing significant changes in flights schedules, with a flights to less profitable gateways more likely to be dropped. At least in the near future. American has ordered a lot of more fuel efficient planes and it plans to accept delivery of those.

One final outcome of this situation? A possible marriage proposal. Industry watchers expect to see a merger between American and US Airways, to make it--like the other recent airline mergers--a super airline that's possibly "too big to fail".  Or at least too big to discount. Because whenever airline's merge redundant routes are eliminated and (often) prices rise.

So don't believe anybody who tells you this latest bit of bad travel news will have no affect on passengers. It will, but the changes will creep up on us, like a receding hairline. Always good to have something to look forward to.

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