Bankrupt airlines
Airlines generally file bankruptcy under Chapter 11. This is usually called as reorganization under Chapter 11. This does not mean that the assets of the company would be liquefied but this is the last step before liquefaction. This is a signal that the company is facing a grave situation. Company file for a bankruptcy under the Chapter 11 only if its debts exceed the value of its assets. However some of the bankrupt airlines have requested the bankruptcy airlines courts to release them from bankruptcy.
Usually the bankruptcy airlines would promise to continue their operations but this should not be believed. The bankrupt airlines hope to sort out their assets and hope to make profits again but they might not be successful. But if the court feels that they would not be able to recover then the court would typically ask them to shut down and would liquidate their assets. The court is the one responsible to decide on the operation of the airlines. So the airlines cannot promise faithfully that they would be operating in the future.
There are three cases that can happen once the bankruptcy airlines has filed for bankruptcy. The airline would either sort out and return backs to the profitable business or can be taken over by other airlines by the permission of the court. Besides these two options the assets of the airline can even be put on auction under the direction of the court.
The next question is what happens to the people who have already bought tickets. For almost all of the airline bankruptcy cases the airline will arrange people who have already bought tickets on other airline without charging any extra charges. In case the schedule of the flight is not in convenience with the timings of the lender then the airline is supposed to refund the money of the passenger especially if the ticket has been purchased directly from the airline and not through any travel agent.
Generally people wouldnt like to fly with a bankruptcy airlines and for this they may like to have a refund of their money. But the money cannot be refunded unless the replacement flight schedule does not match the convenience of the lender. If the replacement were not according to your convenience then you would have to submit a refund application with the airline authorities or the travel agent from whom the ticket was purchased. In case you have paid for the tickets by your credit card then you can get a refund by placing a request with your credit card company within sixty days after which the billing statement for the tickets has been received. But in case you have booked the ticket sixty days in advance and the airline goes bankrupt after these 60 days of you getting the bill then you end up losing the money.
In case the assets of the airline have been liquidated then in such cases the ticket holders and people who have a claim with the airlines are termed as unsecured creditors. If the airline is asked to pay back all the creditors then these people are paid in the last if there is some amount remaining after the secured creditors have been paid. Keep in mind that if you have taken your tickets in USA then the government does not take any guarantee for the money.
If one bankrupt airline is taken over by another airline then you may get the honor ticket or you might not get the ticket. It will generally depend on the terms of the sale and also the purchase of the assets of the airline. When you have frequent flyer mileage credits on a bankrupt airline then you should just forget about it. If you have forgotten to check the terms of the program and check on it again it says that the airline can change the terms at any point. Many of the regular flyer records are sold off to some direct marketing company. But this is not the case in USA. So in case if you have any mileage credits on any airline which is going bankrupt then you should use them as soon as you can. Besides do not make any other investments in the mileage programs of this airline. You should also avoid booking any future traveling with the airline.
Here are some tips that you can use to protect yourself when buying tickets from a bankrupt airline.
* When you know that the airline is going bankrupt and you are buying a ticket then you should use a credit card for your purchase rather than a debit card. Whiling using a credit card if the airline goes bankrupt you can get the money from your credit card issuer.
* You should get paper tickets. These tickets do not cost much even if they cost a bit more you should pay for it. If you are buying an e-ticket then you should consider taking a print out of the passenger receipt coupon.
Now that you know quite a bit about dealing with bankrupt airlines you should be careful when you buy tickets with such airlines. There are instances when you might get a fund but you cannot be too sure about it. Besides whenever you get a ticket make sure that you get it with your credit card rather than your debit card. So before you buy a ticket confirm the condition about the airline. Besides make sure that you use up your flyer mileage as soon as possible before the airline files for a bankruptcy finally and its assets are liquidated.
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