NEW YORK (
) -- The news that American Airlines and its parent company
filed for Chapter 11 bankruptcy protection Tuesday may have unnerved some ticket holders, but it isn't likely to have any impact on year-end vacation plans for those who have booked flights with the airline.
In its bankruptcy announcement, American noted that it will continue to honor all tickets, reservations and airline miles from customers and plans to keep offering its signature AAdvantage frequent flier program and Admirals Club memberships. The airline also intends to maintain its normal flight schedules and service routes. Some of this could change in the long term, but in the immediate future, the bankruptcy might actually help American Airlines customers rather than inconvenience them.
American Airlines' bankruptcy may actually be good for travelers, at least in the short term.
"This has happened so many times before that we know how it usually ends," says George Hobica, a travel expert and founder of Airfarewatchdog.com, referring to such other airlines as
that have filed for bankruptcy since the terrorist attacks of 2001 prompted a slowdown in the travel industry. "The miles will be protected, but people will shy away from American Airlines in the short term because of bad publicity, so the company will probably have a sale." Hobica predicts that the company may implement promotions such as double mile bonuses to retain customers.
In the long term, though, customers may see the quality of service go down while prices soar.
Much of the reason for American Airlines' decision to file for bankruptcy had to do with its higher-than-average labor costs cutting into company profits. The airline had tried and failed repeatedly during the past few years to broker new labor contracts as other airlines successfully brought their costs down.
Now that the company has filed Chapter 11, Hobica predicts pay cuts will be front and center again. As a result, if and when American Airlines emerges from bankruptcy, the company may be leaner but the workers may be meaner.
"The service and morale at the company definitely won't get better," Hobica says.
Ultimately, Hobica predicts that American Airlines, which fell from being the largest to the third-largest airline in the past decade, will partner with smaller carriers such as US Airways,
Alaska Air Group
to compete against
and United Continental. That may be a good for business, but not necessarily for travelers.
"Very few airlines have ever survived by shrinking down, so what we'll probably see is more consolidation, which would not be good for consumers," Hobica says, noting that fewer airlines can only mean less competition on prices.
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