Ticket-holder protection may be renewed

Congress may extend rule forcing airlines to honor tickets of defunct rivals

October 07, 2004|By KNIGHT RIDDER/TRIBUNE

PHILADELPHIA - A law requiring airlines to honor tickets issued by competitors that go out of business is due to expire Nov. 19, but Congress is moving to extend it in light of the fragile financial condition of US Airways Group Inc. and others.

On Monday, the Senate unanimously approved an amendment that would keep the ticketing rule in place.

The Senate attached the amendment to a larger piece of intelligence legislation adopting many of the recommendations of the Sept. 11 commission. The House also would have to approve the provision.

The amendment has the strong backing of groups representing consumers, including the Business Travel Coalition and the Association of Retail Travel Agents. The airlines are divided on the issue, with US Airways supporting it, Southwest Airlines saying it is neutral and other big carriers opposed.

In addition to US Airways, which filed for Chapter 11 bankruptcy protection Sept. 12, United Airlines' parent, UAL Corp., has been operating in bankruptcy for almost two years. Delta Air Lines Inc. has said it could be forced into bankruptcy reorganization by the end of this month if it cannot restructure some of its debt, and a smaller carrier, ATA Airlines Inc., has said it may seek Chapter 11 protection by January.

Delta, United and US Airways account for almost half of the U.S. airline industry's passenger capacity.

The original legislation was one provision of a bill, the Aviation and Transportation Security Act, that helped airlines recover from the Sept. 11 attacks. It passed at a time Congress was worried multiple airlines could fail, leaving millions of travelers stranded.

Under the original legislation, passengers who found themselves with worthless tickets on a defunct airline could use them for up to 60 days on the same routes on another airline, but only on a space-available basis. The surviving airline could charge a service fee of no more than $50 round trip.

US Airways has said it could be out of business by mid-February unless it quickly reduces its labor costs, an effort it is pursuing in a hearing scheduled today in U.S. Bankruptcy Court in Alexandria, Va.

Travelers who purchase tickets with credit cards usually can get refunds if an airline goes out of business, but those who buy using cash or bank debit cards do not have the same protection, said Kevin P. Mitchell, chairman of the Business Travel Coalition.

"Airline failures should not be financed on passengers' backs as they are left holding millions of dollars in potentially worthless tickets," he said.

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