American Airlines bankruptcy: what it means for Qantas passengers

By John Walton, November 30 2011
American Airlines bankruptcy: what it means for Qantas passengers

With American Airlines filing for bankruptcy overnight, Australian travellers – especially those booked on Qantas, which relies on AA for connections from Los Angeles and Dallas/Fort Worth – may be wondering what it means for them.

We'll be up front with the general message: the airline hasn't gone bust. In fact, American Airlines has invoked the US legal status known as Chapter 11 which affords some protection against bankruptcy -- it's a way to cut costs and restructure the airline while still flying, so there's nothing to worry about in the short term.

Many of American's US competitor airlines have gone through Chapter 11 and out the other side without much disruption to passengers.

Your Qantas codeshare flight with American Airlines will continue to run, and American says it will "remain an integral member of the oneworld alliance ... and continue its codeshare partnerships". The airline "expects to continue normal business operations throughout the reorganization process".

Qantas has also moved to reassure passengers, with a spokesman telling Australian Business Traveller that "Qantas passengers booked on American Airlines-operated codeshare services will not be affected and should travel as scheduled."

"American remains a member of the oneworld alliance and an important Qantas partner through the joint business agreement between the two airlines."

In other words: for now, it's business as usual.

Future impacts for Australian travellers

American Airlines is unlikely to make earth-shaking changes to its frequent flyer program AAdvantage. Like Qantas, the frequent flyer program is in some ways more valuable than the airline.

In the event of serious changes to American -- a proper "AA goes bust" situation, say -- it's possible that your travel insurance will quibble at paying out.

There's a clause in most contracts about how a "reasonable person" might have foreseen the problems. An airline in Chapter 11 might be a "reasonable" thing to avoid, but given the fact that most US airline have already gone through it without going belly-up, it's not a clear-cut case.

We expect some of American's oldest gas-guzzler planes to be retired as well, potentially faster than the airline can pick up the hundreds of fuel-efficient replacements it has on order from Boeing and Airbus. That might lead to route or schedule cuts in the medium term.

Whenever a US airline goes into Chapter 11, there are the inevitable merger rumours too. But that's probably a way off, and impacts from any proposed merger will be delayed while proposals work their way through regulators.

Australian Business Traveller will be keeping an eye on things and will bring you any developments likely to affect your travel plans.

John Walton

Aviation journalist and travel columnist John took his first long-haul flight when he was eight weeks old and hasn't looked back since. Well, except when facing rearwards in business class.

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