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FF Miles And Airline Bankruptcy  
User currently offlineSafetyDude From United States of America, joined Sep 2001, 3795 posts, RR: 15
Posted (10 years 5 days 20 hours ago) and read 2472 times:

Hi all,
I am wondering if an airline (say, Delta) were to go bankrupt, if they could suddenly get rid of the FF program and have everyone loose their miles.

Thanks.
 Smile
-Will


"She Flew For What We Stand For"
11 replies: All unread, jump to last
 
User currently offlineDtwclipper From , joined Dec 1969, posts, RR:
Reply 1, posted (10 years 5 days 20 hours ago) and read 2463 times:

In the case of Pan Am 1, my WorldPass account was moved over to Delta, but I never used it.

I am sure if DL or any other airline where to liquidate, a sale of assets would transpire, and the FF list is a very, very valuable asset. Those accounts would most likely move to the buyer.



User currently offlineSabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 47
Reply 2, posted (10 years 5 days 20 hours ago) and read 2464 times:

Sure they can! Most of the times that's exactly how it goes.

You then become a creditor of that defunct airline and might try to get compensation from the receivers of the company, but don't expect much.. After all when an airline goes belly up, it has so many debts, your miles really were just a drop of water in the ocean, but technically speaking you should be compensated.

What may happen however is that when the company re-emerges, the new owners of the company might want to honour its FFP and the accumulated miles. This was the case with Swiss and SN Brussels Airlines, both successors to resp. Swissair and Sabena, which both honoured miles handed out from their predecessor.

In short: mostly you loose everything, sometimes you don't. Depends on the goodwill of the new company.



User currently offlineANstar From United Kingdom, joined Nov 2003, 5175 posts, RR: 6
Reply 3, posted (10 years 5 days 19 hours ago) and read 2426 times:

Unlike Ansett where all the FF members got nothing. Even reward seats that were booked on some other carriers were voided

User currently offlineLuv2fly From United States of America, joined May 2003, 12090 posts, RR: 49
Reply 4, posted (10 years 5 days 19 hours ago) and read 2413 times:

Most likely you would get nothing, now a smart airline would go after the FF with status, i.e. gold and such, to get there business.


You can cut the irony with a knife
User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 16
Reply 5, posted (10 years 5 days 19 hours ago) and read 2408 times:

I am sure if DL or any other airline where to liquidate, a sale of assets would transpire, and the FF list is a very, very valuable asset. Those accounts would most likely move to the buyer.

Ahem...FF accounts are a liability. In an asset sale, usually assets are sold. I can't think of ANY US airline in todays market that would be falling all over themselves to take on the liability of a FF program.

And there's an assumption that if, say, Delta filed and couldn't restructure, that someone would ride to the rescue and "buy" them, ala AA-TWA. If anything the other majors have enough aircraft parked in a desert and enough employees furloughed that they'd have very little need to "buy out" a failing airline. Given the history of the AA-TWA deal, I think most airlines would just let the failing carrier fail and pick up whatever pieces they wanted - directly from the lenders or leasing companies and not the failing airline. And FF programs would NOT be something that they would find any value in.

Last I checked, there was nothing written that said Atlanta must be a megahub airport. Sure, there'd be a helluva lot of demand for travel - demand that could be picked up using existing airlines and employees and aircraft, and deals done between surviving carriers and the airports. It's just that Atlantan's would find themselves more likely changing planes somewhere like Chicago or Dallas or Houston instead of hopping on a nonstop flight. And passengers in other cities who used to connect in Atlanta would find themselves connecting thru a different hub airport.



User currently offlineOB1504 From United States of America, joined Jul 2004, 3309 posts, RR: 9
Reply 6, posted (10 years 5 days 19 hours ago) and read 2386 times:

But if an airline, say, US, went bankrupt, wouldn't the FFP miles still be good on flights on other Star Alliance carriers? Would it be the same with oneworld and SkyTeam?

User currently offlineSafetyDude From United States of America, joined Sep 2001, 3795 posts, RR: 15
Reply 7, posted (10 years 5 days 19 hours ago) and read 2378 times:

Thanks for all of your replies.

 Smile
-Will



"She Flew For What We Stand For"
User currently offlineUsnseallt82 From United States of America, joined Jan 2004, 4891 posts, RR: 53
Reply 8, posted (10 years 5 days 19 hours ago) and read 2373 times:

Well, the thing about FF mileage is that its a gift from the airline to loyal customers. If they are looking down the throat of bankruptcy then they will be doing anything they can to bring customers in as quickly as possible. If they get rid of FF miles, they lose a very large customer base that has stayed with them forever.

This is usually why airlines will find a way to either honor those miles or switch them to another, more financially stable, carrier.

Cheers!  Big thumbs up



Crye me a river
User currently offlineCragley From Australia, joined Jul 2004, 427 posts, RR: 0
Reply 9, posted (10 years 5 days 17 hours ago) and read 2321 times:

As Ansett showed, a FF program is a loyalty scheme, but is also a liability as far as accounting is concerned.

Nobody touched their FF customers. United honored all existing bookings and Credit Cards offered double points for a 2 month period for existing clients. the condition was that the Ansett points were no longer valid (Altitude Card)
and that the Credit Card loyalty balance was zero.

So I guess it would all depend.



User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 16
Reply 10, posted (10 years 5 days 17 hours ago) and read 2303 times:

Cragley hit it on the head - according to any FF program, trips that are pending from FF miles would be honored, but they can drop the program with about 6 months notice.

Let's use Delta in this case...Sure, they'll be some customers who would defect to another carrier in protest, but when push comes to shove, if Delta has a flight that A) fits the schedule and B) is priced right, most folks will book that flight. Because the fact is, most "elites" are not buying their tickets - their company is. And I don't know of many companies who would accept "I will not fly Delta because they don't have a FF program" and gladly reimburse an employee for paying more and flying on a less convenient AA or UAL flight.

An "employee friendly" company might agree to reimburse them for the cost of the "company preferred" flight and let the employee pay the difference out of his/her own pocket for the flight on an airline that does offer a FF program - and only if the schedule of the "employee preferred" flight was within an hour of the "company preferred" flight. My guess is that folks who try that will find themselves less willing to pay to go to work, and they'll fly whatever the company tells them to fly.


User currently offlineN6376m From , joined Dec 1969, posts, RR:
Reply 11, posted (10 years 5 days 17 hours ago) and read 2279 times:

Going Boeing - FF lists are intangible assets. Outstanding FF miles are liabilities.

Because the list of participants is a self-created intangible, it rarely shows up on the balance sheet, but it certainly affects the value of the entity. It's sort of like goodwill.

-76M


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