SafetyDude
Topic Author
Posts: 3654
Joined: Fri Sep 07, 2001 10:02 am

FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 9:53 pm

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"
 
dtwclipper
Posts: 6668
Joined: Wed Oct 29, 2003 3:17 am

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 9:57 pm

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.

Compare New York Air, the Airline that works for your Business
 
sabenapilot
Posts: 2442
Joined: Sat Feb 26, 2000 6:18 pm

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 10:03 pm

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.

 
anstar
Posts: 2868
Joined: Sun Nov 23, 2003 3:49 am

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 10:25 pm

Unlike Ansett where all the FF members got nothing. Even reward seats that were booked on some other carriers were voided
 
luv2fly
Posts: 11056
Joined: Tue May 13, 2003 2:57 am

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 10:42 pm

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
 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 10:44 pm

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.

 
OB1504
Posts: 3001
Joined: Tue Jul 27, 2004 5:10 am

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 10:56 pm

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?
 
SafetyDude
Topic Author
Posts: 3654
Joined: Fri Sep 07, 2001 10:02 am

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 11:04 pm

Thanks for all of your replies.

 Smile
-Will
"She Flew For What We Stand For"
 
usnseallt82
Posts: 4727
Joined: Tue Jan 06, 2004 4:49 pm

RE: FF Miles And Airline Bankruptcy

Tue Jul 27, 2004 11:09 pm

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
 
cragley
Posts: 391
Joined: Tue Jul 20, 2004 6:09 pm

RE: FF Miles And Airline Bankruptcy

Wed Jul 28, 2004 12:23 am

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.

 
goingboeing
Posts: 4727
Joined: Sat Dec 04, 1999 1:58 am

RE: FF Miles And Airline Bankruptcy

Wed Jul 28, 2004 12:52 am

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.
 
N6376M
Posts: 2310
Joined: Tue Aug 12, 2003 12:54 am

RE: FF Miles And Airline Bankruptcy

Wed Jul 28, 2004 1:08 am

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