(Originally published October 10, 2005)
With four of the nation's largest airlines currently operating under protection of the bankruptcy court, there could be several effects on the group travel market.
Delta and Northwest, which last month became the most recent carriers to file for Chapter 11 bankruptcy protection, are being somewhat forthcoming by devoting sections of their websites to the reorganizations, but they are adamant that passengers will not be much affected.
But Edward Hasbrouk, author of the "Practical Nomad" travel books, warned that programs such as discounted group travel or frequent-flyer miles can continue only with the permission of the bankruptcy court, and, while such OKs are likely, they should not be considered certain.
"An airline can get rid of the [frequent- flyer] program at any time and for any reason — that's true with or without bankruptcy," Hasbrouk said. "The additional component that bankruptcy sticks on top of that is that if they want to continue to operate a frequent-flyer program, they have to get permission from the bankruptcy court. That permission can be revoked at any time if the court doesn't think the program is in the best interest of the creditors."
That said,"Frequent-flyer programs are safe, as is group travel, unless an airline liquidates," opined airline analyst Ray Neidl of Calyon Corporate and Investment Bank in New York.
Jay Ellenby, president of Safe Harbors Travel Group, a travel management services company based in Baltimore, said, "We constantly recommend that people use their frequent-flyer miles or give them to charity as soon as possible even if the airline is not in bankruptcy."
Both Northwest and Delta have already made significant cost cuts. Northwest will lay off 1,400 flight attendants by January, and the pilot's union expects cuts of approximately 400 pilots as well.
Delta is eliminating its least fuel-effi- cient aircraft, reassessing certain flights and schedules and cutting compensation to management, and it reportedly is likely to eliminate some 9,000 jobs.
One big change may be lessened direct service to and from the Cincinnati/Northern Kentucky airport; nine cities that previously serviced Cincinnati nonstop will now include an Atlanta connection.
Delta does expect to expand service in certain areas, especially its Salt Lake City and Atlanta hubs as well as Hawaii and select international destinations.
"Both [Delta and Northwest] systems will probably marginally shrink domestically," said Neidl.And once out of Chapter 11, "the new companies will be leaner and meaner with reduced costs and a slightly modified model with more emphasis on international flying."
It can be prohibitively difficult to plan meetings without patronizing the carriers that are in Chapter 11, which also include United and US Airways.
"If planners choose a destination like Minneapolis or Atlanta, chances are they're going to end up flying on an airline that has filed," Ellenby said.