Although e-bk focuses primarily on personal bankruptcy news and information, from time-to-time the staff feels that it is important to highlight certain corporate bankruptcies as they could be seen as a sign of changing times. The last week of March and the first few weeks of April 2008 brought three bankruptcy announcements by airlines.
In March, Aloha Airlines announced its plans to file for bankruptcy and ceased operations effective March 31, 2008. Aloha Airlines had been serving the Hawaiian Islands for more than sixty years. A few days later, on April 2, 2008, Indiana-based ATA Airlines also announced that it had filed for bankruptcy. ATA Airlines did not offer any forewarning to passengers and immediately cancelled all flights. Many passengers were greeted by signs at airports announcing the bankruptcy and cancellations.
Just over a week later, Frontier Airlines joined the fray and announced that it had filed for chapter 11 bankruptcy protection in the Southern District of New York. Unlike Aloha and ATA Airlines, Frontier Airlines remains open and plans to continue business operations as usual throughout the bankruptcy process. In order to ensure the best in customer service during this financial hardship, Frontier Airlines has published a Frequently Asked Questions for Frontier Customers.
Throughout history, airlines have been notorious for financial problems with very few recording profits on an annual basis. The state of the economy in the United States, especially the record high gas prices, is leading to increased costs on the part of the airlines. In addition, the fear of a recession is leading many consumers to forego vacations and other trips that utilize airlines.
The three airlines mentioned here aren’t the only ones being affected by this slowing of the economy. Although no other airlines have announced their intentions to file for bankruptcy, many are scrambling to increase revenue by generating new money-making streams. For example, United Airlines will be limiting economy-class customers to one checked baggage. If the customer would like to check an additional piece, as was customary prior to the new restriction, they will be faced with a surcharge of $25.00.
Other ways that airlines are using to increase revenues are by charging for skycap or curbside check-in, charging for printed and/or mailed tickets, increasing the fees for overweight luggage and charging booking fees when a customer books a flight. These new charges are likely here to stay.
