Consumers Fear Booking US Airways for Holidays

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With the long-term prospects for US Airways Group Inc. more uncertain, travelers are hesitant to book flights on the carrier for the upcoming holiday season, travel consultants said Monday.


“We’re hearing a lot of nervousness about people booking their Thanksgiving and Christmas trips,” said David Stempler, president of the Air Travelers Association. “Several of our members called asking if they should buy a ticket … if US Air is still going to be there by then.”


The holidays are typically the busiest times of the year for air travel.


Arlington, Va.-based US Airways on Sunday filed for Chapter 11 bankruptcy protection for the second time in 25 months. The company said as it reorganizes, it will maintain normal operations and its current schedule of nearly 3,300 daily flights to 182 airports in America, Europe, and the Caribbean.


But Mr. Stempler is warning his members to be aware that even if US Air doesn’t liquidate, the carrier could make schedule changes that might affect their travel plans.


“Sometimes these things don’t unfold as an absolute shutdown, but they start cutting back and cutting back,” he said. “It’s like a slow-moving train wreck.”


Adding to consumers’ unease, he said, is the fact that the Aviation and Transportation Security Act expires in November. The act, passed after the terrorist attacks in 2001, says if a carrier stops operating, other airlines must honor those tickets at a cost of no more than $25.


Still, Mr. Stempler’s group isn’t telling people to avoid booking on US Airways, but to be aware that there could be schedule changes or that the airline may liquidate.


“We’re telling people to use a credit card – it’s the safest thing to protect their investment,” Mr. Stempler said. “And we’re saying if you’re really worried about it, book something else.”


Under the Fair Credit Billing Act, consumers are supposed to get their money back if an airline ticket isn’t honored – if consumers dispute the claim within 60 days of charging the ticket on their credit cards.


Kevin Mitchell, chairman of the Business Travel Coalition, said he thinks the “chances are remote” that US Airways will liquidate before the holidays, but he understands consumers’ concerns.


“That’s the risk when you enter bankruptcy and consumers read the numbers and see that very few companies the size of US Air that file for bankruptcy twice ever come out,” Mitchell said.


He said business travelers probably won’t rush to switch away from US Airways as quickly as leisure travelers because they’ll have a better understanding of where the company stands in reorganization.


But Mr. Mitchell thinks Thanksgiving from both a business and leisure travel perspective will be the “make-or-break” point for US Airways.


“Thanksgiving is when you panic …if US Air headlines aren’t positive, with their labor and creditor deals, then US Air is in deep trouble,” he said.


That will be the time when corporations, business travelers, and meeting planners will be making their advance bookings for 2005, Mitchell said, and will likely steer clear of US Air if things haven’t turned around for the carrier.


US Airways shares closed Monday’s regular trading session at $1.02, down 44 cents, or 30.1%, on volume of 21 million shares. Average daily trading volume is 458,400.


[Meanwhile, A bankruptcy judge gave US Airways Group Inc. permission yesterday to tap a government loan to fund daily operations – a move expected to allow the airline to continue its normal flight schedule while it searches for additional financing, Associated Press reported.


U.S. Bankruptcy Judge Stephen Mitchell also gave the airline permission to continue its frequent-flyer program and its alliances with other airlines. US Airways officials sought to as sure customers that the airline has no intention of going out of business – even as it asked to skip required payments to employee pension funds.


The company may seek to terminate pensions for flight attendants, bag handlers, and mechanics, and plans to skip a contribution to pension funds tomorrow, Bloomberg News reported. The airline said that it considers $135 million in pension obligations, including $110 million due this week, to be debt incurred before its bankruptcy filing.]


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