When an airline goes bankrupt and stops operating, you technically become one of the airline's creditors in bankruptcy. If you file a claim in the bankruptcy court, there is a chance you will recover some very small percentage of the value of the ticket, but more likely you will recover nothing at all.
But just because an airline is in bankruptcy doesn't mean it has stopped operating. Your ticket may end up getting you where you want to go, on the carrier you expected.
In the past, most airlines would honor a bankrupt airline's ticket and allow you on a substitute flight. But these days, given the competitive nature of the airline industry, this is rarely done. Sometimes, as a gesture of good will (and a way of luring new customers), an airline will offer a special discounted fare for passengers holding tickets on a bankrupt airline. If you have a ticket on a bankrupt airline and are a frequent flyer on another airline, try to negotiate free or discounted travel using the bankrupt airline's ticket. Trip cancellation or trip interruption insurance can sometimes cover the cost of a replacement ticket.
If you have an e-ticket on an airline sliding into bankruptcy and you can't stand the uncertainty, run to the nearest ticket counter for your airline and exchange it for a paper ticket. Any airline nice enough to accept passengers from a bankrupt airline will accept only those passengers with paper tickets.
Some travelers who belong to only one frequent flyer program will pay more for a ticket or will take an indirect or inconvenient flight on an airline just to get frequent flyer credit. One way to avoid this frequent flyer trap is to join more than one program. Although you can get travel awards faster by concentrating your travel on one airline, you may get better fares and connections if you don't restrict yourself to one airline. When you compare tickets, keep in mind that frequent flyer miles are worth approximately 2 ¢ per mile; use that figure to help calculate which option is best. The 2 ¢ per mile estimate was calculated by dividing the average cost of a domestic round trip ticket (approximately $500) by the number of frequent flyer miles needed for such a ticket (25,000 miles).
Some airlines allow you to give your frequent flyer awards to immediate family members. Many don't allow anyone other than the person participating in the program to use the awards. As for selling your awards: Most airlines don't allow this and, if they find out, will confiscate the ticket and penalize the frequent flyer program member's account balance.
Tickets may have either of the following restrictions.
Nontransferable. A nontransferable ticket can be used only by the passenger whose name appears on the face of the ticket. If the names on the passenger's ID and on the ticket do not match, the airline can confiscate the ticket. If a ticket is nontransferable but refundable, however, you may be able to cash in the old ticket and buy a new one with the new passenger's name.
Nonrefundable. If you have a nonrefundable ticket, you cannot get your money back if you decide not to travel. But each airline has exceptions. If you cannot make a flight for which you have a nonrefundable ticket, you may be able to apply the ticket toward a future flight or exchange it for credit toward future travel. If the fare has dropped on a flight for which you have a nonrefundable ticket, you may be able to get reticketed. In either situation, you will probably have to pay a fee to make the change.
Penalties. Often, there are penalties for canceling or making other changes.
Airlines determine the price of most airfares through computer programs that calculate how many passengers are likely to book seats on any given flight. In addition, airlines might offer discount fares to avoid flying with empty seats, and they charge more for flights and schedules that are likely to be used by business travelers. Ticket prices may also be affected by competition with other airlines that offer discounted prices. The result of all of these things is that passengers on the same flight could be paying as many as a dozen different fares.
In certain exceptional cases, the airlines will allow nonrefundable tickets to be refunded if you need to cancel your plans because of the illness or death of your traveling companion or a close relative. Usually, you are urged at the time of purchase to take out travel insurance to cover this contingency. Sometimes charging a ticket on a credit card will give you some travel cancellation insurance.
An airline may offer a discounted fare (sometimes a minor discount, sometimes a generous discount) when a close relative becomes seriously ill or dies, causing you to travel without any advance planning. Who must be ill or have died for you to obtain a bereavement fare varies among airlines. For example, some airlines will give a discounted fare to attend the funeral of a parent, child, sibling, spouse, or in-laws only, while other airlines include non-marital partners and their immediate family members.
However, policies vary, as well as circumstances. If you are going to a memorial service scheduled for next week, even for your immediate relative, the airline will probably not offer you a bereavement discount.
Contact the airline immediately. You will be required to fill out a lost ticket application. The airline will either issue a replacement ticket (after you sign an agreement to reimburse the airline for the cost of the replacement ticket if someone successfully uses your lost ticket) or force you to purchase a replacement ticket at the currently available fare (often outrageously expensive because you do not get any advance purchase discounts). In addition, you usually have to pay some sort of service charge or penalty.
After waiting some time (usually two to six months), the airline will issue you a refund for the price of your replacement ticket (less a handling charge) if your lost ticket was not used during that time.
If a flight is overbooked, the airline is required to ask passengers to volunteer to take a later flight. Normally, the airline will offer some kind of incentive, such as a free domestic or international round-trip ticket. If an insufficient number of passengers volunteer to be bumped from a flight, the airline must begin involuntary bumping. Generally, passengers with the most recent reservations or those who checked in the latest are the first to be bumped.
If you are bumped, you are entitled to compensation if you have a confirmed reservation (your ticket has an "ok," "hk," or something similar in the status column), the scheduled plane has a seating capacity of more than 60 passengers, and it is not a charter flight. Even if you meet these requirements, the airline might refuse to compensate you if any of the following is true:
If the airline bumps you due to overbooking, the amount of compensation it must provide depends on when it can get you to your destination on another flight. For details, check out FlyRights, published by the Department of Transportation's Aviation Consumer Protection Division (http://airconsumer.dot.gov/publications/flyrights.htm).
It depends. Recent changes to U.S. Department of Transportation rules set limits on the amount of time airlines can keep passengers on board a delayed domestic flight. These regulations also spell out what airlines must provide to passengers during long delays -- i.e. water, food, and access to toilet facilities -- in order to make conditions as comfortable as possible.
Learn more in Nolo's article Tarmac Delays and Airline Passenger Rights.
Your rights depend on whether it's a domestic or international flight.
Domestic flights. For the most part, federal law does not require airlines to compensate passengers whose flights are delayed or canceled. So any compensation you'll get will depend on the airline's policy. Full-service airlines are likely to offer more generous terms, such as meals, hotels, alternate transportation, or even emergency toiletries in the event of an overnight delay, while budget or no-frills airlines may offer little, if any, compensation.
International flights. If the delay was caused by anything other than the airline's overbooking, recovering damages for an international flight delay can be very difficult. Under an international treaty called the Warsaw Convention, an airline can escape liability for damages caused by flight delay if it can show that it took all necessary measures to avoid the damage or that it was impossible to take such measures. If your international flight is delayed, you may be able to persuade the airline that it should cover direct costs caused by the delay, such as meal, hotel, or telephone expenses. To back up your argument, you can quote Article 19 of the Warsaw Convention which states: "The Carrier shall be liable for damages occasioned by delay in the transportation by air of passengers, baggage or goods."
The airlines' treatment of baggage is a constant source of passenger complaints. At some point, nearly every airline passenger has waited for what seemed like an eternity for his or her baggage to show up on the baggage carousel.
To be fair, most of the time baggage does arrive in good shape on the same flight that you were on. When your luggage is damaged, delayed or lost, however, the results can be disastrous. The best way to protect yourself from the most serious losses is to follow one simple rule: Never put anything valuable or irreplaceable (such as jewelry), or that you might urgently need (such as medications), in checked baggage. While the airlines may compensate you for lost baggage, the compensation will rarely cover the actual cost of expensive items or your inconvenience.
If your baggage is lost or destroyed, the compensation that the airline owes you depends on whether you were flying on a domestic or international flight.
Domestic flights. An airline can limit the amount it must pay if baggage is lost, damaged or delayed to $2,500 per passenger. You can get around this limit by declaring at check-in a higher value for the baggage, up to the airline's maximum. If you declare a higher value, the airline will charge you a fee based on a percentage of the declared value. The airline then becomes liable up to the declared value if it loses, damages or delays delivery of the baggage, unless the airline can prove that the actual loss was lower than the declared value.
International flights. The Warsaw Convention provides the rules that determine the liability for lost, delayed or damaged baggage. Unfortunately, these rules will not work to your advantage. Damages are calculated based on the weight of the baggage, regardless of the real value of the baggage or its contents. The Warsaw Convention states that the value for lost or damaged baggage is $400 per passenger for unchecked baggage and $9.07 per pound (or $20 per kilogram) for checked baggage. If your bag was weighed before the flight, then the value is determined by multiplying the weight of the bag times $9.07. For example, a 20-pound bag would be valued at $181.40. If your bags were not weighed, the airline will generally assume that all of your bags weighed a total of 70 pounds, and will reimburse you $634.90.
To add insult to injury, an airline can completely avoid responsibility for lost or damaged baggage if it can prove that the damage was caused by error in piloting, in the handling of the aircraft or in navigation, and that, in all other respects, the airline and its agents took all necessary measures to avoid the damage.
The contract between you and the airline dictates what duties the airline owes to you. The terms of this contract are printed on the back of your ticket under the heading "Conditions of Contract." In addition, most airline tickets also state that the contract incorporates the "Conditions of Carriage and Related Regulations" that the airline has filed with the U.S. Department of Transportation. You can get a copy of the "Conditions of Carriage" by requesting it from the airline or your travel agent. Also, most airlines post the "Conditions of Carriage" on their websites.