Auto Club Answers Asked Questions About United Airlines Bancruptcy.

Business Editors & Travel/Transportation Writers

LOS ANGELES--(BUSINESS WIRE)--Dec. 9, 2002

The filing for bankruptcy protection by United Airlines has beleaguered travelers nationwide asking questions about current and future travel plans.

The Automobile Club of Southern California and its AAA Travel agents answer many of the frequently asked questions about what can happen.

Q: Does this mean United is going out of business?

A: Chapter 11 bankruptcy means United will reorganize. It does not mean that the airline is being grounded. If any U.S. airline stops flying, other carriers are required by law to accept its tickets on a stand-by basis. It is possible that after reorganization, United could regain profitability by reworking labor agreements and renegotiating leases for their jetliners.

Q: What are the chances of United surviving?

A: The chances of United emerging from Chapter 11 are 50/50. Most airlines seeking Chapter 11 protection come out smaller. Continental and TWA survived Chapter 11 bankruptcy twice and America West once. Eastern and Pan Am folded.

Q: How does this bode for travelers?

A: The airline industry in general is struggling. Sept. 11 hurt the industry severely. In addition, airlines have high fixed costs involving labor contracts, plane leases and gate leases/slotting fees. As a result, in 2001 airlines needed to sell at least 77 percent of their seats to break even. In the 1980's the number was 60 percent.

Tips for Travelers

-- Travelers need to do their homework in planning flights. Always have a back-up flight in mind. Start travel earlier in the day and avoid the last flight of the day -- which is usually among the first to be eliminated.

-- Due to shrinking schedules, travelers should double-check to see if flights or times have changed. When one purchases a ticket through a AAA travel agent, any schedule change will be communicated directly to the client by a AAA Travel employee.

-- Travelers are encouraged to purchase airline tickets with a credit card. In the event that an airline defaults and the traveler must cancel the trip, credit card companies generally will not require payment because the service was never rendered.

-- If a traveler purchased a ticket and the airline then declares bankruptcy and ceases service, by law rival carriers must accept the ticket with a maximum of $25 in fees each way. However, the carriers are not required to confirm space, thus forcing the traveler to fly "standby." This law may change in April 2003.

-- Be aware of time limits for rescheduling and for credit card refunds. Most airlines will give travelers 60 days to reschedule. Most credit card companies will observe the same time limit.

-- Purchasing airline tickets through travel agents can save time and money, even though a fee may be charged. Agents work for the consumer, not the airlines, so if a problem occurs, travel agents will work to make sure their clients get to their desired locations as quickly and efficiently as possible.

The Automobile Club of Southern California, the largest AAA affiliate, has been serving members since 1900. Today, Auto Club members benefit by the organization's roadside assistance, financial products, travel agency and trip planning services, highway and transportation safety programs, insurance products and services and automotive pricing, buying and financing programs. Information about these products and services is available on the Auto Club's Web site at www.aaa-calif.com.