Airline Startup Failures - The Deadbeat Goes On
(December 1999)
They've got great rates, but sometimes, they don't
stay around long enough for you to take advantage of them! What can
you do to protect yourself from startup airlines going under?
First, a little background. New airlines have always
had trouble getting off the ground. According to the Department of Transportation (DOT),
61 upstarts have failed since 1978.
Are customers not responding to new startups? Are
startups facing pressure from the majors? Are they just poorly
managed? Whatever the cause, the list of casualties this year is
staggering:
· KIWI Airlines
This Newark-based startup,
named after a flightless bird, flew high for three years before
being grounded by the FAA on March 25.
· SunJet
This Newark-based charter carrier
stopped flying June 25.
· Winair
This Long Beach startup stopped
flying August 17.
· Eastwind Airlines
The Greensboro,
N.C-based carrier suspended service September 7.
· Tahoe Air
The Lake Tahoe-based airline
stopped flying November 23
· AccessAir
The Des Moines-based carrier
stopped flying November 30.
Yet another startup filed for bankruptcy this Tuesday.
AccessAir, the Des Moines-based carrier, abruptly stopped service,
stating that customers "didn't respond as expected." The airline
stated its hope to resume service in a month with new routes,
however, the shut down comes at the busiest time of year, will
affect thousands of consumers.
Aside from Eastwind, most of these airlines, stopped
flying without advanced notice - stranding hundreds of passengers.
So, how can you protect yourself if you decide to fly an upstart
carrier?
1. Do a little research on the carrier. Does
their management have previous successful airline experience?
Are they currently hiring or laying-off? Are they expanding routes
or suspending service on existing routes? These are clues to the
financial viability of a carrier. KIWI and Eastwind were laying-off
many employees and suspending service on many routes before they
shut down.
2. Read your local paper. Have there been
incidents surrounding the carrier? For example, in the months
preceding the KIWI and Eastwind shutdowns there were numerous
incidents of "air rage" and passenger protests due to poor service.
In addition, find out if the carrier has lost gate space at any
airport due to missing lease payments. This was the case for both
KIWI and Eastwind. KIWI failed to pay lease payments at Boston, and
was forced to end service there. Eastwind had the same scenario in
Philadelphia.
3. How are the Department of Transportation's Air
Consumer Report statistics on this carrier? Are they on time?
Are their complaint levels low? Check the DOT's website at http://www.dot.gov/airconsumer/index1.htm
for the latest statistics.
4. Read Smarter Living's Travel Forums. See if
any customers have posted kudos or complaints about the carrier at
http://www.SmarterLiving.com/forums.
5. Has a dissatisfied customer created a
website? This happened in the case of Eastwind Airlines. A
businessman in Boston created the website Eastwindsucks.com, complete
with news and a bulletin board for complaints.
6. Always pay by credit card. The protection
that a credit card offers can give you peace of mind. In the
unfortunate circumstance of an airline shutdown you will probably
get your money back sooner than if you paid via other methods.
7. If you are flying on a charter airline, make
sure you deal with reputable and highly recommended tour operators.
A good travel agent will advise you on your options. Charter
airlines operate under different rules than do scheduled
airlines.
· Companies can cancel charter flights up to 10
days before departure.
· Charters are allowed to change their
schedule last-minute.
· Charters are allowed to delay flights
for up to 48 hours with no compensation mandated. Many charters do
not have reciprocal agreements with scheduled airlines, so you won't
be put on an alternate airline.
· Most charter tickets have no
refund value.
· A good travel agent will advise you on the
options.
8. Get trip insurance. If you're investing in
an expensive vacation, don't leave home without it.
The majority of startup carriers operate few aircraft,
which means limited service. As you might expect, most face an
uphill battle with the majors, and can compete only on price.
Startup airlines may offer service with very low prices to attract
customers. This may be great for consumers in the beginning.
However, be aware that as more and more startup airlines appear on
the horizon, the frequency of bankruptcies and shut downs will
unfortunately be more common.
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