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Late last week, Frontier Airlines filed for chapter 11 bankruptcy. Unlike some of the recent airline shutdowns, Frontier IS still flying, much like Delta, Northwest, US Airways, and United did earlier this decade. But the real news nugget is Frontier’s stated reason for the timing of their bankruptcy filing. Not fuel prices, or competition. Credit cards.

In making the announcement, Frontier CEO Sean Menke stated that the Denver-based airline “filed for very different reasons than those of other recent carriers.” Indeed, Mr. Menke blamed the airline’s descent into bankruptcy on an “unexpected attempt” by credit card processor First Data “to start withholding significant proceeds received from the sale of Frontier tickets.”

Generally, credit card vendors turn over revenue to airlines from bookings in a matter of days. But in some cases, the companies hold on to a percentage of ticket receipts until customers actually take their flights. These so-called holdback policies vary, usually depending on the financial stability of an airline.

In Frontier’s case, the holdback rate went from 45% to 100%, effective May 1. Ouch.

For travelers, though, there are longer-term implications here: If airlines’ financial viability is a dance on a razor blade, and if accepting credit cards can create a risk of survival, then travelers are likely to see cash-payment incentives (or credit-payment disincentives), going forward.

European airlines have been charging a credit card surtax for some time, to dissuade customers from charging it. And a few months ago in the U.S., discounts were floated as a way of getting customers to pay by cash. And despite the fact that every airline has an affinity credit card that generates points in their loyalty program, Frontier’s bankruptcy is going to put more pressure on airlines to reduce the reliance on credit.

Just watch.

Related:
- Is there a backlash against credit cards brewing among U.S. airlines?
- Skybus shuts down abruptly, third scheduled U.S. airline to fold this week

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Upgraded: Overreaction
Downgraded: Everyone
Turn on the news, you’ll see reports of American Airlines canceling more flights. At last count, they’ve canceled over 2500 flights, costing millions of dollars, and pissing off hundreds of thousands of customers. Their MD-80s weren’t properly repaired last week, when the FAA grounded them the first time (umm, why weren’t they properly repaired, exactly?). But really, was this mayhem necessary? The FAA previously gave the airline 18 months to fix this wiring. Sure, it should have been done, and done right. But if the FAA felt the airline could take 18 months to fix things, it can’t be that big a deal. So why ground every single MD-80 in the AA fleet? Punitive, sure, but who is punished? Hundreds of thousands of passengers, in addition to the airline itself. (At least the airline is rebooking passengers where possible, but flights are already full, so where can passengers really go?) Seems like a more orderly plan could have been developed.

Upgraded: Delta-Northwest merger odds
Delta’s pilots have agreed to a deal that could pave the way for the Delta-Northwest merger, previously on the skids. We’ll see. (Thanks to Dr. Vino!)

Upgraded: Them. Not you
Hundreds of thousands of people are stranded in airports, waiting to get out on the next flight. If you’re feeling bitter, you may not want to read about how airlines treat VIP passengers. Not elite frequent flyers. Celebrities. (Thanks to reader J!)

Upgraded: Explanations for the accidental discharge of a pilot’s pistol
Downgraded: The TSA
Still wondering how a US Airways pilot might have fired a weapon mid-flight? Here’s a plausible explanation, in video (or vlog) form. (Enjoy the guy’s amazing Chicago accent, as a bonus.) The post suggests that TSA’s policy — requiring an awkward padlock that can pull the trigger if conditions are right — is to blame. I’m still opposed to guns in the cockpit, but the argument against this particular lock system makes sense. Locks: good. This lock: maybe not. Better training of pilots would help, too, methinks. (Thanks to reader Dave!)

Downgraded: Checked baggage weight
In the U.S., airlines are waging a war against the second checked bag. Across the Pacific, Australian baggage handlers are threatening to refuse to move bags weighing more than 20kg (44 lbs.) Until now, 32kg (70 lbs.) were considered legal weight, and those numbers still appear in the Qantas contract. Most U.S. airlines have a 50 lb. cutoff before overweight charges kick in. But this is different: It’s not about fees, it’s about willingness to transport bags over a given weight, period. Bottom line: As always, pack light! (Thanks to reader Rob!)

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Skycaps have been getting screwed for the past few year. They used to offer their curbside check-in service for tips alone, but then the airlines got into the act, charging a mandatory $2/bag. But many (or most?) customers didn’t notice the change, and didn’t realize that the $2 they paid now went to the airline, not the skycap. So they didn’t tip. They thought they were tipping.

Skycaps were understandably pissed off. Nine of them sued American Airlines for the change, and yesterday a jury awarded them $325,000. Hey, airline executives: prepare for more lawsuits. It could be made a class action, too, covering skycaps at 60 airports across the United States.

Good for the skycaps. They were being screwed, and they fought back. Huzzah.

At least they didn’t take it out on the passengers. I’m hoping that these skycaps aren’t included in the award.

It’ll be interesting to see how airlines adapt to the lawsuit. Will they reduce the fee? Or will they create better signage, indicating that the $2 goes to the airline, not the employee? Or will they just eliminate skycaps entirely?

Reader Jeff writes in:

I’ve been told that there are no upgrade seats available for a flight I’ll be taking in a few weeks. But, I can see that the first class section is wide open.

The telephone agent (Continental Airline) said that I should keep calling as an upgrade seat might open up.

What’s the best strategy here? When is the best time to call to try to snag an unsold first class seat and get an upgrade using my miles?

Your frustration is understandable. You look at the seating chart, and there are unreserved seats, so you think you’re “in.” But no dice. Not so fast.

As you found out, empty seats on a chart don’t always correspond to seats available for upgrades. There are several reasons.

Empty seats on the chart doesn’t mean there are unsold seats. The airline may have already sold first class tickets, but not assigned seats yet.

More likely: Their inventory managers know the sales history for a particular flight, and similarly “know” that a last minute rush for first class tickets always magically appears on that flight. They could be holding back upgrades, hoping to sell those seats for cold, hard cash.

Or, sure, they might just be screwing with you.

The bottom line is this: There’s no magic bullet, and you’ll have to keep trying. Upgrades will open up when inventory managers throw in the towel on cash sales. Since you can’t book miles-based upgrades online with Continental, you just have to keep calling.

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Time to short Samsonite stock?
Continental is the latest in a long line of airline to slap an additional fee on checking in a second suitcase. Yes, some exceptions apply, so OnePass elites as well as premium-cabin customers won’t have to pay the bill. But the bottom line: The 2008 flying environment dictates that the “2PC” rule is dead. One checked bag per person, or pay up.

UPDATE: Cranky points out that United has tightened up its rules on the 2nd bag. Previously, a refundable (read: expensive) ticket meant you got a waiver on the 2nd bag fee. Not anymore. How nice of them to make the policy so much more consistent, while, surely coincidentally, adding a revenue opportunity for the airline!

Another one bites the dust
Not quite the level of drama as the ATA, Aloha, and Skybus shutdowns, but Midwest Express’ commuter feeder Skyway Airlines is no longer flying. Their routes are being taken over by Skywest, a few letters apart, but a different company nonetheless. Passengers may not even notice, as the tickets were sold by Midwest and simply subcontracted to a different supplier. But the pilots and employees of Skyway will be feeling the sting.

Fuel cell-powered airlines coming someday?
It’s a small plane, without tons of passengers and cargo, but an encouraging sign nonetheless. Boeing successfully tested a small plane that ran on batteries and fuel cells. Its only emissions: Water vapor. Now if only they could create a fuel cell large enough to fly to Singapore…

How would US Customs & Immigration rate?
Jan Chipchase blogs about customer service feedback opportunities at Beijing and Frankfurt airports. I’ve flown through Frankfurt, but not Beijing, yet I’ve never been asked to give my opinion of the customs/immigration experience. Harrumph. The Beijing mechanism — an electronic device that invites you to push a button, rating your customs agent on a Likert scale — is nutty, and frankly unexpected at ANY airport, much less in China. (Jan snapped a photo of the device in the airport, which, in itself, is amusing, considering the general securitization of the customs area…) Nice idea, as long as you can rate the agent AFTER you’ve completed your business. I can only imagine how the surly agents at JFK would rate.

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Late Friday, Skybus announced on its website that it would shut down by the end of the day. If you hold tickets on the discount airline for travel today (Saturday, April 5, 2008) or later, call your credit card company immediately and try to secure a refund.

I say “try,” because you may not be able to get your money back. If you booked tickets well in advance and you’ve already paid the bill, you may run into snags with your credit card company in getting a chargeback. You generally can dispute charges when a company fails to deliver the services it promised, but if you’ve paid your bill, your bank is far less likely to work on your behalf. Banks vary; call them. Now.

If you’re already halfway into an itinerary, you can try to get your ticket honored by another airline, but as Chris Elliott has pointed out after previous airline shutdowns, there’s no law requiring them to do so. If any other airline accepts a Skybus ticket, even with a surcharge, it’s as close to an act of charity as you’ll ever see from a for-profit enterprise.

So far, no statement has appeared on any of the major airlines’ websites to woo Skybus customers. Who would want to attract a cheapskate customer who only paid a measly $10 one-way fare, I guess. In contrast, you’ll see announcements of standby policy for stranded ATA and Aloha customers on airline websites like Northwest, US Airways and United. For example, ATA customers can fly standby (on a space-available basis… good luck) on US Airways for $100 per segment. Not truly “cheap,” but better than paying a walk-up fare to, say, get back to the U.S. mainland from Honolulu.

But back to Skybus: Their failure is a surprise, but only for its timing. The third scheduled airline this week to close its doors, after the much older Aloha and ATA. (I’m sorry, I don’t count the charter airline Champion Air, which also folded this week. Bad week for the industry.) High fuel prices and bad business models combined to create this week’s carnage.

I never flew Skybus, though I had been considering trying them out on a Greensboro-Chicago/Gary flight. I flew Aloha inter-island in 1994, which was pleasant, and I flew ATA in 2003, which was less than pleasant. (I swore never to fly ATA again after a miserable experience with their front-desk staff at Chicago/Midway, who refused to issue a boarding pass, even though I was at the gate more than 45 minutes before the flight. “You’ll never make it through security in time.” “I bet I can.” “Nope, you won’t. The next flight is in 7 hours. You’re on the standby list.” I’ve never been angrier at an airline employee.)

Taking three airlines out of commission is pulling a good chunk of supply from the market, especially to Hawaii, which will allow other airlines to raise fares. For the short term, these airline failures are bad news for all flyers, not just the folks who hold tickets on the defunct carriers.

But rest assured, much like lottery tickets always find a market, capital always seems to flow to start-up airlines, though it’s not overnight. Perhaps a Charleston, West Virginia based airline might be the next big thing. Or even a Louisiana-themed discount carrier named after gumbo.

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Just a reminder to get your nominations in for the 2008 Travvies, the travel blog awards.

Nominations are open through Monday, the 7th. There have been some great and interesting nominations, and, speaking solely for myself, I’ve discovered a set of blogs I hadn’t known about before. I hope others have made similar discoveries.

Check the Travvies ‘table-of-contents’ page to navigate the awards thus far.

Delta Airlines must have been watching the recent downgrades at US Airways and United and thought, “Gee, those airlines are doing such a great job pissing off their passengers! Why can’t WE frustrate our best customers like that?…”

Sure, they had tried before. They had previously declawed their SkyMiles program by watering down their “anytime” SkyChoice awards — the tickets that cost double the miles but formerly guaranteed a seat on the airline if any empty seats were available. (Versus the capacity-controlled tickets that most travelers seek out.)

At the time of that devaluation, you may remember this sidebar in my post:

As an added bonus, there’s this nugget of a policy change on the site, too: “Some airline partners impose a surcharge on Award Travel redemptions for travel on their airline. These charges will be collected at the time of booking.”

Bad enough — and yes, those fees exist, and they vary — but it’s even worse: It’s not just itineraries booked solely on partner airlines that get slapped with an obnoxious fee. If you use miles to book an itinerary that combines Delta and any partner airline, there’s a $25 surcharge. Just because you’re using one of their business partners. (Hat tip to Chris Elliott.)

What’s the point of alliances — and heck, frequent flyer mile programs — if you need to keep paying real cash on top of the miles? Delta’s miles just lost more value. Again.

And as Gary Leff pointed out a few weeks ago, actually making that reservation is worse now, too. In a gratuitous move, you can no longer put itineraries on hold over the phone. And remember, you can’t book every itinerary online using miles. Other airlines still offer a 48- or 72-hour hold, which is useful for making reservations for hotels, etc. No longer: Now you ticket immediately, or lose the itinerary.

Someone explain how we can call this a “loyalty program” any longer? And where is the SaveSkyMiles.com crowd, so vocal back in 2003, on any of this?

The sun is setting on Delta SkyMiles.

Related:
- Another stab in the back of frequent flyers
- Flight Mitosis: Delta splits your nonstops into two

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Upgraded: Evidence that airlines are unwilling to break the status quo
The Air Transport Association, fresh off its successful lawsuit that overturned the Passenger Bill of Rights in New York, is threatening to sue the Department of Transportation over the proposed introduction of congestion pricing at the busiest U.S. airports. The airlines will do what they can to stop the proposal, they say. So what’s the airlines’ solution to overbooked airports? Cue the crickets…

Upgraded: Olympic condoms
With the summer games coming up, Chinese hotels are stocking up on condoms. Yes, really. “The condoms shall not be used as evidence of prostitution and whoring.” Well thank goodness! But will they be found in the minibar?

Downgraded: Commemorative British Airways newsletters
Upgraded: FedEx
Five years, and billions of capital spent, and the Terminal 5 fiasco at London Heathrow continues to be a headache for all involved. Last week’s grand opening of the posh new terminal was marred by the now well-publicized luggage handling failure. 20,000 checked bags still need to be reunited with their owners, and British Airways is calling in the cavalry: FedEx. Another reason that BA has decided to scrap a commemorative in-house newsletter celebrating the terminal opening.

Upgraded: Single travelers in Delta coach
Downgraded: Ghetto upgraders
Delta is buying Thompson Solutions’ “Cozy Suites” for its widebody jets, to be installed in 2010. The seats are a little odd, with a staggered configuration with no two people sitting precisely next to each other. More armrest space is one perk with this approach. Good for solo travelers, bad for couples and families. But even worse for anyone hoping to get a “ghetto upgrade” — an entire row of seats to oneself, allowing you to lift the armrests and stretch across. It’s also somewhat reminiscent of the alternating forward-backward-forward seating that was floated just about a year ago. But it’s thinking differently, and I like that. (via Cranky)

Hopefully everyone got the April Fool’s ha-ha’s out of their system today. But the winner, in my book, is Canadian airline WestJet, which announced that they were converting their overhead bins into sleeper seats.

Their press release offered this explanation:

By offering our existing overhead bins as sleeper cabins, guests will now have the opportunity to lie down for a period of time and arrive at their destination refreshed, rested and ready to go.

Well-played, WestJet. Well-played.

And in an alternate joke bound to make Chris Elliott cringe, “Richard Branson’s Virgin Blue airline got into the April 1 spirit by running newspaper ads offering half-priced fares for passengers willing to stand, with free calf massages on flights longer than two hours.”