First time here? Check out the site's "greatest hits" or read a random post from the archives. Feel free to ask a question, and consider subscribing to the latest posts via RSS or e-mail. Thanks for visiting!

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

(image)

Upgraded: American Airlines’ fleet
American is boosting its delivery schedule of Boeing 737-800s, to replace the aging, gas-guzzling McDonnell Douglas MD-80s that make up half their fleet. The new planes will burn 25% less fuel.

Downgraded: Cash on Frontier Airlines
Frontier will no longer accept cash for onboard payments, beginning April 1. They join other airlines like ATA and Spirit in going cashless. Cash may be downgraded, but overall, and many will miss the choice of cash or plastic, but as an aficionado of credit cards (more miles! receipts!) this is fine with me.

Upgraded: European airline merger fever!
The open skies treaty’s passage on the European side of the Atlantic is sparking chatter of mergers and acquisitions. British Airways has expressed interest in bmi, Lufthansa is peeking around Iberia, bmi, and Alitalia, and Virgin Atlantic has supposedly been poking around the continent’s airlines as well. No trans-Atlantic mergers rumored quite yet.

Upgraded: Lufthansa lounges
Lufthansa is spending $130 million worldwide to upgrade its airport lounges, which are already pretty decent. U.S. airlines’ lounges, already a sad also-ran in the global lounge wars, will seem even more outdated and under-serviced.

Downgraded: Singapore Airlines’ frequent flyer program
It’s not just U.S.-based carriers who seem hell-bent on reducing benefits for their frequent flyers. The Global Traveller bemoans the latest changes in Singapore Airlines’ KrisFlyer program.

Upgraded: Luxury hotel brands’ geographic reach
Looking for a Ritz-Carlton or other high-end hotel? It’s getting easier. The luxe chains are spreading to second- and third-tier cities.

Upgraded: Regulation
Travel companies, from cruise ships to airlines, haven’t done a sufficiently good job of self-regulating, so here come the regulators! Beyond the PBOR, we’re seeing moves toward regulating the cruise industry as well as airlines. The pressure to re-regulate is snowballing.

Upgraded: Your stinky wardrobe
Brilliant! A charcoal garment bag that deodorizes your stinky clothes. (Via Dethroner)

Upgraded: Airport bathrooms
Coming soon to Raleigh-Durham Airport: Better bathrooms! Wider/longer stalls let you keep your stuff in sight. But this has me scratching my head: “Tilted mirrors will be placed above the urinals so men can keep an eye on computer cases even as they’re going about their business.” Won’t these mirrors provide others with a great show, too? I’ll settle for cleaner bathrooms, as a start.

(image)

USA Today’s Ben Mutzabaugh follows up the recent fracas over possible cellphone use in flight by contacting individual airlines and asking them what their policy on cellphones is.

The roundup:

AirTran: no to voice
Alaska: not sure yet
American: hedges, noncommittal
Continental: no comment
Delta: not sure yet
Frontier: hedges, noncommittal
JetBlue: yes to silent mode/texting, no to voice
Northwest: not sure yet
United: yes to wi-fi, no to voice
USAirways: not sure yet

Conspicuously absent from the list: Southwest. (The singing of “Wheels on the Bus Go Round and Round” will remain permitted, encouraged, and complimentary, though.)

Consider writing to your air carrier of choice with your views on the matter, too. So many of these companies say they’re “listening to their customers,” so they need to hear from you.

tags: travel | air travel | cellphones | inflight wireless