AIG isn’t just the well-deserved whipping boy of the moment. It’s also a company that many travelers depend on, directly or indirectly — they just may not know it. So what are some of the ways AIG’s future affects travel?

Travel Insurance: Buyers
With AIG now 80% owned by the U.S. government (but seemingly not under its control), there’s pressure to spin off some of its businesses, such as their Travel Guard travel insurance subsidiary. For those who buy travel insurance, the current mess and the subsequent spinoff will likely have little effect. The federal government sure isn’t letting AIG renege on its policies, so your current policy is secure. Heck, you may even be better off with an AIG-issued policy now than ever before. How this would affect buyers after a spinoff is a question, but it’s still unlikely to harm the company’s viability or ability to make good on promised payments. They may not ceremoniously present you with a giant check, but the check is unlikely to bounce. Call it a wash.

Travel Insurance: Sellers
For those selling AIG’s travel insurance products, the spinoff is undoubtedly a good thing. Even before the spinoff, you’ll be hard-pressed to find references to AIG on their website today. The stigma of selling something with the AIG name would be gone, and travel agents (the primary sellers) will be able to simply point to the “Travel Guard” brand, which has a long operating history. Advantage: spinoff.

Airlines: Plane leases
More complicated: AIG also owns International Lease Finance Corp, the worlds largest plane lessor, and a huge customer of Airbus and Boeing. Major airlines often lease the plane through ILFC rather than buying the equipment outright, so finance trouble at ILFC could affect their clients. Much like a renter getting booted from his apartment because the landlord was foreclosed, airlines (and their passengers) could feel the brunt of any funding trouble at ILFC, which has relied on the nearly-closed short-term commercial paper credit markets to finance its operations.

And ILFC is admitting it’s in trouble. The subsidiary “said it may not survive unless it gets help from its parent company or new access to credit.” While help from the AIG mothership (read: the American taxpayer) is promised, who knows how things could look in a month or two.

This could also affect the supply of new planes in the skies. The leasing company has 168 planes worth $16.7 billion on order, and needs to find a way to actually pay for them.

For the time being, AIG’s implosion and subsequent rescue haven’t hurt travelers, but the firm’s downfall has added uncertainty to an already uncertain system. As if travelers needed one more thing to think about…

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Ed Perkins points to the deceitful but unfortunately effective practice of insurance upselling by front-desk employees at car rental agencies.

Agents told [customers] that although their [credit] cards covered damage to the vehicle, they didn’t cover the additional “loss of use” fee the car company would collect for the rental revenue lost while a damaged car was out of service. That statement is a flat-out lie.

Loss of use is included in the CDW (collision damage waiver) provision of credit card coverage. If your card has rental car insurance built in, then you should be fine. (Check your card’s fine print to see if you have the coverage in the first place, of course. If you don’t have the rules governing your card’s benefits, call your bank and have them send it. If you don’t have the coverage, get a card that does.)

This “loss of use” story is a sales pitch I’ve gotten before at the time of rental, most memorably and insistently from a desk agent at Advantage Rent-a-Car at the Phoenix airport. I’ll never forget that guy. He kept telling me over and over again how much Advantage charges for “loss of use,” and how neither my own auto insurance nor my credit card would cover it. It was his aggressive hard-sell, and the snotty attitude he copped after I declined his coverage again and again, which cemented my policy to never rent from Advantage ever again.

Bottom line: Never trust a car rental agent to tell you what your existing insurance covers. Not when they try to tell you about the insurance provided by a credit card, and not when they try to tell you about your own policy.

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The UK ratcheted down their threat level (similar to the rainbow of fear in the United States) and hand luggage is once again permitted on board British flights.

In a statement, it said: “Each passenger is permitted to carry one item of cabin baggage through the airport security search point. The dimensions of this item must not exceed a maximum length of 45cm, width of 35cm and depth of 16cm, including wheels, handles and side pockets.”
However, liquids of any type – including gels, pastes, aerosols and lotions – cannot be taken on to planes. The exceptions were prescription medicines and baby milk.

But don’t be surprised if flights headed TO the UK will still carry a restriction on carry-ons today. As other countries and airlines have adapted to the British ban, they will likely not instantly reverse that ban. Today’s a transition day, so you may still face problems out there.

This is especially good news for those carrying electronics such as iPods and laptops, since insurers are balking at paying for damaged, lost, or stolen electronics that are transported in checked luggage. Even though passengers didn’t have a choice in the matter.

Insurers say the airlines are responsible, and the airlines reply with “I’m rubber and you’re glue,” refusing to pay more than the maximum amount of £850 as determined by the Montreal Convention. Passengers, stuck in the middle, lose.

Official announcement of new UK security rules is here.

(hat tip Consumerist on the insurance article)

The law, on your side:

Florida v. Wyndham et al.
Florida’s attorney general successfully prosecuted a case against Wyndham hotels for failing to disclose mandatory fees (such as resort fees, energy surcharges, etc.). The decision against the chain means that Wyndham hotels in Florida need to state the total price of a room at the time of booking. This includes price quotations on third-party travel sites. (via Elliott)

This is major. Mandatory fees are a big complaint against hotels, and in some parts of the country (like Palm Springs) the practice is rampant. Like airlines that impose fuel surcharges to make the base fare seem cheaper, resort fees should die a quick but painful death.

The court’s decision is an important step in that direction. For starters, Wyndham has agreed to change its business practices nationwide, and not just in Florida. (Aside: I wonder how this affects bookings through opaque sites like Priceline, where you sometimes get whacked with resort fees despite paying for your room up front…) Second, the case sets a legal precedent for other plaintiffs, so other chains are on notice to change their pricing or face a suit.

Until other hotels DO move to total pricing, the decision puts Wyndham at a disadvantage in side-by-side comparisons with other chains that DON’T quote total prices. Expect Wyndham, recently gone public on the NYSE, to push for total pricing in the industry, now that it lost its case. Other firms, and other states’ regulators, should heed the call.

British regulators targeting travel insurance
Travel insurance is a tricky game, both for medical insurance or trip cancellation/interruption coverage. Insurance companies are very adept at selling you the policy, but then finding a way to avoid payouts. Now the UK’s Treasury is investigating lazy or unscrupulous agents who sell these policies without disclosing the real terms and conditions.

Travel insurance is big business in the US as well, with about a third of travelers opting to buy in. For many, the coverage may be redundant, already covered by their homeowner policy, their medical coverage, or even their credit card. (For example, I’ve never purchased insurance of any kind, but my credit card’s automatic insurance covered the extra expenses I incurred — hotel, meals, transportation, etc. — when a tropical storm delayed my return home Barbados a few years ago.)

Three suggestions: Check your existing policies and credit cards to see if you are already covered. Only consider insurance for really big ticket items. And read the fine print of any policy you do actually consider buying, to make sure the thing you’re trying to insure isn’t excluded (e.g., cancellation due to hurricane evacuation, pre-existing medical conditions, etc.)

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Safety first!
Flying from the United States to Korea or Japan? If you’re traveling with Asiana or Korean Air Lines, you’ll take a different flight path nowadays, thanks to North Korea’s recent missile tests coming dangerously close to existing air routes. Today Japan’s largest airlines, Japan Air Lines and ANA, announced their own re-routings. No word on American carriers’ flight paths. Yay.

Safety second!
British tourists file more travel insurance claims on trips to Thailand than any other country. Runners up: “…the Czech republic, which came out top for incidents of pick-pocketing, South Africa, top for violent robberies, and Mexico, which is the place to go for over-exposure to the sun, it seems.” By this measure, Ireland was the “safest” destination.

Impressive, but…
China recently completed the train to Tibet and began passenger service. It’s an ambitious and impressive engineering project to be sure (the train cars are pressurized, like a plane, due to the enormous altitudes), but also a highly controversial exercise in internal colonialism. A good overview of the cultural and political ramifications (and fears) can be found here. It’s not all gee-whiz-isn’t-it-neat-what-they-built.

The Denny’s of the Sky?
A new promo: If you fly Aloha Airlines on their birthday (July 26), and you keep the boarding pass stub, you can fly free on your birthday (return within 7 days). Inter-island flights only. But what the heck.

Fare sale to Europe
Air France kicks off their Bastille Day fare sale today (purchase by July 28). Some good late summer/fall fares.

More luxe to Europe
All-biz airline Eos looks to expand from the New York-London route to also serve New York-Paris.

Healthier airborne meals
Northwest Airlines had better keep up. Just a few weeks ago they announced that their Stalinist experiment in inflight dining was over, and that they would reintroduce a choice (gasp!) to the menu in domestic first class. At the same time, other carriers are redesigning their first and business class menus, too, with an eye for lighter gourmet fare. But take away the ice cream, and flyers revolt. (The sarcastic chorus of “boo hoo” is coming from the economy seats.) The article also plugs Peter Greenberg’s book The Traveler’s Diet: Eating Right and Staying Fit on the Road.

Predicting the next protectionist outrage
Chicago Midway under foreign management? It could happen, since the city is soliciting bids for long-terms leases on the airport. We’ll see if a (likely) winning bid from a foreign entity yields as much furor as the Dubai ports affair. If an international firm wins the bidding, it won’t be the first foreign-managed US airport. Indianapolis and Stewart-Newburgh, NY airports are already under British firms’ control. International bids for US assets should be no surprise, given the current account deficit; all those dollars flowing overseas need to be put to work somewhere…

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