Last Week: Air Berlin Declares Bankruptcy, Flights Cancelled and Why This Matters To You
I'm writing this post as a quick belated heads up, partly because this blog is generally New York-centric in its approach to travel, and Air Berlin flies out of New York.
Last week, oneworld alliance member Air Berlin filed for bankruptcy. Its main shareholder, Abu Dhabi-based Etihad, pulled funding after it "came to the conclusion that there was no further positive way ahead for Air Berlin," as Germany's dpa news agency reported, carried wider by the Associated Press.
So, what happens when an airline suddenly declares insolvency? What about people who have flights scheduled, or who are mid-transit during the filing? And can you still book flights from the US, paid or award?
It could go a few ways, but bankruptcy doesn't usually mean that operations will cease immediately. In this case, the German government announced a 150 million euro loan to Air Berlin in order to keep operations normal (or close to normal) for the next few months. Theoretically, anyone travelling should have been unaffected.
However, this wasn't quite the case. A friend of mine, Robert Steimel, was traveling home from Prague, sitting in a Priority Pass lounge in Dusseldorf waiting for his connecting flight to New York, when the news broke. A few minutes later, his flight, AB7480, was cancelled. Air Berlin doesn't have the best track record for on-time performance and cancellations, so it's very possible the cancellation was unrelated to the bankruptcy — I reached out to Air Berlin's press office for for the cause of the cancellation, but they haven't responded. The scene Rob described was one of total chaos:
"They never announced what was happening or why the flight was cancelled. Phone support lines were down. We were on a line with over a hundred people trying to get our checked bags, which was taking forever. Someone from the airline told us to run to the British Airways counter to try and get booked on their flight to LHR without getting our bags first, but BA's system locked out after a few people were booked. Eventually a TV news crew showed up, and the airline started giving out bottled water. People were really anxious that they were stranded because of the insolvency, and then there was a rumor that crews could strike the next day and delay us even further."
Eventually, Rob and his wife were rebooked on a flight DUS-FRA-JFK the next day on Lufthansa. They flew to Frankfurt, where they learned that the flight to JFK had been overbooked. They were reaccomodated on a Lufthansa flight to LHR and a United flight home to EWR.
Because of German bankruptcy law, there's a chance that Air Berlin may not pay EU-required compensation to affected passengers. Also, refundable tickets are not currently being refunded, also because of a provision in German bankruptcy law.
While flights already scheduled for the next few months should be set, Air Berlin's longer term future is uncertain. It's already in talks with at least one airline, Lufthansa, regarding a takeover of various units. It's reportedly also in talks with other airlines, so it's certainly possible that Air Berlin will continue to function in at least some form.
In the meantime, it might be wise to avoid making plans to travel on the carrier. Because Air Berlin is a member of the oneworld alliance you can use American Airlines AAdvantage miles to book tickets on the carrier — since American has been opening very little award space on its own planes, that's been a decent option to get to Europe on an award business class ticket. However, you might want to avoid that for the time being until we know more about Air Berlin's long term solvency.
If you're interested in more details, Skift has a great explanation of Air Berlin's descent.