American Airlines, who insiders say will file for protection from creditors via a chapter 11 bankruptcy in US Federal Court in the next 30 days, is anticipating reorganization and already enforcing new policies that will make travel more expensive for islanders and tourists alike.
Several articles in the US media are warning that investors in the troubled airline are insisting that management go forward with the filing. Sources from within the airline management are cautioning the Chapter 11 filing is likely. One supplier to the airline told TCI News Now they are holding up equipment shipments due to concerns about payment.
In previous airline Chapter 11 filings, suppliers who insisted on being paid prior to shipment were required to refund the money to the court because all creditors must be treated according to the terms of their contract in proportion to what the court allows.
Currently the round trip ticket price for Miami to Provo purchased (one week) in advance online is $540. On short notice or with open return dates where seats are available this price can often double.
Earlier this year the airline ticket price included two checked bags and one carryon bag plus a hand bag. The airline now considers a small camera case an additional handbag subject to an additional charge. Now the airline is also charging $60 for the second checked bag, which are limited to 50 lbs each
At one time the weight limit for bags was 75 lbs. Recently, American has canceled their policy of excusing a service charge for passengers needing to extend their stay for medical reasons or traveling due to bereavement. This is impacting those referred to overseas medical care in South Florida. The policy until recently was that upon presentation of a doctor’s letter the returning reservations could be extended at no charge.
Now doctors’ letters or death notices are not accepted and a service charge between $150 and $200 is applied to recovering medical passengers, more than doubling the returning cost.
Numerous islanders are being sent overseas for secondary medical care at their own travel expense. Islanders often traveling to the USA for medical, personal and holiday shopping are now facing the escalating costs of the new policies.
Included in ticket prices is a $116 total airport departure tax applied by both airports. This fee is expected to rise by an additional $35 due to Provo airport expansion costs.
Two years ago economy carrier Spirit Airlines provided less expensive service from Ft Lauderdale to Grand Turk and back to Provo. Despite the convenience of this service, Grand Turk residents chose to travel inter-island airlines for an additional $200 on domestic flights and then paid the higher fees on preferred carrier American Airlines to Miami, where American Airlines has the exclusive TCI travel rights. Spirit was therefore discouraged and discontinued service, eliminating one plane service for Grand Turk (and nearby) Salt Cay residents.
South Florida's Tri-Rail express train service carries passengers from Ft Lauderdale to the Miami Airport for $5 one way, including bags. The once empty rail service is now experiencing more passengers as fuel prices rise.
Newly formed Sky Cruise Airlines has a licence pending before the Air Transport Licensing Authority (ATLA), which is being disputed by domestic carrier Air Turks and Caicos owner Lyndon Gardiner. Sky Cruise is expected to provide service to Fort Lauderdale.
Some passengers travel through the Bahamas, visiting relatives in Nassau, where they board Bahamas Air or Air Turks and Caicos to Provo. US Airways provides service to Charlotte, North Carolina, and beyond. TCI is also served in the USA by Delta Airlines from Atlanta and British Airways from New York.
Major airlines previously serving the TCI included now bankrupt Trans World Airlines (TWA) and Pan American Airlines (Pan Am).
Airline industry suppliers are reporting that, while American Airlines executives are trying their best to escape using Chapter 11, the airline is experiencing labour costs that are above their competitors and they are the remaining major US based airline which has yet to file bankruptcy and have the court throw out the labour (union) contracts, renegotiating them.
One additional sign of the looming bankruptcy is the massive exodus of American Airline pilots who are deciding to take scheduled and early retirement before the airline’s pension fund is set aside for future retirees by a Chapter 11 court.
It is unknown what the results of the American Airlines bankruptcy will bring. Companies unable to convince the court and their creditors of a new positive business plan often slip into Chapter 13 liquidation.