By Andrew Compart
LAS VEGAS -- National Airlines ceased operations Nov. 6, after
nearly two years of flying under Chapter 11 bankruptcy
protection.
Agents lose a carrier that had continued to pay 10% commission,
and travelers lose a low-fare option.
National's customers have a few choices in what to do about
their tickets.
Under the Aviation and Transportation Security Act, customers
holding valid paper or electronic tickets from insolvent or
bankrupt carriers for a particular route are entitled to
transportation on a space-available basis on any airline currently
serving that route.
The provision, part of the law enacted in the aftermath of Sept.
11, is in effect for 18 months. It will expire in May.
In previously issued guidance on the statutory requirement, the
Transportation Department said the airlines must honor each other's
tickets in such situations "to the extent practicable," so long as
passengers request accommodation within 60 days of the suspension
of service.
The DOT said the airlines are entitled to recover the marginal
cost of providing the transportation, but the DOT said the costs
should not exceed $25.
National is not providing ticket refunds. But the airline noted
that customers who purchased their tickets with MasterCard or Visa
credit cards may apply for a refund through their credit card
company.
Customers using other credit cards must inquire at their
respective credit card companies about refunds, National said.
Use of National tickets on other carriers may affect customers'
refund requests with their respective credit card companies,
National added.
ARC, meanwhile, suspended its reporting agreement with the
carrier, but said it would continue to process all National
transactions submitted with the period ending dates of Nov. 3 and
Nov. 10.
ARC said it would work with the airline to determine processing
beyond that.
National has been living on the edge for a while, having filed
for Chapter 11 bankruptcy protection in December 2000.
Its position became even more precarious after the Air
Transportation Stabilization Board in August rejected National's
application for a $50.5 million federal loan guarantee.
National president and CEO Michael Conway wasn't happy about
that, accusing the board of favoring major carriers over smaller
low-fare competitors, and he took another, parting shot in the
airline's Nov. 6 press release.
"The ATSB is choosing winners and losers in the industry,
notwithstanding direction from Congress to the contrary," Conway
said.
After the ATSB rejected the application, National put together a
$112 million financing deal. But a backer who was going to provide
a $2 million letter of credit pulled out in late October, which
seemed to factor into the collapse of the deal.
Conway said in the press release that National "exhausted every
possible viable alternative" for funding before deciding to cease
operations.
"I truly hope that other carriers pick up the service vacuum and
still maintain the low-fare competition that National brought into
every city we served," Conway said.
National had continued to pay 10% commission until its demise,
but in recent months Conway had complained the payments were not
bringing the airline enough extra business from agents.
"There's no question that we are generating more sales [from
agents], but you've got to compare the incremental bookings with
the cost of the distribution itself," Conway told Travel Weekly in
July.