airberlin declares bankruptcy – what happens to thousands of passengers now?

After years of financial losses, recent restructuring and talk with part-owner Etihad, Lufthansa, the German government and other stakeholders to mount a rescue or at least an orderly transition, the attempts have failed. Etihad (somewhat surprisingly) pulled the plug and declined to provide further financing, resulting in airberlin declaring bankruptcy because they can’t see a viable path forward. The German government stepped in to provide an emergency bridge-loan to allow operations to continue through November.

While the collapse of airberlin doesn’t come as a surprise (I reported here and here about the attempted restructuring), it did come sudden with Etihad pulling the plug. Plenty of airline executives have lamented that the European airline market is too fragmented compared to the US and consolidation is needed. Lufthansa and the German government met in Abu Dhabi in an attempt to find a path forward, but it appeared to have failed because Lufthansa didn’t want to take over $1.2Billion in debt and other liabilities of the failed carrier. Now, it appears they do get their wish – the bankruptcy allows airberlin to shed the debt and gives Lufthansa and easyjet an opportunity to take over planes, routes and airport slots. 

But what happens to passengers currently on vacation or ticket holders (like yours truly!)? The German government is providing a $150M bridge loan to enable operations to continue through the end of November, getting all those summer vacationers back home. It conveniently covers the period past the upcoming election in September, keeping the chaos of voters minds. And of course, airberlin is releasing an update that business continues as usual, with all flights operating as usual, all tickets being valid and future flights being available for booking, according to this statement from their website:

Obviously, portraying normalcy is the way to best protect the value of airberlin for possible suitors, but if this insolvency proceeds like other ones, it is likely, that we will start seeing changes and cancellation of flights as airberlin is restructured, sold or liquidated. 
Here are your rights:

If you booked one of the many flights to sunny vacation destinations through a tour company, your tour company is responsible for bringing you home as well as for any additional hotel or transit costs. 

If you booked your flight online through an intermediary that is not a tour operator or with the airline directly, you don’t have that protection. While I’d expect airberlin to do their best to accommodate existing passengers and honor tickets, the further away from today your flight is, the higher the risk that your flight will be changed or cancelled and you might not receive a refund or re-accommodation on another flight. If you have a flexible ticket that can be cancelled without fee or penalty, I would look for alternative flights now and try to book elsewhere. If your ticket can’t be changed or cancelled, you are best off to sit and wait what happened. For an important trip, I’d look for alternative flight arrangements, just in case your flight gets cancelled.

If you were planning to book an airberlin ticket, I would hold off for now. It is likely that bookings for airberlin will drop in the aftermath of the bankruptcy and airberlin will respond with deep discounts. This could give you the opportunity for some cheap flights and I’d consider it for leisure flights that are within 1-2 weeks from booking. I would personally not take the risks to book any flights that are further out than 1-2 months from now or past October. I would also not book any flights for business trips or important personal events that have little flexibility on dates and times. 
I currently hold an airberlin topbonus award ticket for flights on Etihad and airberlin in November and there is a risk that the ticket will not be honored or one of the flights might get cancelled. My alternatives are very costly at this point, so I will have to wait and see.

The demise of airberlin might not come as a surprise, but it is still sad to see. We have seen in the US that consumers don’t benefit from consolidation and I’d expect the same to be true for Europe. We can expect to see fewer options and higher prices for flights to/from Germany as a consequence. 
I will keep you posted on the developments. If you’d like to get more travel related news like this from around the world, please follow me on Twitter – I’m posting news daily, so you can stay up to date on the world of travel with my Twitter updates! Or, for a weekly update, sign up for my newsletter for a Sunday Summary!

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