Practical Advice for Travelers If Air Berlin Goes Out of Business

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The end is nigh for Air Berlin. Germany's second-largest airline — a member of the Oneworld alliance — is facing almost certain liquidation. A white knight only had until September 15 to bid on purchasing the airline outright; however, most potential buyers (Lufthansa, EasyJet, Thomas Cook/Condor) have publicly disclosed that they're bidding for the component parts of the airline — from airport landing slots to the airline's fleet — and not the entire operation.

With the airline ending some US routes as soon as September 25 and one-off flight cancellations popping up daily, many Air Berlin travelers may be wondering what they can do about the precarious situation. This guide is designed to help you navigate the choppy German bankruptcy waters.

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Transactions Prior to August 15

Essentially, if Air Berlin owed you anything of value any time before August 15, you can assume that you won't collect it from the airline. This includes travel vouchers, refundable airfare tickets, EU 261/2004 claims for delays and cancellations prior to insolvency and taxes/fees on cancelled flights. Note that if you've already redeemed a voucher for an airline ticket, your ticket is still being honored.

If you're an Air Berlin traveler in this situation, the airline notes that you'll "have the opportunity to file the claim for the insolvency schedule after the opening of the insolvency proceedings." So, unless you want to go through that long and tedious process, it's safe to assume that you won't get anything.

Cancelled Upcoming Flights

The European Union has some very flyer-friendly laws, mandating airlines pay travelers for delays and cancellations. These Regulation (EC) No 261/2004 rules are reflected in Air Berlin's Contract of Carriage (warning: PDF file), which states that you're owed at least a rebooking or a full refund if your flight is cancelled:

The Passenger has the same rights to alternative carriage, care and support service, and refunding and compensation payment as listed above, should the flight for which the Passenger has a confirmed booking be cancelled.

In addition to rebooking on another Air Berlin flight or receiving a refund, the terms reference a "compensation payment" payable under EU laws. But, not all those who are cancelled are due a compensation payment:

Similarly, there is no right to compensation payment in the event of the Passenger being informed about the cancellation at least 14 days before the booked departure.

So, if your Air Berlin flight was cancelled more than 14 days out, you're not going to be getting any extra compensation for the cancellation under the EU regulations. For cancellations within 14 days of departure, it gets a bit more complicated. Typically, the airline must rebook you on another flight that arrives within a certain time range from your original ticket to avoid having to pay compensation.

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But, there's a broad catch on this compensation:

The Passenger is not entitled to compensation payments if the flight is cancelled due to extraordinary reasons that could not have been prevented taking all reasonable actions.

The ceasing of operations certainly seems to be an "extraordinary reason," but we'd recommend filing for compensation as soon as possible anyway.

Mid-Trip Cancellation

EU regulations also address what happens if flights are cancelled in the middle of your trip. EU airlines are required to refund the "part or parts of the journey not made" within seven days of cancellation. In addition, airlines are required to provide "a return flight to the first point of departure, at the earliest opportunity." But, then again, there's the sticky "extraordinary reasons" excuse that Air Berlin could claim to leave you stranded.

Credit Card Protection

If you used a credit card to pay for an Air Berlin flight and a cancellation ruined your plans, your credit card's trip cancellation insurance might come in handy for more than just the cost of the lost ticket.

Chase's Trip Cancellation Insurance is found on the Chase Sapphire Reserve, Chase Sapphire Preferred and Chase Ink Business Preferred. The terms of this coverage may vary based on your specific card's Guide to Benefits. However, one of the generally-included reasons is "Financial insolvency of the Travel Agency, Tour Operator, or Travel Supplier whose services you booked." A "Travel Supplier" is later defined as "a Tour Operator, occupancy provider, cruise line, airline, railroad or other Common Carriers." So, a trip cancellation due to the insolvency of Air Berlin should count as a covered loss. Chase will reimburse you and covered family members as much as $10,000 per person or $20,000 per incident, depending on which card you used to pay for the flight.

A Chase representative wouldn't comment to TPG on the possibility of disputing an actual airfare credit card transaction from Air Berlin. However, this may be another method of recovering the money you paid for an Air Berlin flight. Specific to Chase, one of the dispute options is:

I didn't receive the merchandise/service as agreed. Select this option if you were charged for merchandise or a service you did not receive, or if you ordered a service or merchandise for a specific time or date and it was delivered after that time/date, which was too late for its intended purpose.

If your flight was cancelled and you weren't provided a refund or an alternative booking, it appears that this would be a valid reason to file a dispute.

Award Flights

While there are a variety of airline partners that can book Air Berlin award flights, American Airlines AAdvantage is likely one of the more popular options for travelers based in the US.

We reached out to AA for an understanding of what members should expect as Air Berlin starts cancelling flights. Unfortunately, after a lengthy back-and-forth inside the airline, it was determined that "due to legal reasons," American Airlines can't make a statement on the matter. So we are left to speculate.

Considering AAdvantage is still solvent and Air Berlin's failure is no fault of AA's members who booked award tickets, we would presume that AAdvantage members will be covered in some manner. This could mean waived fees for changing to another award flight or refunding the award miles used without any charge for redepositing them.

I faced a similar situation with United's MileagePlus program on a recent award flight. Turkish Airlines reduced its schedule between Istanbul (IST) and Mauritius (MRU), causing United to drop all four legs (ATL-IST-MRU-IST-MUC) of our United pre-devaluation award ticket. United offered to cancel the entire award ticket and refund the miles without fees, but not wanting to lose the rest of the ticket (onward to Japan and Saipan), we pushed back. So, United opened up award space on its own flights for the transatlantic legs to connect us with available partner award options.

Hopefully, American Airlines will be similarly flexible and will open extra AAward AAvailability to help members complete booked trips.

Air Berlin Topbonus

Bad news for those with Topbonus miles: the mileage program declared bankruptcy on August 25 and at that time, all mileage earning and spending was suspended. Around a month later on September 20, the program announced a partial resumption of activities and you can now collect Topbonus miles from Etihad flights and non-airline partners. But we'd recommend against it.

Currently, the only way to redeem is through the "topbonus Pop-Up Shop," offering "vouchers of SIXT, Secret Escapes and HelloFresh" at 0.2 Euro cents (0.24 US$ cents) per mile, which is nearly worthless. Even worse, the Pop-Up Shop isn't accessible to those in the US:

For those with existing Topbonus reservations on partner airlines, check with the operating carrier to see if your trip is still confirmed.

Good news if you have Air Berlin status: reports are that this status must be honored by Oneworld airlines as long as Air Berlin remains a Oneworld partner airline.

Bottom Line

The Air Berlin bankruptcy — and likely liquidation — is messy, and the situation will get worse if the airline is broken up and sold off in parts. But now that you've got some basic pointers about your rights and options, you'll know which remedies to explore if you end up being affected.

Got questions about Air Berlin that we didn't answer here? Add them to the comments below.