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Archive for Sunday, August 11, 2002

Agency: Airlines must honor Vanguard tickets

August 11, 2002

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— Passengers who had booked flights on bankrupt Vanguard Airlines could find it easier to have their tickets honored by other carriers thanks to a federal ruling.

The U.S. Department of Transportation said Friday that airlines that fly the same routes as Vanguard Airlines must honor tickets held by Vanguard customers when space is available.

Kansas City-based Vanguard suspended operations and filed for bankruptcy protection July 30, laying off about 1,000 employees and stranding 6,500 passengers.

Vanguard officials are making last-ditch attempts to obtain new financing while in bankruptcy so that operations can resume. A court hearing scheduled for Wednesday will determine whether Vanguard will try to return to the skies or must seek liquidation.

The Transportation Department's ruling cited Section 145 of the Aviation and Transportation Security Act, which was the focus of confusion after Vanguard declared bankruptcy.

According to that section, any airline that shares a route with another airline that has to suspend its service because of insolvency or bankruptcy "shall provide, to the extent practicable, air transportation to passengers ticketed" by the bankrupt airline.

Scott Dickson, Vanguard chief executive officer, had cited Section 145 in asking competing airlines to accommodate Vanguard passengers "at no additional cost."

But most airlines interpreted the rule differently. They said the phrase "to the extent practicable" left it up to them to decide how they could accommodate Vanguard passengers.

Most waived advance purchase restrictions, and some discounted their tickets or offered standby status. But for the most part, they still required Vanguard passengers to buy new tickets, often more expensive than their Vanguard fares.

The Transportation Department, however, said the only extra costs the airlines can charge Vanguard passengers are to recover the "direct cost of rewriting a ticket and meal costs."

"The department does not foresee those costs exceeding $25 each way," said a department notice Friday.

Other airlines have not yet responded to the interpretation. But a Transportation Department official said that the agency would be monitoring to make sure airlines comply with the law.

According to the notice, consumers with Vanguard tickets have until Sept. 28 under the section to arrange other transportation on another airline.

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