COVER

Contingency plans

December 16 1996
COVER

Contingency plans

December 16 1996

Contingency plans

Canadian Airlines officials have warned repeatedly that without pay concessions from all its unions, the carrier will have to shut down.

That leaves a number of questions for would-be travellers:

What should Canadian Airlines ticket-holders do if they are booked to fly during the Christmas period or in the new year?

Holiday travellers should sit tight, says Hugh Campbell, president of the Alliance of Canadian Travel Associations, a 3,100-member organization made up of travel agencies, tour operators, airlines and other travelrelated companies. “I can’t see any problem whatsoever over the holiday season,’’ he says. In a worst-case scenario, Canadian would not cease operations until at least February, says David Lee, vice-president of Toronto-based GIANTS Travel Ltd., a consortium of about 800 independent agencies across Canada. That may be cold comfort for those who have tickets booked later in the year. But those tickets often do not have

to be paid for until they are picked up, says Campbell. Canadian has not decided on the refund policy it would adopt in the event it were grounded, says France Poulin, a spokeswoman for the airline. But Glynn Williams, an industry analyst with Newcrest Capital Inc. in Toronto, says there is only a slim chance Canadian will fold. “The odds are the airline will continue to provide service,” he says. “The question is, who’s going to own it?” If the company does not survive, its operations would wind down over a period of months, he expects. Travellers who want to take extra precautions can purchase default insurance for an extra $6 to $12 a ticket, says Campbell. But there is no guarantee they would receive a full refund since most insurance companies impose limits on the amount they will pay out if a major carrier or tour operator goes under.

What about Canadian Plus frequent-flyer points?

“If the airline did shut down, they’re gone,” says Campbell. The points would not even be accepted by Canadian Airlines’ frequent-flyer partners—American Airlines, British Airways, Air New Zealand and Qantas Airways. But there are some options for Canadian Plus members, he adds. One is to use the points now. A lot of people are already doing that: Canadian has “been swamped” with redemption requests, says Campbell. For a fee, Canadian Plus points can also be transferred to one of the programs run by its partners. It may also be possible to purchase insurance for points. Poulin says that, to her knowledge, the only company offering such a service is Frequent Flyer Services Inc. of Colorado Springs, Colo., which charges $161 a year for points insurance.

What will happen to Canadian Airlines routes if it stops flying? In Canada, others will likely fill the gap, says Ted Larkin, an analyst with Bunting Warburg Inc. in Toronto. On domestic routes, there are no regulations limiting carriers from picking up or dropping routes, says Robert Greenslade, a spokesman for Transport Canada. Airlines need only be licensed by the Canadian Transportation Agency, which requires an operating certificate, adequate insurance and majority Canadian ownership. In the case of international routes, carriers must apply to Transport Canada. But a carrier may apply for routes in a competitor’s territory if the designated carrier is no longer operating or is “under-utilizing” the route. If more than one carrier applies, Transport Canada makes its choice based on the best service proposal and the airline’s track record.