What We Learned From The airberlin Bankruptcy

In August, flyers were subjected to the abrupt fall of Germany’s second major carrier, airberlin. After years of attempting to turn around, the oneworld member suddenly became insolvent after minority owner Etihad Airways stopped their financial support.

Immediately, the German Government and Lufthansa were asked to step in to ensure travelers could complete their itineraries booked aboard airberlin. Today, the carrier is surviving on a $179 million bailout loan, while bidders begin to line up to purchase the bankrupt carrier.

The fall of airberlin cannot be tied directly to just one incident or event. Rather, this tale is of a slow descent that was only held together by multiple influxes of foreign investments. Days prior to the bankruptcy, some airline executives even mused that there were too many airlines flying in Europe and consolidation was soon to be a reality. Is there a lesson flyers need to learn from the fall of airberlin?

With the carrier soon to fall into new hands – or multiple hands as the case may be – the most important lesson flyers can take away is that financial stability matters when booking flights. Airlines falling on financial hardships hold few guarantees, especially where passengers are involved and no money is available to bring them home.

Does anyone remember when Skybus Airlines was grounded after the airline ran out of money? Flyers across the United States were stranded at their gates, usually at secondary airports across the country. While some airlines offered aid to stranded Skybus flyers, the writing was on the wall months in advance. The situation with airberlin was eerily similar: after struggling for a long time, the airline finally folded after investors stopped providing money – except airline tickets were still honored after bankruptcy.

For those travelers who wish to inherit the risk of flying on an airline showing signs of insolvency, this is a situation where travel insurance is strongly advised. After the bankruptcy or financial failure of a common carrier, some trip insurance plans offer coverage for flyers to get home. However, not all travel insurance policies are the same, especially those that come with credit cards. Before booking the lower price flight aboard the questionable airline, be sure to understand what is and is not covered in a travel insurance policy.

Second, the airberlin situation may give us a look into the future of travel. If the most recent shifts in aviation are an indicator of the future, then we may be looking at even more split in the travel experience. With EasyJet, Lufthansa and Ryanair expected to take a piece of the airberlin split, our passenger experience of the future could be limited to either a full-service experience, or a bare-bones experience, with little room in the middle. As a result, prices in cash and our beloved points could divide further: while a low price will result in a seat and not much else, getting a seat in a premium cabin may come with a significant cost.

While the airberlin collapse is a hit for everyone involved, there are lessons to be learned from it. For all flyers – regardless or class or service – purchasing airfare should always be a “buyer beware” situation.