oneworld airline air berlin was a basket case — which is how Etihad bought into it in the first place. When Etihad withdrew its support, tired of the losses at the German carrier as well as at Italy’s Alitalia, it collapsed.
The bankruptcy administrator is seeking up to $2 billion in damages from Etihad, arguing that the Abu Dhabi-based airline had pledged to provide support which it then improperly withdrew.
However it appears that the administrator isn’t just going after Etihad. There’s a report that they’re even going after passengers. (HT: @airlineflyer via Zack A)
A customer reports that they had purchased 2 tickets on the airline. The carrier went bankrupt and cancelled its flights. So they disputed the ticket purchase with their credit card company, Chase, and got their money back.
Now, they say, they have received an email with a “bill for the flight and a court order for payment and a deadline.”
This is certainly unusual and I do not have any expertise in German bankruptcy law, though I am confident that this passenger needn’t worry. Though they don’t share the actual text of the demand or copy of the order of the court, I think we can reasonably surmise that:
- The bankruptcy administrator’s position is that the passenger is an unsecured creditor of the airline. Once air berlin entered insolvency proceedings they stopped refunding refundable tickets.
- That passengers are relatively low on the list for repayment, and essentially jumped the queue with the credit card dispute.
- So they want to claw back the money from the customer in order to pay higher priority creditors.
I do not know whether the customer themselves or the credit card company is the proper target of such a motion in a German insolvency proceeding. And I suspect that any such judgment would find difficulty being enforced through a U.S. court, since under U.S. law the passenger would be a priority creditor. Though I’d love to hear from subject matter experts among readers here.
Most consumers assume that successfully disputing a credit card charge nullifies a debt. That’s not true – the company you paid can still ask for payment and sue you for the debt.
However in this case air berlin doesn’t have a claim that the customer failed to pay for something they received — air berlin cancelled the flight. The claim is that even though they didn’t provide the service, the limited funds the airline had should have gone to repay someone else.
That may or may not be the case under German law but as a US resident I simply wouldn’t worry too much over it. Ultiamtely the chargeback was done in compliance with the airline’s credit card processing agreements covering events including bankruptcy.
This particular message to this passenger notwithstanding, the best approach in the event of an airline bankruptcy is to seek a refund through your credit card company.
However be aware that the U.S. Court of Appeals for the 10th Circuit ruled this year that a credit card company does not have to honor a chargeback if you have already paid off your card’s bill that included the charge. That’s one reason not to buy tickets too far in advance of travel, though not a practice card companies are likely to try to enforce except with very large transactions.
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