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Airline's gone bust—what happens to my miles?

/ Source: The Associated Press

Q: What can I do if I have frequent flier miles on an airline that ceases operation?

A: With the recent bankruptcy filings from ATA Airlines, Aloha Airlines and Skybus Airlines some travelers might be wondering what would happen if a carrier they rely on goes under. While analysts don't seem to think major airlines are likely to falter, seeing three bankruptcies in as many weeks might cause some travelers to become concerned for the miles they've earned.

The short answer is that when airlines halt operations rather than just reorganize, the miles would likely disappear as quickly as a jet's vapor trail. But that doesn't necessarily mean starting over for all travelers.

In rare cases other airlines will step in to honor miles, though that's less likely to occur in bankruptcies of smaller airlines focused on vacationers, said Terry Trippler at in Minneapolis.

"There is a possibility that there may be some other airline that may court your business. Given the current climate I sort of doubt it," he said.

Trippler noted that planes are already crowded and that airlines are getting pinched by high jet fuel costs so carriers aren't likely in a generous mood.

But observers say frequent travelers might have better luck.

"If you've got 10,000 miles that's one thing, if you've got 100,000 that's another thing," Trippler said.

Travelers who have accrued a large number of miles can essentially shop themselves around to airlines.

Janet Libert, editor of Executive Travel Magazine, noted that travelers who can show documentation of their frequent flier status on one airline can make the case that they deserve to be given similar status on a new airline because they will prove to be loyal customers.

"You have to prove to this carrier that you are going to be a good, solid loyal customer," she said. She noted that some frequent fliers often try to extract concessions at competing airlines even when their existing carrier isn't at risk of shutting down.

Airlines generally extend benefits to travelers based on how much they fly with them. Travel often enough with one carrier or its partners and top-tier members can get benefits such as use of lounges in airports and speedier check-in times.

"People play games all the time with their frequent flier program," she said.

Airlines can accept frequent travelers for a probationary period, allowing them to have the high status they enjoyed at another airline without waiting to accumulate miles. But these customers have to then prove their worth by flying often enough to show they deserve that status.

For those who travel often but not routinely, it could be difficult to earn miles quickly enough to satisfy airlines looking for travelers who can rack up a hefty log of miles in only a few months, for example. Business travelers are the most likely to be able to keep this pace.

While business travelers account for about 1 in 5 passengers, their business brings in roughly half of many airlines' revenue, Libert said. So business customers are going to be taken care of first.

"Any company — whether it's a retail store or a restaurant or an airline — they're going to focus on their best customer," she said.

But for those travelers who don't fly often enough to attract an airline's attention, there is often little they can do to hang onto their miles when a carrier shuts down.

"I believe that your miles have gone to Never-Never Land and are therefore probably worthless," said Tom Parsons, chief executive of "That's really what happened with other airlines in the past too."