Delta, NWA in Chapter 11: What should you do with your miles?

Delta and Northwest have filed for Chapter 11 bankruptcy protection, making them the third and fourth major U.S.-based carriers operating under bankruptcy protection (alongside United and US Airways).

Many airlines maintain business as usual during bankruptcies, which can last anywhere from a few months to a few years. United, for example, has been operating under bankruptcy protection for three years and plans to emerge a stronger airline in early 2006. However, if you’re fearful that Delta or Northwest may eventually liquidate—an event that currently seems unlikely—or if you’ve lost confidence in these airlines altogether, here are a few steps you can take to protect your miles.

Related stories

• Delta, Northwest file for bankruptcy protection
• What happens if Delta or Northwest stop flying?

Take an impromptu vacation

In the event of a liquidation, your miles will become worthless unless another airline purchases Delta’s or Northwest’s miles programs. So now might be a good time to use your miles for their intended purpose: travel awards. Book your upcoming holiday travel with miles, or plan a spur-of-the-moment getaway this fall.

Turn miles into tickets

Can’t get away now? You might consider redeeming your miles for award tickets for future travel. You can currently book an award for travel up to 330 days in advance.

Although you may have heard of the Aviation and Transportation Security Act, which forces airlines to accommodate passengers with paid tickets on a newly defunct airline, award tickets are not specifically protected by the ruling. However, it’s very possible that, in the event of a liquidation, other airlines will honor the award tickets in the hopes of gaining your business. It is also likely Delta and Northwest will still be flying when your departure date arrives, and you’ll be able to take your trip with no problems.

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Take advantage of partners

An alternate option is to book your award tickets on one of Delta’s or Northwest’s partner airlines. While many airlines have their own financial problems, Delta’s and Northwest’s partners are unlikely to liquidate in the near future. You may feel safer with your ticket booked through another, more stable airline.

Swap your elite status

If you’re worried about losing your elite status and accompanying bonuses, either through an eventual liquidation or because you intend to fly Delta or Northwest less in the next few months, you can ask another airline to give you complimentary elite status in its frequent flyer program. Some airlines may ignore their qualifying-flight restrictions and bump you right to elite tiers if you can show proof of your elite status and explain how you intend to make the new airline your preferred carrier. Just be sure to take advantage of your new special status by flying on that airline; usually, you will only get comped once in your life by a carrier, so you want to make the most of the experience.

Change your credit card

Many frequent flyers earn thousands of miles with an airline-affiliated credit card, such as the Delta SkyMiles card from American Express. If your card will soon be up for renewal, you might want to consider switching credit cards, rather than pay the annual fee and earn miles that may become useless in the future. Plus, if you switch to another affiliated credit card, you can get a big boost in your mileage account on that airline from the signup bonus. However, if your card is not up for renewal, you won’t want to switch cards just yet and pay two annual fees in one year.

Don’t worry so much

Keep in mind that it’s likely Delta and Northwest will effectively restructure under bankruptcy protection and emerge as stronger airlines within a year or two. But as there is no way of knowing what the future holds for these carriers, it’s difficult to predict the best course of action to take. The best advice is to assess your situation based on the number of miles you have, whether you can afford to lose them, and the time you have to take extra flights. Then, earn or burn your miles depending on what feels right to you.