Read This Before You Buy Airline Tickets

A growing list of airlines have found themselves in financial troubles due to high fuel prices, falling demand and even credit card processor worries.

Aloha, ATA, Frontier (FRNT), Maxjet and Skybus have all either stopped service or have filed for bankruptcy protection. Even more airlines are likely to join this list in the months to come. AirTran (AAI) stock plummeted last week on speculation that it may be one of them. (Delta and Northwest reached a deal on a merger. Full story here.)

Many people are surprised to learn that passengers have no government granted rights when an airline cancels a flight or an airline goes bankrupt. People have assumed for a long time that airlines would honor tickets from a bankrupt airline for a small fee or the bankrupt airline would continue to fly. While this was true in the past, it's no longer the case.

Even after deregulation when airlines were no longer required by the government to help passengers out with canceled flights, many airlines honored tickets of competitors that went out of business. That began to change after Sept. 11. Airlines, facing an industry-wide slowdown, began to refuse to honor tickets from airlines that went bankrupt.

In response, Congress wrote a new law in November 2001 that required airlines to rebook passengers from bankrupt airlines for a set handling fee. Originally this fee was $25 one-way, but the Department of Transportation raised the handling fee to $50 one-way in 2005. In addition to requiring airlines to rebook tickets, the law gave ticket holders the right to ride standby for $50 each way for 60 days on their ticket.

Unfortunately, after heavy lobbying from the airline industry, Congress let this law expire in 2006, meaning that there is no longer any law requiring airlines to honor tickets from competitors that go bankrupt. During this recent round of airline bankruptcies, many airlines have refused to accept the tickets of the bankrupt airlines, forcing ticket holders to purchase new ones.

Due to this, consumers need to be much more careful when picking airlines, especially for tickets bought months in advance. If you are planning a trip that involves air travel, here are a few things you can do to help protect yourself.