Are Mileage Plus Members "Creditors?"

Are Mileage Plus Members "Creditors?"

As United readies its reorganization plan, attorney D. Michael Kratchman of Southfield, Mich., is considering getting in on the act.

Mr. Kratchman currently represents five Mileage Plus members who are concerned about the fate of their miles in the United bankruptcy, and want their interests protected as the airline reorganizes.

Mr. Kratchman has already approached the trustee, who told him that he saw no need for a frequent flyer creditor’s committee at present. Once United files its plan, however, the court may allow such a committee to be formed.

Once again, the question arises: If miles have no monetary value, how can they be protected?

“It’s a property right,” says Mr. Kratchman. “Even though there may not be a monetary value, there’s the value of a seat on the plane, and you can enforce that right to a seat.” In addition, Kratchman said, the fact that miles are now handed down by will and trust, combined with the fact that United assigns a monetary amount to miles in their internal accounting, point to the existence of a substantial property right.

Mr. Kratchman is no stranger to airline litigation, having been co-class counsel on a 2000 suit against Northwest on behalf of passengers stranded on Detroit runways for up to 11 hours in a snowstorm.

The next step? Mr. Kratchman said he’s examining all options, but will probably wait to see what the plan proposes. In the meantime, he said that he is talking to other interested parties who are considering an alternative plan.

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