Maxjet shuts down, stranding holiday flyers

There's never a good day to declare bankruptcy. But for a travel company, and for its customers, the day before Christmas, in the throes of the holiday crush, has to be among the worst possible.

This is the year that scenario played out.

All-business-class carrier Maxjet today filed for protection under Chapter 11 bankruptcy and ceased all flight operations, stranding flyers traveling from the U.S. to London, and from London to the U.S.

On December 15, when we warned SmarterTravel readers to avoid booking travel on Maxjet until the company's financial troubles could be sorted out, the Maxjet website assured prospective customers that there was no cause for concern, and that the carrier's 34 weekly flights would continue uninterrupted. Particularly ironic was this, from the company's CEO, William Stockbridge: "We look forward to serving our customers during the busy Christmas season, in 2008 and beyond."

Now, all that remains of the Maxjet website is a very different message from Stockbridge, beginning, "It is with deep regret that I must inform you that Maxjet filed Chapter 11 bankruptcy on 24 December 2007. With today's fuel prices and the resulting impact on the credit climate for airlines, we are forced to take this drastic measure."

According to a USA Today report, Maxjet has purchased tickets on an alternative carrier to accommodate some of its own displaced passengers. Stockbridge also committed to contacting affected travelers, even going so far as to book hotel rooms in London, New York, Las Vegas, and Los Angeles to put up travelers stranded by the Maxjet shutdown. Customers holding tickets for future flights are being advised to request refunds from their travel agency or credit card company.

So far, Maxjet appears to be making a good-faith effort to re-accommodate ticketholders who have already commenced travel. It will become clear in the coming days and weeks just how well the carrier delivers on those promises.

But what many of us will be left with in the end is a disturbing split-screen image: the company's public assurances that operations would continue through the holidays, juxtaposed with its Chapter 11 announcement on December 24. It's a textbook case of a company being less than candid with consumers.

Looking ahead, a Chapter 11 filing does not necessarily signal the death of a company. United, Delta, Northwest, and US Airways all operated under protection of Chapter 11 in recent years. They successfully reorganized and are now considered viable companies once again.

But those were large corporations, with deep pockets. Maxjet, launched in 2005, is barely out of its start-up stage, and can't count on the financial life support available to major carriers.

It's likely that this most recent sad chapter will turn out to be Maxjet's last.