Your frequent flier account... It's just been revoked.
pO157.
Posted to Business on Thu Feb 21, 2008 at 08:21:05 AM EST (promoted by port1080). RSS.
The latest announcement by Tempe, AZ based US Airways highlights the ongoing struggle between customers who have accumulated a ton of frequent flier miles and want to cash in, and the airlines who issued those miles and now want to avoid having to redeem them for actual seats on airplanes.
Airlines make big money off of their frequent flier programs. In some cases it is the only profitable department in the entire airline, with money coming in from branded credit cards, sales of miles to vendors to distribute to consumers for purchasing gifts, meals, hotel rooms or other non-airline related materials. The amount of mileage out there has gotten so big that on a cash basis (a penny or two per mile) there are $3.8 BILLION worth of miles out there. In 2004, airlines issued over 16 million free tickets but that barely made a dent in the amount of mileage not called in. Due to the large amount of miles floating out there airlines are walking a fine line between customers who love earning them, and their bottom line which prevents them from giving out too many free passes.
US Airways is notorious for customer service related screwups. It has such a bad reputation that some of its most loyal customers have started an online protest/support group to demand change in their favorite transportation company. The detractors at FFOCUS had another item to gripe about in what some called the Valentines Day Massacre. US Airways announced it will soon award the actual number of miles flown on flights, instead of a minimum 500 miles per flight. Since the airline specializes in short hops (some less than 50-100 miles) this could reduce the number of miles earned on a short, expensive flight 80-90%. This understandably made a large group of frequent fliers upset. In the same announcement, US Airways reported that it will charge customers $50 to redeem "Free tickets" within 14 days of departure, when the savings is usually the greatest. Critics called this plan just another way for the airline to give you less but charge you more.
But it is not the only airline to publish cutbacks recently. United airlines is being accused of devaluing its frequent flier program to nearly the value of S&H green stamps. Delta airlines announced it is cutting the number of free tickets available per flight. Other airlines began calling in old unused miles, announcing that all frequent flier accounts would be revoked after as little as one year of idleness. US Airways made money on both ends by charging re-activation fees and 1¢ per mile to reinstate unused awards. As the industry gets greedier it appears increasingly likely that "use 'em or lose 'em" is going to be the best strategy.
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