Business

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 It's just been revoked.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.

Tags: edited by Port1080, written by pO157, US Airways, FFOCUS, airline, planes, trains, automobiles, airport, TSA, tax, fuel, gas (all tags)

This story: 14 comments (2 from subqueue)
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5

flying has depreciated in value.

wetkarma.

Fri Feb 22, 2008 at 07:04:38 AM EST

4.50 (interesting)

The thing about the modern flying experience is that (with the exception of select international airlines), flying on a specific airline is a commodity experience. I travel a lot and I've been treated exactly the same by all the airlines. Frequent Flyer points originally started as a way to reward the most valuable travelling customers, but when you earn points by buying a cup of coffee on your credit card, the customer for the airline becomes the credit card companies not the traveller.

For myself, I've switched to collecting hotel points -- airline flights are (relatively) cheap while hotel prices are all over the map. My general rule of thumb is to cash in my hotel points when the room costs over $150/night. The ability to guarantee leverage myself into a $1000/night room for 35000 hotel points is far more useful than questionable availability on a flight I can buy for $300 bucks.

Memory is a strange bell, jubilee and knell.

9

^ 5

Re: flying has depreciated in value.

port1080.

Tue Feb 26, 2008 at 12:51:25 PM EST

none

The ability to guarantee leverage myself into a $1000/night room for 35000 hotel points is far more useful than questionable availability on a flight I can buy for $300 bucks.

Is there really that much difference between a $1000 night hotel room and a $300 a night room? As long as there's a decent mattress on the bed and the sheets are clean, I don't see there being all that much difference. I've stayed in a few three and two star hotels and a lot of crappier ones (including one really scary one in Sterling, North Dakota - the only hotel or motel where I've actually slept on top of the sheets because I was too skeeved out by the though of what might be living in them...), and I just haven't seen that much difference between the three starts and the two stars, other than maybe having a better breakfast or a better attached restaurant. It seems to me that you pay more based on the location of the hotel (i.e. whether it's right in downtown or on the outskirts / near the airport) than how good the hotel actually is. There is a HUGE difference, on the other hand, between flying coach and flying first class or business class (especially on international flights, especially if you're taller than 5' 7" or so or have long legs).

10

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Re: flying has depreciated in value.

wetkarma.

Tue Feb 26, 2008 at 01:45:31 PM EST

5.00 (informative, informative)


Is there really that much difference between a $1000 night hotel room and a $300 a night room? As long as there's a decent mattress on the bed and the sheets are clean, I don't see there being all that much difference.

Yes and no. Mostly no -- there is not much of a difference between a $1000 hotel room and a $300 room. At least to my tastes -- I frequent business hotels, I suspect resorts might be different.  Depending on the time of year -- it can be the same room that sells at different rates.

 A room rack rate of $1000+/night is basically a 4-5 star hotel near maximum occupancy at peak season in a major city. They get to charge that much because of scarcity -- whether its a room facing Times Square on New Years Eve or a last minute reservation for a suite in London during the coming Olympics. The advantage of hotel programs vs. frequent flyer programs is that program rules will allow you to get the room as long as its available. You don't get charged extra points because its peak season.

Secondly -- with the exception of international flights, the majority of flights in the USA are under 5 hrs. I agree (oh dear lord do I agree) that on international flights business/first class is a HUGE difference but correspondingly if you are travelling international the hotels are more expensive as well.

Finally - as a frequent guest of a particular chain, they treat you much nicer than a frequent flyer of an airline. Even when I pay the cheapest hotel rate (or use points) I automatically get bumped to the best available room, get free meals (breakfast) and access to a business lounge which offers free liquor. Compare that to flying where I'm grudgingly offered a seat on a flight route thats most convenient to the airline and its clear to see that I'd rather just fly the cheapest airline flight and concentrate on racking up the hotel points.

p.s. The greatest hotel program is Starwood which allows you not only to rack up hotel points, but convert those points to obtain frequent flyer tickets at favorable rates. For every 20k starwood points (1 pt accrued per dollar of spend on a starwood credit card) , you can get 25k ff points on most airlines.

Memory is a strange bell, jubilee and knell.

11

^ 9

Re: flying has depreciated in value.

skeeter1.

Thu Feb 28, 2008 at 01:11:41 AM EST

4.00 (interesting)

"Is there really that much difference between a $1000 night hotel room and a $300 a night room?"

Hell, I'd settle (and have many times) for a $50 room at a Super-8, Motel6, Red Roof Inn, HoJo...  I've been in all of them, and if it's clean, I don't care about much else.  For the most part, the only thing I go to a motel for is to sleep and use the bathroom.  The rest of the day is time outside.  

Yes, I have stayed at some fairly fancy hotels in NYC and NOLA when someone else (the magazine I was working for at the time) picked up the bill.  Was it worth the money?  Sure, as long as I didn't have to pay for it.  

there's only one way to find out...

12

^ 9

Re: flying has depreciated in value.

thefadd.

Thu Feb 28, 2008 at 03:12:22 AM EST

none

There are some really nice beds out there. I don't know what kind of bed you have at home but I'd never put a ton of thought into it until I ran into some really nice ass beds at a couple.

It is easy to buy small plaster models of what you think life is like.

13

^ 9

Re: flying has depreciated in value.

thefadd.

Thu Feb 28, 2008 at 03:18:53 AM EST

none

Have you ever stayed in this one?

It is easy to buy small plaster models of what you think life is like.

14

^ 13

Re: flying has depreciated in value.

port1080.

Thu Feb 28, 2008 at 08:39:41 AM EST

none

I have not, but my wife went on a university sponsored trip to Europe a few years ago (right after the Euro really started appreciating against the dollar, so they were on a budget) and she spent some time in youth hostels. The Europeans really know how to take the notion of "budget hotel" to a new art form. Think prison accommodations, except you "want" to stay there and you have to pay for it! I took a similar school sponsored trip to China and we mostly stayed in 2 or 3 star hotels (except when we went to Hong Kong) - this was about 7 years ago, though, when the dollar went a lot further than it does today, and when prices in China were a lot cheaper....

4

Your frequent flier account...

skeeter1.

Thu Feb 21, 2008 at 10:37:36 PM EST

3.50 (interesting)

Well, I don't fly much any more, but the FF miles aren't much different than gift cards.  The businesses won't pass up on any opportunity to screw over the consumer.  

there's only one way to find out...

1

Screw FF Miles...

port1080.

Thu Feb 21, 2008 at 08:33:14 AM EST

none

...just give me cheap, efficient service. Maybe that's impossible these days, with the new security overhead and the rapidly fluctuating but always increasing cost of fuel, but that's what I want and I think I'm not alone. It's no coincidence that the airliners that have generally done the best recently (Southwest, JetBlue) are the ones that don't play as many games and simply deliver what you pay for (or at least advertise that that's how they operate, obviously the reality isn't always that black & white).

2

^ 1

Re: Screw FF Miles...

thefadd.

Thu Feb 21, 2008 at 02:38:28 PM EST

none

The airlines are a very competitive industry and I can see where rewards for frequent and corporate customers would engender loyalty and help maintain a consistent customer base. Personally, I don't fly that much but I've got multiple frequent flyer accounts with various airlines and I can see where a customer like me is a problem for them. I don't even bother to maintain or have any interest in my accounts yet there they are. They want to draw me in so they sign me up every time but then my accounts just sit out there. They'd do better to figure out a way to get rid of accounts like mine and not eliminate the miles of customers who do care, thus pissing people off who were previously loyal customers.

It is easy to buy small plaster models of what you think life is like.

3

^ 2

Re: Screw FF Miles...

pO157.

Thu Feb 21, 2008 at 03:42:07 PM EST

5.00 (astute)

Actually, people like you are who they want. They WANT to use the miles to attract people, have banks pay for the right to branding credit cards, and then pay the airlines for miles they pay out as rewards, have retailers pay to pass out miles to customers. What they do not want are people who accumulate enough miles or are savvy to use them for expensive awards.

It surprises me that they are getting rid of the minimum mileage policy. That is just stupid and likely to piss off their best customers -- the guy who needs to get from NYC to Boston or something with no more than a days notice. Those flights can run $300-400 round trip or more. Considering US Airways specializes in short flights like from Scranton to PHL, or Lehigh Valley, PA to PHL, etc (some of the trips can be as little as 30 miles) catering to business travelers who pay through the nose and expense it, this move is stupid. Why should Joe MBA expense a flight on US Airways, get 45 miles and have to take like 556 trips (25,000/45) to get a basic free coach ticket for his family when he can transfer to United/Continental/Delta/whoever and earn a full 500, plus a frequent traveler bonus, and probably earn a free pass in 10 or 20 trips?

Ma and Pa making that big trip cross country vacation style to San Fransisco with flowers in their hair don't make jack for the airline. Those are long trips, burn a ton of gas and people book in advance so they spend less. Short business flights are where its at. If they had to screw customers they should do something to the irregular leisure fliers.

Why am I interested in this? I have spent tens of thousands of miles from my frequent flier days getting free flights for myself or my friends or upgrading people to first class (all I ask is that they drink enough or consume enough first class services to have outweighed the cash at the gate upgrade fee. Heh.). It pays off because if you buy a ticket at the last minute using miles instead of cash you can save hundreds instead of being screwed by the airlines highly confiscatory last minute walk up fares. I don't fly much anymore, but by being a savvy consumer (credit card, florists, branded companies I would have used anyway, etc) I have filled one of my airline mileage accounts with about ~350,000 points. This will hopefully buy my significant other and I two round trip tickets to Australia in International First Class, a month long vacation of which has been a goal of ours for a while. If we paid cash those tickets would generally run ~$10k each or more. But by doing stuff we would normally do, and just being smart about it we will go for free. Because that's how I roll.

I probably just jinxed it and tomorrow the airlines are all going to go under and recall their miles like the worthless fiat currency they are.

6

^ 3

Re: Screw FF Miles...

skeeter1.

Fri Feb 22, 2008 at 10:08:58 PM EST

4.00 (interesting)

"That is just stupid and likely to piss off their best customers -- the guy who needs to get from NYC to Boston or something with no more than a days notice."

Back when I was writing for a magazine in NYC but living in Cleveland, we often had to make same-day trips between CLE and LGA.  Just for shits-and-giggles, I looked up the fare if I had to do that on Monday (non-stop flights).  It's $627 now (it was $450 in the late '80s).  At the time, paying full-fare got you an automatic upgrade to first-class.  WTF, the magazine was paying for it, so why not?

Considering factoring in inflation between 1988 and 2008, fuel costs, etc., that's not bad at all.  Still, passengers are likely to get screwed out of FF miles.  I racked up plenty of miles (almost all on Continental), but I doubt very much that they're any good any more.  

By the same token, if you got a gift card for Christmas, you'd better use it up pronto.

there's only one way to find out...

7

^ 6

Re: Screw FF Miles...

thefadd.

Mon Feb 25, 2008 at 08:01:10 PM EST

none

By the same token, if you got a gift card for Christmas, you'd better use it up pronto.

Unless you live in California where it's illegal to expire them.

I think I actually just got an email from Continental or one of my ff accounts that my miles were expiring and giving me a list of magazine subscriptions I could redeem them for. Nothing turns me off more than free offers for magazine subscriptions.

Considering factoring in inflation between 1988 and 2008, fuel costs, etc., that's not bad at all.

Flying to so much more common now. High speed rail could really jump in if they could offer the old timey airline service of the '80s.

It is easy to buy small plaster models of what you think life is like.

8

^ 7

It's how the airlines make $$$. OfficeSpace style.

pO157.

Tue Feb 26, 2008 at 11:51:49 AM EST

none

Honestly dude they make more money selling magazine subscriptions than they ever did slinging IniTech executives around the country.

What are you going to do with your 40 new subscriptions to Vibe?

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