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THE AIRLINES BEING AIRLINES, AS USUAL
By Joe Brancatelli
July 30, 2009 -- Good news we could discuss this week: I had a great and cheap hotel stay in New York, haven't had to rent a car in a while, started planning a luxury trip to Ireland with some friends and found a treasure trove of Laura Nyro and David Clayton-Thomas performances on You Tube that I've moved to my laptop for my next flight.
Bad news: We have to talk about frequent flyer programs this week.
To be brutally honest, frequent flyer programs are boring. They stopped being fun to discuss a long time ago. They stink compared to the rich, varied and financially sound hotel frequent stay programs. And even when the frequent flyer program news is good, as it is this week, you're always looking for the next rug that the airlines are planning to pull out from under you. They've broken faith with us so often that we know every apologetic gesture they make today will be followed by a money-grubbing asininity tomorrow.
So forgive me if I can't gin up passion, enthusiasm, outrage or even feign surprise at the moves we will dissect this week. Let's just get through them and consider some of the rationale and strategies. I trust you'll make decisions based on your own needs and flying patterns.
We start with United Airlines' Mileage Plus program. For years, United has engaged in a vicious cycle of stupidity--an unseemly orgy of "free" miles followed by award-chart inflation, new fees and blocking award seats on its Star Alliance partners--that has turned Mileage Plus into a sad joke.
This week, however, United eliminated the booking fees on so-called "last-minute" awards. As you may know, United virtually created the idea of charging frequent flyers for the privilege of claiming the awards they earned. The fees had become insanely high--$75 for an award ticket booked 7-20 days in advance and $100 a pop for bookings within a week of departure--and were long seen for what they were: A transparent rip-off that infuriated United's customers and painted United's executives as the penny-wise losers that they clearly are.
Why end the fees? A couple of thoughts: So many seats are going empty on United now that the airline figures that it might as well remove the financial bars to claiming them for free. Or United can't match the one-way award program launched by American Airlines earlier this year and Delta's new initiatives (more on those in a moment), so it might as well dump the fees as a "competitive response." Or--and this one is my personal choice--there's another Mileage Plus devaluation coming and United is looking for a fig leaf.
Then there's US Airways. Its nearly moribund Dividend Miles program is offering a 100 percent bonus if you buy miles by August 15. In other words, you can earn one mile for every mile you purchase up to 50,000 miles. At the posted selling price of 2.5 cents a mile (plus a $30 processing fee) you can start from jump street and buy enough miles for $1,030 to claim an 80,000-mile, restricted business-class ticket to Europe. It costs $905 to score a 70,000-mile restricted first-class ticket to Hawaii. If you purchase the maximum of 50,000 miles, you'll get a total of 100,000 miles for $1,280. That's an effective price of just 1.28 cents a mile.
Why the comparative bonanza? US Airways has the least unrestricted cash and fewest unencumbered assets of any of the legacy carriers. This stunt is a transparent attempt to raise a little cheap capital. If you think you can negotiate the availability swamp (even US Airways' most expensive awards have capacity controls and blackout dates) and grab a low-priced premium-priced seat, have at it. But a word to the fiscally wise: As I have said about nine million times, "banking" miles to claim far-in-the-future ticket awards is a fool's game. It's doubly crazy in this financial environment.
And now we come to Delta, whose SkyMiles program is going through another wrenching change. If you're an elite player in SkyMiles or the soon-to-be-former Northwest WorldPerks, make sure you examine the machinations carefully. For the rest of us, a quick summary of the two key changes:
+ Introduction of a super-duper fourth elite level called Diamond that requires 125,000 miles of flying or 140 segments.
+ "Rollover elite miles" that carry over into the next year when you reach an elite threshold. In other words, all of the miles you fly over the elite status you reach in the current year are credited toward elite-status qualification the following year.
Although the introduction of the rollover program is surprising, it is hardly shocking. Now that the combined Delta-Northwest is the world's largest carrier, it has a few logistical problems. So many SkyMiles members would qualify for the existing top level--Platinum, which requires 75,000 miles of flying or 100 segments--that Delta had no choice but to add a new elite tier. And the rollover program is Delta's way of trying to stop SkyMiles elites from flying other airlines when they reach the elite level of their choice. In other words, while the changes may be a net plus for flyers, the moves are about Delta's internal needs, not recognition of the customer's loyalty.
If you had any doubt that Delta wasn't bending over backward to woo flyers, consider the wimpy new benefits that the airline announced with top-line changes. The "unlimited" complimentary upgrades for elite flyers are restricted; both United and American offer their elites a better upgrade scheme. The 125 percent flight bonuses offered to Diamond members are nothing startling. The richest benefit for Diamond members, free membership in the Delta Sky Club, was a perk once offered to the Platinum members. We've seen the "choice benefits" scheme (qualifying elite members choose from a menu of privileges) before, too. And the newest wrinkle, free upgrades on award tickets, was so sketchily explained and poorly documented that no one knows where an award-ticket holder will stand on the upgrade list.
The bottom line on Delta's changes, as with the US Airways and United moves, is simple and stark: This is just the airlines being the airlines. They're desperate now and want to be seen doing good things to win (or keep) our loyalty, especially if it helps their finances. But, inevitably, some bean counter or C-suite executive will soon enough decide that it's time to squeeze the airline's best customers again and a new round of rules and restrictions will undoubtedly follow.
But you knew that, right? You weren't really expecting the airlines to lead us to the glory river, were you? If you were, surf here and let Laura Nyro take you.
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ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.
This column is Copyright © 2009 by Joe Brancatelli. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.