The Brancatelli File



September 8, 1993 -- Frequent flyer awards are as close as business travelers ever get to a free lunch. But the elegance and sophistication of the meal is up to you.

Manage your programs wisely and you'll be feasting. Get sloppy and you'll end up with table scraps.

Blinded by the lure of free travel, too many business travelers lose sight of one basic fact: Frequent flyer programs are a business strategy, not an act of airline noblesse oblige.

The awards you "win" are not really "free." You pay for them with your loyalty to the airline sponsoring the frequent flyer program. The more loyalty you show--in other words, the more frequently you do business with them instead of the other guys--the more valuable your awards.

Recognizing that unspoken equation--extreme loyalty equals lavish perks--is the basis of intelligent management of your frequent flyer programs.

Consider the matter of "mileage concentration." Say you fly a total of 80,000 miles over the course of the next few years and let's say you travel 20,000 miles on each of four different airlines. At the 20,000-mile level, most frequent flyer programs reward your loyalty with a roundtrip, advance purchase domestic coach ticket. At current fares, each ticket would cost you about $350 to buy. Not chopped liver, but not caviar, either.

But say you're managing your frequent flyer programs wisely and have chosen to fly all 80,000 miles on one airline. Use Continental Airlines as an example. As a reward for accumulating 80,000 miles, Continental's OnePass frequent flyer program will give you two unrestricted roundtrip coach tickets to Europe. If you use those freebies to fly to Paris, you've earned an award that costs about $5,300 to buy.

That geometric progression--the value of an 80,000 mile award is 15 times larger than the value of a 20,000 mile award even though you only had to fly four times as many miles--is what leads savvy frequent flyers to concentrate as many of their miles as possible in as few frequent flyer programs as possible.

This desire to concentrate miles leads to the next smart move in frequent flyer program management: playing the travel partners.

Anxious to tap into the loyalty-building power of the frequent flyer plans, international airlines, hotels and car-rental firms all have flocked to the party. For example: USAir is primarily a domestic carrier, but its frequent flyer plan allows members to earn miles by flying any of ten different international airlines. Five hotel chains offer miles in TWA's frequent flyer program. Four car-rental firms give miles in United's Mileage Plus plan.

Playing the travel partners is a nearly cost-free way to concentrate miles in your chosen frequent flyer plan. After all, you've got to stay in a hotel and rent a car anyway, so why not patronize the chains prepared to help you win free travel?

Keeping track of the maze of overlapping partnerships isn't difficult, either. The newsletters included with your monthly mileage statement always list the available partnerships.

As the frequent flyer programs continue to sway the buying decisions of business travelers, mileage partnerships have begun to extend beyond the traditional travel arena. For instance, long-distance phone companies are joining the programs because business travelers are also heavy long-distance users. To induce you to use its network, Sprint will give you miles in TWA's frequent flyer plan. Call with MCI and you can earn miles in the Northwest Worldperks program.

One last tip for savvy frequent flyer program management: play your cards right. Your credit and charge cards, that is.

Most frequent flyer programs offer a so-called affinity Visa or Mastercard that awards one mile for every dollar of purchases charged to the card. Many of these cards charge higher interest rates than standard Visa and Mastercards, but even that isn't a problem. Since you are probably traveling on an expense account and receive timely reimbursement of your expenditures, just make sure to pay your affinity credit card bill in full before your balance "rolls over" and begins accruing those inflated interest charges.

The loyalty-building power of the frequent flyer plans has even forced American Express and Diners Club, the titans of T&E, to play the game. Although neither card participates directly in a frequent flyer program, both now operate plans that offer one credit for every dollar charged.

What are the credits good for? Frequent flyer program miles, of course.

Commuter carrier Wings West, which flies under the American Eagle name, says it will drop flights to Visalia on December 18. Under a federal subsidy program called the Essential Air Service, Wings West operates four daily flights between Los Angeles and Visalia via Bakersfield. The flights are Visalia's only scheduled airline service. Budget Rent A Car is opening two rental stations in Moscow. Unlike other major chains in Moscow, both Budget locations will rent only American-made cars, minivans and four-wheel drive vehicles. Business travelers will also be able to rent chauffeur-driven autos, Budget says. The Greek government will build a new international airport in the town of Spata near Athens, but you're going to pay for it. Construction begins next year and the project will be financed with a head tax: $20 per passenger for an international departure and $10 for a domestic flight. American Express is offering international business travelers a lucrative perk: a free companion ticket for each full-fare first class or business class ticket purchased. The promotion runs through April 30, 1994, and is valid for flights on Air New Zealand, Alitalia, British Airways, Iberia, Sabena and SAS.

This column originally appeared in The Los Angeles Times business section.

Copyright 1993-2007 by Joe Brancatelli. All rights reserved.