This article was published in the Boulder County Business Report, Travel Section.
  Frequent-flier deals build loyalty
  By Barbara Jameson
Frequent-flier programs are alive and well , continuing to help airlines fill seats while building passenger loyalty -- and sometimes smoothing fliers' ruffled feathers.

But, no matter how much business travelers love the first-class upgrades and free trips, most corporate travel planners agree that schedules, plane and price dominate the decision- making process when it comes to business air travel.

That being said, if you know how to work the frequent-flier system, there really is such a thing as a free lunch, and more.

Although getting free tickets is easier today than in the earlier years of frequent-flier programs, awardees still need to be flexible on destinations and travel times. And blackouts still are implemented during peak travel periods such as Thanksgiving and Christmas. During these holidays, virtually none of the participating airlines will offer free flights.

The incentive packages are fairly uniform among the major carriers, but there are some differences.

"USAir doesn't have dated miles," says Randy Petersen, editor and publisher of InsideFlyer, a Colorado Springs-based magazine dedicated to straightening out the mileage-program snarl for frequent-fliers. Some other airlines require awardees to cash in their miles within a three-year period in use-it-or-lose-it programs.

Other airlines partner with car rental agencies, hotel chains and credit card companies so that even a passenger who doesn't travel a lot has ways to accrue free miles.

Continental Airlines was considered by some travelers to have a superior upgrade program, but since its flights have been limited out of Denver, former loyalists have had to switch to more convenient airlines.

Jeff Haney, an employee of the Boulder-based public relations firm Metzger & Associates, was one of those who switched. When Continental starts flying out of Colorado Springs, however, he says he might return to his preferred carrier.

Most airlines offer several levels of participation, and the level you can join is determined by how much you fly. Haney estimates he logs around 100,000 miles per year, half on United Airlines and the rest divided among TWA, Delta, American and Northwest.

His 50,000 miles a year with United allow him to accrue double miles with that airline. Since the free tickets are transferable, Haney says he saves his miles and gives them to his siblings for Christmas.

It takes about 25,000 miles to get a free ticket, good for any U.S. destination, including Hawaii.

Haney is a master of maneuvering with the airline giveaways and has managed to get free lodging at a Hyatt hotel and free car rentals. Racking up 107,000 miles with Continental, he won a free round trip from Denver to Prague via Copenhagen -- a journey normally worth close to $4,000.

He also takes advantage of United's upgrade program, buying $40 coupons redeemable for an upgrade to first-class seats with 72-hour notice.

"Upgrades are a good deal for the airlines," he says, "because they're essentially selling your seat twice and putting you in a first-class seat that would have gone empty."

In the Denver area, the most popular frequent-flier program is United Airlines' Mileage Plus -- by default, really, because Denver is United's hub, so that airline offers more flight options out of Denver International Airport, or DIA, than any of the others.

The national favorite, though, is American Airlines' AAdvantage club, with 23.9 million customers in 1994. United is second, with 21.1 million members worldwide. Nevertheless, most airline customers choose their airline based on when they want to fly, where they're going and the price of the fare. It seems that as an inducement, frequent-flier miles rarely act as a primary lure for choosing one carrier over another.

This isn't true, however, for companies such as Boulder-based Valleylab that are mandated to fly a particular airline when possible. "As a subsidiary of Pfizer Inc., we have to use the mandated carrier which for us is United," says Nancy Harrison, who, as an executive secretary in the Valleylab finance department, schedules flights for her group. If the employee has to fly to a destination not serviced by United, mileage bonuses usually are not a factor in choosing another airline.

"We schedule according to 'plane and price,'" Harrison says, adding that employees sometimes will specify a certain carrier, but that since most of them offer mileage plans, "we end up with more miles than we can ever use, regardless of whom we fly with."

Airlines aren't the only companies that offer frequent-flier programs; certain credit card companies also offer them. For the third consecutive year, readers of InsideFlyer magazine have voted the American Express card as the best frequent-travel affinity card, honoring American Express's Membership Miles program with the Freddie Award.

According to American Express, its members say that the plan's variety of redemption options and the volume of bonus offers were the main reasons they continued to choose Membership Miles as the favorite, giving it a two-to-one victory margin over its nearest competitor. Nevertheless, the membership is only 2 million, slightly more than the eighth most popular airline plan, America West's FlightFund, which numbers 1.8 million members.

American Express card users receive a bonus mile for every dollar they charge on their American Express cards. The miles are redeemable on eight airlines and in five hotel chains.

In what's called the Topping Off program, members also can borrow against a mileage bank to fill out the required number of miles needed with an airline to receive a free ticket.

"For instance, if someone who is a member of American Express and Delta's Frequent-Flyer program needs another 15,000 miles to get a Delta award fare, he or she can borrow the needed miles against their American Express 'account,'" says Maureen Bailey, American Express vice president of public affairs.

Nine-year-old InsideFlyer magazine provides passengers with a comprehensive rating of frequent-flier programs -- an increasingly complex chore, as the number and benefits of mileage clubs grow. "We help airline passengers learn how to earn more miles and manage them more effectively," says Editor Petersen.

For membership fees ranging from $50 to $150 per year, the magazine also offers other services such as tracking individuals' unrecorded flight miles and insuring passengers against mileage loss in the event an airline goes bankrupt.

Over the past several years, Midway, Braniff and MGM Grand have bitten the dust, financially speaking, and their passengers have had to forfeit their accrued mileage.

Petersen came up with the idea for his publication in the mid-'80s when he was flying thousands of miles for his former employer. "I read the fine print and found out you really could get free tickets," he says, referring to the early days of frequent-flier offers when a lot of passengers considered the offers to be just slightly this side of shady come-ons. After managing to get free tickets to Hawaii and Europe, he decided there was a good business opportunity in helping others do the same.

Most companies, as well as the state of Colorado, allow their employees to keep the flight miles they accumulate on business trips. Technically, the miles belong to the person whose name is on the ticket, says Andre Pettigrew, executive director of the state's Department of Personnel and General Support Services. While his department doesn't actually schedule ticketing, it does negotiate the travel contract with the designated carriers -- currently United.

Although the state does enjoy reduced fares because of its enormous buying power, individual employees cannot use the discounts for personal travel. And although they may keep the miles, they are encouraged to offer them to the state on a voluntary basis to further reduce the state's travel costs. "If they wish to, employees can use their miles to reduce the cost of their business travel, but we can't really demand that," says Pettigrew, "since the miles actually belong to the individual."

He agrees that bonus miles are not a primary factor in scheduling flights, the prime consideration being scheduling. To handle flight arrangements, the state contracts with approximately 50 travel agencies throughout Colorado.

Of the approximately 26,000 state employees, those who possibly log the most miles are in higher education. "I think people in general tend to overlook the fact that the state employs a large number of scientists such as archaeologists and anthropologists who fly all over the world on research projects," Pettigrew says. "For instance, if Wieman and Cornell -- state employees -- win the Nobel prize in physics, we'll have to fly them to Sweden and back."

Randy Krumpek, manager of travel services for Storage Technology, says that as with most other corporations, the computer storage company lets employees keep their miles "because it would require additional administrative effort to track the mileage," a cost not worth the animosity it could create among employees.

Krumpek adds that for leisure travel, StorageTek employees might fly in and out of the Colorado Springs airport to save on flight costs, but generally speaking business travel is based out of DIA because of the time factor ... and that after several months of experimenting, the Louisville-based company's usual route is via Church Ranch Road and 104th Avenue, "especially if there's congestion at the I-70 tunnel."

It's possible that it might be more efficient to schedule free tickets through corporate or in-house travel departments than commercial travel agencies.

According to Doris Schwarz, assistant manager of Destination Travel in Boulder, agencies aren't thrilled with frequent-flier programs because they don't receive any commission on the free tickets. "We'll work with our customers to try to schedule them on whatever airlines they're members of," she says, "and we'll record the information with their frequent-flier programs, but other than that, we don't get involved." This sentiment was echoed by an Automobile Association of America agent who said quite succinctly "we don't get involved."

Amassing frequent-flier miles has become a national hobby, with 278.6 billion miles redeemed in 1994 -- air-time worth $644 billion dollars. Nevertheless, as one industry wag noted, "It's a way for the airlines to make money out of empty seats." Even in the best of times, despite what stand-by fliers might conclude, the average paid per-flight load factor is only 67 percent. Nearly 7 percent of the remaining seats are filled by non-revenue tickets. The rest go empty.

The pioneer in issuing free tickets to loyal passengers was American Airlines, which began its AAdvantage program in 1981 and now serves as the industry benchmark for similar schemes.

According to Petersen, most airlines can't afford not to have some sort of frequent-flier program. The notion that if you offer cheap flights, "they will come," doesn't seem to work. Fledgling Western Pacific has tried it and after losing passengers to more expensive carriers with good freebies, "will probably implement a bonus program," Petersen says.

The other strategy airlines are using to strengthen their attraction to mileage hoarders is partnering. For instance, Frontier has allied with Continental, Reno Air joined the American Airlines programs, and American has a Visa card attached to it. Other airlines, such as Southwest, keep complexities to a minimum -- basically, you just get a certain number of free miles for every paid mile you fly.

Other airlines have entered the realm of partnering complexity to the extent that it takes a computer to figure it out -- miles for hotel nights, miles for charge-card purchases, miles in exchange for car-rental road miles, partnerships with non-U.S. carriers -- Haney's Denver/Prague flight included SAS -- and so on.

If you get involved in these programs and can't keep the bookkeeping straight, Petersen's magazine can help you. A sample issue may be ordered by calling (800) 333-5937.

Finally, although some airlines have increased the number of miles you need to fly to get free tickets, more airlines continue to spring up, providing more alternatives for accruing miles.

Fewer carriers for more passengers is a myth left over from the '80s. In the last several years, the skies have welcomed Western Pacific, Reno Air, Kiwi, Valujet, a new Midway -- out of Chicago -- and the re-hatching of Frontier.

"Airlines are like sports teams," Petersen says. "There's always someone around with a lot of money who's dream in life is to own one." And most of them are eager to ply you with free miles.



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