Mileage Pro The Insider's Guide to Frequent Flyer Programs

AS ANY TRAVEL MARKETER WILL tell you, airline frequent flyer programs are designed to gain and retain the business of travelers by rewarding them for their loyalty.

Very much like how a neighborhood coffee house rewards patrons with a free cup of Joe after they purchase 12, frequent flyer programs attempt to keep customers coming back for more by promising them free trips and other perks after they meet certain conditions.

The airlines have taken the concept of loyalty programs (also called frequency programs, rewards programs, mileage programs and customer relationship management programs) to levels of size, sophistication and value unmatched outside the travel sector.

Actually, there is more to travel loyalty programs than the airlines’ schemes. While first offered by airlines, these programs are now equally endorsed and popular among hotel chains and credit card companies, and to a lesser extent by rental car companies. Because of the popularity of these programs, and because these programs use both miles and points, the term “frequent flyer” when used throughout this book refers to travel loyalty programs in general.

There are essentially two types of members who commit to frequent flyer programs: The frequent business traveler for whom these programs were first introduced (and who still represent the greatest share of revenue for the airlines) and the mileage consumer who might best be described as an “infrequent” flyer who enjoys accumulating miles by patronizing the airlines’ various partners. The frequent business traveler is rewarded with a wealth of benefits including free upgrades and earning elite status, which is most often offered in tiers: Usually gold and platinum, though almost any precious metal or mineral (think diamonds, rubies and sapphires) might apply.

Much like dollars in a bank, your frequent flyer miles reside in your account. Miles accumulate as you travel, but unfortunately they do not earn interest. At present, most of the larger domestic airlines use a fairly uniform policy: Your earned miles will not expire if you have activity in your account once every three years. The type of activity varies between programs, but generally any activity—including redeeming an award or using a partner—will suffice in making your miles active. When the mileage total reaches a certain amount, you can “redeem” it for an award, usually free travel.

Airline Programs
The common currency among airline programs is miles. However, some programs still award points or credits instead of miles. Most airline programs award miles based on the actual miles flown. For example, the flight distance between Los Angeles and Dallas is 1,235 miles; therefore, a traveler flying roundtrip between Los Angeles and Dallas will earn 2,470 miles toward an award.

Once enough miles are earned (20,000 to 30,000 in most programs) the miles may be exchanged for a free ticket. An upgrade to business or first class usually starts at 10,000 miles.

Members of frequent flyer programs should also be aware of minimum miles, class-of-service bonuses and partner miles.
Minimum miles: Some programs award minimum mileage regardless of the actual miles flown. For example, on flights that are 500 miles or less, some airlines award 500 miles.

Class-of-service bonuses: With some airline programs, when a first class ticket is purchased, the traveler will receive a bonus equal to 50 percent of the actual miles flown. Class-of-service bonuses may also be awarded for business class travel.

Partner miles: Airlines also award miles for hotel stays, car rentals, credit card purchases, long distance telephone calls and flower purchases. Businesses that award airline miles are referred to as “partners.”

Hotel Programs
Hotel frequent guest programs vary greatly in the manner in which points are earned and in the types of awards that are available.

The common currency among hotel programs is points. Generally, hotels award points based on the dollar amount of room charges per stay. For example, guests will earn 10 points per one dollar charged to the room. Eligible charges may include room rate, food and beverage (including room service), telephone and laundry. Or, guests may earn points based on the stay only. For example, the hotel may award 500 points per stay (regardless of whether the stay is for one night or five nights).

Many hotel programs give guests the option of earning points valid for redemption in the hotel’s program OR miles valid for redemption in an airline program. A few hotel programs (such as Hilton HHonors) award both hotel points and miles (this is called double dipping). So, for example, a HHonors member can elect to receive both HHonors points and miles in one of 55 participating airline programs.

Note: A flight in conjunction with a hotel stay may be required by the airline or hotel in order for the hotel stay to be eligible to earn miles.

Hotel program points can also be earned for partner car rentals and partner credit card purchases.

Car Rental Programs
For frequent travelers, car rentals are known primarily as a source of airline miles or hotel points. For example, members of frequent car programs may earn 50 miles per rental. A flight or stay in conjunction with the car rental may be required by the airline or hotel in order for the rental to be eligible to earn miles or points. A few car rental agencies do offer frequent renter programs of their own. Generally, the programs are quite simple. For example, Hertz awards travelers a free rental day after 12 rentals.

Credit Card Programs
Credit card programs award miles or points based on purchases. There are two types of credit card programs: 1) Affinity credit cards such as the Continental Airlines World MasterCard and the Marriot Rewards Visa, both issued by Chase. These sorts of cards are directly connected to an airline or hotel program (thus “affinity”). Miles or points are awarded per dollar spent and then deposited monthly into the member’s loyalty program account. 2) Credit cards operate programs of their own and points are awarded per dollar spent. Points can be redeemed for miles or points in an airline or hotel program, or they can be redeemed for awards offered by the credit card program itself. See chapter 5 (Plastic Magic: Credit Card Miles and Points) on page 43 for more information on credit card award options.

Many credit cards impose caps on the number of miles annually earned. For example, the popular American AAdvantage MasterCard issued by Citibank has annual maximums (waived for elite members) of 60,000 for Gold and 100,000 for Platinum cards respectively.

Partners
Airline and hotel programs have established a network of partners that award miles or points. Some programs even award miles for flower purchases, moving services and investments in mutual funds.
Partnerships are an excellent way for someone who flies only occasionally to supplement his or her loyalty program account. In theory, a free flight can be earned solely through the use of program partners. For example, if you charge all of your purchases to an airline affinity credit card and sign up with a partner long distance carrier, depending upon your level of activity, you could earn an airline award in 12 months. The proliferation of partnerships has made it much easier to earn free travel awards, particularly with programs that enforce the expiration of miles and points since partner activity is considered enough activity to keep an account active.

Planning
One of the most important aspects of loyalty membership is careful planning to ensure you accumulate the most miles and points. Read through the information in your loyalty program’s newsletter to ensure you are earning the most miles and points possible. For example, if you are traveling to Chicago and one of your hotel programs is offering a limited-time 100 percent bonus, all other things being equal, it is in your best interest to stay at the hotel that will give you the most points.

Consider this scenario: You are taking a three-day trip from Chicago to Los Angeles (Sunday through Tuesday). You fly United (earning 3,490 miles), stay at the J.W. Marriott (earning 500 miles), and rent from Hertz (50 more miles). Your total for the trip is 4,040 miles. With better planning, you might have chosen Delta instead of United. Delta was offering a 1,000-mile connection bonus through Denver and another bonus of 2,000 miles for flights Sunday through Friday, thus you would have earned 7,500 total miles for the flight. You could have earned even more miles using some of Delta’s hotel and car rental partners. For instance, you could have stayed at the Los Angeles Airport Marriott on Sunday night for 1,000 bonus miles and then switched to the J.W. Marriott on Monday night for an additional 1,000 bonus miles. At the airport, you would have rented from Avis on Sunday and earned 100 bonus miles, then turned the car in on Monday morning and switched to Hertz for another 100 miles. Ultimately, choosing Delta and its partners would have been worth 11,500 miles (156 percent more than the original trip). (In this case Delta was preferable to United; under different circumstances, of course, the choice might be the opposite.) By using an airline affinity credit card to purchase the tickets and pay for the hotels, car rentals and dinners, you could have added another 2,000 miles. You could have added even more miles by using a long distance telephone service (program partner) for your calls back to the office.

Recordkeeping
An estimated 7 to 8 percent of all travel is improperly recorded. Do not expect the airlines, hotels and car rental companies to be sympathetic. As in real life, a thousand things can go wrong, and often do. We suggest you pay attention to the following:

Retain Records and Receipts
Keep track of mileage earned and check it against the statement your program provides. Keep boarding passes and passenger coupon portions of tickets. Keep an accounting log for withdrawals and deposits much like you do with your check registry. If you have to submit expense reports for travel, always make copies of receipts before submitting the necessary paperwork to your company. Keep track of special promotions in which you are participating as not all programs will account for double miles and points when replacing missing credit.
Policies and Procedures

Check your airline’s policies concerning inter-line reciprocity, changing tickets and re-crediting mileage for unused tickets. If you were bumped from a canceled flight onto another airline, you will want to know your airline’s policy for awarding credit for that flight. Make sure your travel agent has on file your frequent traveler membership numbers. Make a list of the retroactive dates for each of your programs. Some will not let you file for missing credit more than three to six months after the date of travel. Others, such as American AAdvantage, will let you file for missing credit up to 12 months later as long as you were a member of the program when the credit was not posted.

Elite Status
If we could give one piece of advice to every frequent traveler it is this: Accumulate as many miles and achieve as high a status as possible with various frequent flyer programs. Often called elite-level programs, we are referring to the level of membership at which you can earn the most miles, points and privileges. Although some programs still have not introduced higher levels of membership, elite status is indeed a standard in the industry.

Some people might wonder why we suggest going out of your way to pay for and travel on another trip just to qualify for elite level membership. Review the various elite level programs offered by your airline or hotel and you will see why this is an important decision. Most provide special upgrades at no cost as well as tier bonuses that can increase your mileage and point totals automatically by 25 to 125 percent each time you travel. For most members, that means a 25,000-mile free award can be earned with only 12,500 actual flight miles, even with no partner bonuses.

Each December, you should make a point of reviewing your mileage totals with your major programs and decide which benefits you want to have for the next year. Trust us, as a Gold, Premier, Platinum or other elite level member, you will be treated differently.

The Bottom Line
Loyalty programs work whether you travel regularly or just occasionally, and even if you do not have elite status. A little more graciousness and cooperation seem to be extended to members of loyalty programs by the personnel at airline ticket counters, hotel registration desks and car rental counters. Members of Northwest WorldPerks program often receive special airfare offers not available to the general public, and most hotel guest programs allow members, even basic members, such privileges as free gym use and daily newspapers.

REMEMBER THIS:

• There are essentially two types of members to frequent flyer programs:
• the frequent business traveler and the “mileage consumer.” The frequent business traveler flies to earn most of his or her miles, whereas the mileage consumer is the more infrequent flyer earning most of his or her miles from the airline’s partners, such as grocery stores and restaurants.
• Did you know that an estimated 7 to 8 percent of all travel is improperly recorded? Recordkeeping is a must for those who do more than just fly when earning their miles.
• Tier bonuses are one of the most important benefits of earning elite-level status. Mid-tier members often earn a 100 percent bonus from their flights, meaning they only need to fly 12,500 miles to earn a 25,000-mile award.