OAG Travel News

As a frequent flier, I have a bank of mileage credits saved for a rainy day.  Sometimes I daydream about an around-the-world trip I will take, stopping in destinations such as Tasmania, Easter Island, Greenland and Morocco.  Just knowing that the miles are safely tucked away can be enough to survive the hassles associated with air travel these days.

From a financial perspective, frequent flier miles are considered a liability to the airlines.  To combat these growing liabilities, airlines began introducing restrictions over the past couple of years associated with the redemption of frequent flier miles – such as expiration dates – designed to decrease this enormous liability over time. 

Most U.S. carriers have recently announced even more fees associated with the redemption of frequent flier miles.  The latest changes are not necessarily designed to decrease liability.  Instead, they are aimed at increasing revenue and just the latest in a seemingly never-ending line fees –checked baggage fees, charges for pillows and other on-board amenities – to be charged to flyers. 

Following are links to the award fees imposed by the largest U.S. carriers.

AirTran – http://www.airtran.com/a_terms_conditions.aspx.  I sense a problem when the word “free” is immediately followed by an asterisk.

Alaska – http://www.alaskaair.com/as/mileageplan/changes.asp.  Changes announced just this week (and become effective on November 1, 2008) include an increase for the lowest-tier awards from 20,000 miles to 25,000 miles.

American – http://www.aa.com/aa/i18nForward.do?p=/urls/awardChanges.jsp.  If I interpret this relatively complex structure correctly, a fee of $350 applies to redeem and award ticket between the U.S. and Europe.   

Continental - http://www.continental.com/web/en-us/apps/onepass/.  Fee structure changes on August 17, 2008.

Delta –  http://www.delta.com/skymiles/use_miles/ways_redeem_miles.  Fees are waived for the highest tier travelers.

Frontier - http://www.frontierairlines.com/frontier/frequent-flyers.  I redeemed miles on Frontier just last week – the total charge was $5 and only 15,000 for a domestic round-trip ticket.

jetBlue – https://www.jetblue.com/trueblue/FF_faq.aspx.  The TrueBlue program requires redemption within 12 months of earning a free trip.

Northwest – http://www.nwa.com/worldperks/travel/options.shtml.  Redeposit fees apply if you cancel your trip.

Southwest – http://www.southwest.com/rapid_rewards/rules_and_regs.html.  The only fee I could find to redeem a free ticket on Southwest is the $10 September 11 security fee.

United – http://www.united.com/page/article/0,6722,50994,00.html.
Award fee structure changed in May; still no charge for tickets booked more than 21 days in advance, but many other fees have increased.

US Airways – http://www.usairways.com/awa/Content/dividendmiles.
 Includes a “mileage preservation fee.”  Are frequent flier miles now on the endangered species list?                                 

Given the combination of a highly competitive industry and extremely price-sensitive customers, the airlines feel these fees are an effective way for them to raise revenue.  Interestingly, many seem to be a bit defensive about these new fees. The first two sentences on Alaska’s Web site state: “As you are aware, the airline industry is facing unprecedented challenges. At Alaska Airlines, we are engaged in a comprehensive review of our business in an effort to reduce costs, while at the same time continuing to deliver the level of service you have come to expect. As part of that effort, we are announcing changes to the Mileage Plan that are aimed at maintaining the program's viability as well as its strong value to our members.”  I find it interesting that they mention reducing costs…. when in reality the goal is to increase revenue.  And I particularly enjoyed this Frequently Asked Questions section about the new award fees on US Airways:

Why are the airlines charging so many fees?
We estimate that the airline industry will lose over $7 billion in 2008. With fuel costs higher than they’ve ever been, we’ve had to look at ways to offset our increased operating costs. Increasingly, airlines are charging for a-la-carte services such as checked bags, seat assignments, and award travel in order to offset these increased costs.

Why don't you just raise fares?
Unfortunately, due to the highly competitive nature of the airline industry, even a small fare increase can be impractical.

Why do I have to pay a fee for an award ticket? Shouldn't my award be free?
Award tickets are not free. Award travelers are responsible for taxes, facility surcharges and security fees, as well as any fees assessed by the airline in conjunction with award travel. 

Why don't you just increase the number of miles required for an award?
Increasing the number of miles required for an award ticket would make award travel impossible for many members. The decision to charge a nominal fee will ensure that award travel continues to be accessible for the majority of our members.

No mincing words there - right to the point!

These are certainly not likely to be the last changes we see to frequent flier programs.  So, I plan to keep a closer eye on the fees as I continue to pad my rainy day frequent flier account.

Source: Laura Jackson for OAG.