Airlines Hope Fliers Will Trade Trips For Televisions
Instead of using your frequent-flier miles for a free trip, several airlines hope you might be more interested in exchanging those miles for a new TV, DVD player or a digital camera.
United Airlines is planning to announce today that it is becoming the latest carrier to allow members of its frequent-flier program to redeem their miles for a variety of items such as designer golf clubs, titanium cookware or 27-inch high-definition TVs.
Later this week, Delta Air Lines plans to begin a similar incentive program for its top customers. Last fall, Denver-based Frontier Airlines was among the first airlines to launch such a program.
The nation's airlines are eager to find new ways to reward their most loyal customers as it becomes more challenging to offer free trips. Because of higher fuel prices, most airlines are flying smaller planes these days, leaving fewer seats available for free award travel.
The airlines also want to reduce the number of frequent-flier miles their customers have accumulated to strengthen their balance sheets. For accounting purposes, airlines count such miles as a liability. For example, Delta -- which filed for bankruptcy protection last year -- said in its 2004 annual report that its outstanding frequent-flier miles accounted for $211 million in expected fuel, food and other costs.
Airline analyst Helane Becker of Benchmark Capital said frequent-flier miles represent "hundreds of millions of dollars" in expenses for the airline industry. "They're desperately trying to find ways to reduce their exposure while still keeping their customers happy," Becker said.
United's program is reserved for customers who have accumulated at least 25,000 miles; Delta's program is reserved for its best customers, those who have at least 75,000 frequent-flier miles.
Delta spokeswoman Gina Laughlin said the new program created additional opportunities for frequent fliers to use their miles in a "way that most suits their needs."
Travelers who have earned miles will still be able to use them to book flights.
"This whole miles-for-merchandise mini-movement is being forced onto the airlines by their own inability to make good on the promise of free award seats," said Tim Winship, editor and publisher of FrequentFlier.com. "At the end of the day, people participate in these programs for free travel. That is and will always be the principal motivation for people to participate in these programs."
Some travelers say they would prefer that their airline make it easier to use the miles for free trips and upgrades rather than merchandise.
"If I wanted a new TV, I would go out and buy one," said Sherry Lichtenberg, a Logan Circle-based communications specialist. Lichtenberg flew Delta nearly once a week last year and would prefer to use her miles for seating upgrades or for membership in Delta's airport lounge.
United frequent flier Gary Cohen of Sacramento said that his miles were worth more than some of the merchandise the airlines offered and that he could get a better price by purchasing the items from a retail store.
But syndicated real estate writer Bob Bruss of Burlingame, Calif., who has about 300,000 miles on United, said he liked the idea of exchanging his miles for a new plasma TV because he finds it difficult to use all his miles. He would rather get something else for them.
Obtaining free seats through award travel is one of the biggest complaints among travelers who belong to frequent-flier programs -- and the outcry has attracted the attention of the Transportation Department. As part of its newest investigation into how the nation's airlines are responding to customer service issues, the department's inspector general's office is looking at how difficult it is for travelers to redeem their miles for free trips.
MaxJet Delayed: MaxJet Airlines, the new Dulles-based all-business class, London-bound airline, has delayed its local debut from March 15 to April 3 as the airline takes additional time to reconfigure its Boeing 767 aircraft, upgrade lavatories and give the planes a new interior paint job, says MaxJet chief executive Gary Rogliano. The introductory fare is $999 round-trip.
MaxJet launched in November out of New York's John F. Kennedy International Airport to London's Stansted Airport.
Although MaxJet is delaying its Dulles debut, the airline plans to add an extra day to its schedule. The carrier originally had only four flights a week. But Rogliano says advance bookings were so strong, the carrier has added a fifth flight.
Rogliano says passengers who booked flights prior to April 3 out of Dulles will be shuttled by plane to JFK and then rebooked on MaxJet or another carrier.