MilesBuzz! - Who will stay and who will go now? (Air/hotel FF programs)

This has most likely been covered a few different ways but now that we are so close to the end of a hectic year, my question to FT users is this:


WHO do you think will still be around this time next year--or rather, maybe just 6 months from now?

I think the following programs will still be here--I am concentrating what many generally think of as the "majors" here, but feel free to add on others:

UAL will survive. They are large and well established as #2. They have the cool song in their ads and on the phone. The whatever Rhapsody... (sorry, but you know what I mean. Well, you cannot lose with that number!)

AA will survive. They are the only ones you can convert miles to Hilton. They averted ch11 and they are #1. You can still redeem with them a lot easier.

DL will scrape by (but I bet in a few years they get absorbed by something Euro). They have the double Amex thing still going. They have a known logo too and so they will stick around, I think.

NWA will survive and thrive. They are internationally savvy in my opinion and well connected with the KLMs, Air France's and other gigs out there--and hey, they actually post previously errored miles back into one's account a lot quicker than everyone else ever has. At least whenever I have called or faxed them something. I know they are partners with DL but I think they will do better than DL too.

CO will survive. I dunno why but something to do with the great state of Texas. Dont mess with Texas! Also has something to do with these brand new planes I was on when in econ to Italy last fall. So nice we didn't need Biz class!

US Air will fold or be absolved. I bet in a few months--by Spring. I dunno, but having two Ch11s in such a relatively short period is a kinda key here. They are smaller anyway. Some partner of the Star Aliance will absorb some of this some how. Worse case: you lose your miles on them! Would be very "Anset" of them... I actually burned all our family's miles up and we have nothing to lose. I hope you are so lucky!

HHilton, SPG and Mariot will be fine. PC & Hyatt too, but...*

As you can see, my initial post here is just that--a teaser to get more elaborate or detailed epxert feedback from others with opinions. Some of mine are not based on anything but what I have seen or what I feel. I suppose I could think harder on it, but again, that's what the collective feeling of FT is for.

*As for the hotels, I have a feeling that their points programs will change drastically, and within the next few months. You will be required to fill out more paperwork to redeem miles and things like classes of stay will matter more and more in the rooms. This is because they are on the ground and more stable than airlines but are playing the same miles and points game.

Have a great holiday!
:)MM

who knows, we can view this thread in a year to see what happened, but why not play with it right now?

I agree that US air will be gone as we know it.

I then believe it becomes a battle as to which of the legacy carriers can wait out for one of their brethren to fail.

with 2 of them gone, the remaining legacy carriers will have some breathing time and space, as well as profits, to get themselves together

the big 6 is too many for everyone to make a profit
the big 4 may have a chance at it
(assuming they dont give themselves 50% raises)

It sure doesn't seem like US has much of a chance to stick it out a year from now -- but, I would bet there are some who didn't think they would be around by now! :D Of the non-legacy carriers, I don't hold out much hope for Independence or ATA. I don't know if they will completely disappear by next yr, but they are certainly not airlines I would be hoarding miles/points.

As far as hotels go, I think that there has been such a significant rebound in business occupancy rates, the hotel programs are mostly safe. I would think that we will continue to see an erosion of benefits for rooms not purchased/reserved through their own booking channels (see Hyatt's new policy).

With as many miles/points as there are floating out there, and the plethora of ways to earn them, I think we can all count on continual difficulties in redeeming said rewards at the levels we have all grown accustomed.

Stevekoe

This is a very interesting topic. I have been involved with air transport for over 30 years, but only as a FF for the last 7, and just now on FT.

I have to agree with earlier posts that US will fold. There has just been too much damage done. I also think another legacy carrier will fold, perhaps UA or DL. The outcome will be based on future economic activity, the ability of a carrier to re-negociate terms of debt, employees concessions, and a certain amount of good fortune.

The problem for the legacy carriers, as I see it, is that they cannot charge a price to cover their cost, in light of competion by the LCCs. Fuel is obviously a big cost factor, but it affects all carriers to some degree, dependant on their ability to hedge that cost. But the cost of labor is something that will cause the legacy carriers to have a higher seat cost, always.

There is no way around this. If you have a 20 yr agent, reservationist, flight attendant, or pilot, the labor cost is going to me more than it will be for the new LCC on the block. Thus the legacy carrier must charge more to recover their costs.

I'm not trying to pick on any labor group, and I wish the best for those employed by a legacy carrier, but the cost structure of the legacy carrier is now out of line with what the marketplace will pay for a ticket.

Back in 1978, when deregulation first came about, there was a lot of speculation about who would survive. PAA, TWA, BNF, and EAL were big players at the time, and all have since departed. Each ended due to seperate reasons, and while LCC were present, each demise had it own reason.

I remember when an outfit called Peoples Express started up out of EWR. It was an LCC, and expanded quite well for a few years. Then Bob Crandall at AA came up with an idea for an advance purchase ticket that eventually did PE in.

PE could not compete with this fare, as this was back in the mid 80's, and everything was done by phone. If you called PE and got a fare, and then called AA and got the same fare, no one would fly on PE when, for the same money, you could fly on AA.

The bottom line of all of this is that the market place has changed. Everyone is now buying discounted tickets. The legacy carriers can no longer count on the business traveler to buy a very expensive ticket, when a cheaper alternative might be available.

The legacy carriers have a great deal of debt to deal with, not only wth hard assets such as a/c, but pension liability for their workforce. If a legacy carrier bails on a retirement plan, as US has done and UA wants to do, what will this do to the employee force, and ultimately, to the product the carrier is selling?

There has always been a war with the LCC's and the Legacy carriers, but this is the first time in history that the LCC's are winning. People have always wanted cheap fares, but this is the first time that I can remember when the business fare went to the LCC based on price.

To go back to the begining, I think US will fail. Other carriers will pick up the slack, but the legacy carriers that go in to pick up the slack will be faced with intense competition by the LCCs, and, eventually, will not be able to compete. All of this will take time, but there is no doubt that the lecacy carriers are headed for extinction.

US Air will fold or be absolved.
USAir will never be absolved. Absorbed maybe, but not absolved.

Today LCC's will be tomorrow's Legacy Carriers. Didn't Southwest just unionize? :rolleyes:

Donna49, that was a great synopsis.

To expand a bit further, I have many inner thoughts about how all of this affects my miles.

My goal of gaining miles is relative to this kind of thinking. I have much to comment on the interesting things you wrote, but first I will concentrate on how this translates into my own mile concerns and perhaps others should do the same in this thread as well as comment on industry issues and trends.

For my mileage earning & redeeming needs, I like United, NWA and AA, but am thinking of burning up my United because of fears, and have already done this with others like US and DL. I am curious what others think about trying to burn miles up before... before some day of judgement. Sure, it will come slowly, but I think it will come. The phase out is already happening. So much evidence of that exists and so much of what Donna49 says reflects these things if you think about it...

More to come! More to expand on from Donna49's post as well!
:)MM

This is a very interesting thread. My concern is; how can any legacy carrier that has large unfunded pension liabilities survive? Without shedding these liabilities, presumably through a bankruptcy, they are starting the race with an anchor tied to their leg. It may be sooner for some and later for others but all the legacy carriers with unfunded pension liabilities will have to restructure to have a competitive cost structure. I hope I am wrong but can not see another outcome.

The really big question is what will happen to OA :D

US Air will fold or be absolved.

I didn't know Chapter 11 was a sin. ;)

This is a very interesting thread. My concern is; how can any legacy carrier that has large unfounded pension liabilities survive? Without shedding these liabilities, presumably through a bankruptcy, they are starting the race with an anchor tied to their leg. It may be sooner for some and later for others but all the legacy carriers with unfounded pension liabilities will have to restructure to have a competitive cost structure. I hope I am wrong but can not see another outcome.

Well, they're not unFOUNDed, but they sure are unFUNDed. This problem goes way beyond the airline industry and extends to the Social Security system. I've often said that long years of retirement for the masses in the way that many people have come to know it in the current era is something without much of a history -- and perhaps not much of a future, either. Everything I've seen says that we're dancing with a gorilla.

As for frequent flyer programs, I've resigned myself to the idea that those of us who have worked the system so beneficially and so well for so long have probably lived through "a golden era" that continues today, but is not likely to continue indefinitely into the future. I would certainly miss the game and the rich prizes that winning at it provides. Realistically, I don't expect to see anything but diminished returns going forward. "If it seems to good to be true...." To me, it really HAS seemed that way.

Hey, MM! Long time no see, amigo. :)

I think that the hotel programs are in fact becoming more stable and reliable as they mature. I always had a feeling that they were less savvy in the past, but in the past two years I feel like they've really gotten their act together a lot more. Nothing specific, just a gut feeling about it all.

As for the airlines, I agree that NW is the most solid and likely to improve. Great new routes, no rumblings beneath the surface that I've heard of portending danger, and a FF program that offers a lot more and better earning opportunities (for me at least) than most others. I concentrate my mileage earning on them for that reason even though I fly CO and Korean more (hate NonePass and want nothing to do with it; only ever use my KE miles to upgrade on the flights to Seoul, so limited redemption opportunities for me overall there). Great program and airline and only likely to improve IMO.

I think that CO is doing great as an airline, but it's no secret that OnePass is pretty craptacular as a program and pretty apt to stay that way. The airline itself seems rock solid - they've really figured out that staunchly defending their monopoly markets is key and it's working for them. They aren't trying to grow out of control and are instead controlling what they've already grown into.

American seems to be solidly on its feet, retaining a lot of customer loyalty, and likely to remain so. They have MRTC going for them, competitive fares, and maybe even some kind of coherent strategy at the top for once.

US Airways will be gone pretty damn soon barring some divine intervention. I hope that I can donate my remaining 13,000 miles for a tax write-off if there aren't any good magazines I can get with them. Any suggestions on how to blow 13k US miles, people? Can I transfer them to a family member? PM me - I'm not trying to threadjack here. :eek:

Delta seemed pretty shaky a few months back, but I feel like they're doing better and are likely to survive if they don't get low-balled into losses in ATL that would force bad decision-making elsewhere. I have a better opinion of them now than I did five years ago. That said, I think that behind US they are the next closest to the edge.

I don't know what to think of United's future. I do think that it will be closely tied to what happens to a liquidated US Airways and how they - or their competitors - position themselves with the former US markets and assets. A prudent move by one of the majors in buying into core former US markets to pressure United further could force UA into a corner. On the other hand, I'm not sure who actually has the liquidity to take advantage of US Air's illiquidity, so only time will tell. If UA can scrape together some cash and a strategy, they could position themselves very well with former parts of US and be around for quite a long while.

I think the real story of the upcoming year will be the changes in the LCC sector. Independence Air, unfortunately (WAS flyer here and flyi is so so so cheap sometimes..), will kick the can. jetBlue and Southwest are going to keep going strong and I think will try to swallow a lot of the US routes - they are fiscally healthy enough last I heard to attempt it seriously and could do well in those markets. I'm really looking forward to the advent of the trans-Atlantic LCC launch of some sort which can't be far off. I don't know if it'll come in the next year, but maybe in the next two. I think that will be the next big shift in paradigm that we see and will really light things up.

peace,
~Ben~

HAPPY THANKSGIVING!

I didn't know Chapter 11 was a sin. ;)

oops! wrong word choice :) - or was it? I mean, as Seoulmanjr said, it may take devine intervention to save some of these carriers!

oooh who knows.
Well, I redeemed some miles to fly to Key West this week and, well, I leave today!

Happy T day people. I will come back to this thread in a few days.
I will be curious to continue reading and ABSORBING the info and opinions of others!
:)MM

oops! wrong word choice :) - or was it? I mean, as Seoulmanjr said, it may take devine intervention to save some of these carriers!

I didn't know Dan Devine got into the travel business after leaving Notre Dame (sorry, it was the best I could come up with....)

I am dubious about Midwest's chances for long-term survival. I'm no expert, but some of the trends in its financials have not looked promising.

Based on recent dealings with customer service at both US and UA, my sense is that UA is not nearly in as bad shape as US. US acted like a business in trouble, taking 6 mo. to resolve a matter, typically with 2-4 weeks or more to respond to each e-mail correspondence on the matter. UA, on the other hand, was prompt and efficient, more like a business with a future. UA has announced some schedule reductions and redeployments to more profitable routes, and I expect to see more.

AA will probably survive, but I really question the wisdom of a corporate strategy which relies so heavily on the MD-80 class planes. (Delta also seems to have a fair number of these planes in its fleet). I find the seats, even in first, to be relatively uncomfortable. And given the age of these planes, I expect that the fuel economy is nowhere near ideal. Maybe they are hoping to get a deal on newer Airbus planes if US shuts down?

It would not surprise me to see DL de-hub SLC as a cost cutting measure and end up with a route structure which looks like US's (after de-hubbing PIT) with 2 eastern primary US hubs and maybe a sub-hub or two, with service west of the plains limited to major cities.

I also expect that a number of mid-sized and smaller cities may find themselves with fewer flights and/or being served by fewer carriers, with likely increasing prices. I also see a potential opportunity in these 2nd-tier cities for the LCC's, especially for those which are near fortress hubs. (It would also be a great opportunity to move to a more unified strategy for public transportation in this country if there were some political leadership on this matter. EWR seems to be one of the few airports with an relatively easy connection to Amtrak, and CO sells connecting tics on Amtrak.)

The hotel programs are inherently more stable because they award points based upon the number of dollars spent instead of the number of minutes spent on the mattress.

All my credit card awards are hotel-based. I use my air miles as quickly as possible and do all my banking on the hotel side where I believe we'll see less point inflation.

NW, CO, AA, UA, DL - will stay *in order of most healthiest
US will fold late February, early March in my opinion

I agree with your order, but believe DL is healthier than UA at the present time. Long-term, I wouldn't be surprised if the only legacy carriers left were NW, CO, and AA.


NW, CO, AA, UA, DL - will stay *in order of most healthiest
US will fold late February, early March in my opinion

I agree with your order, but believe DL is healthier than UA at the present time. Long-term, I wouldn't be surprised if the only legacy carriers left were NW, CO, and AA.

I think we may end up with three, and one reason why I think this has to do with partnerships. But I think one of each of the "flavors" will have to remain just because of marketshare patterns that exist right now. For that reason, I think it has to be one of the One World, one of the Star Alilance and one, not two of the sky team. For example, when you fly to the islands or to some of the ski areas like Aspen, etc, you see US Air or United planes. Who will fill the void in terms of legacy carriers--especially if no one is really that much into expanding right now? I think some how, some way, UA may pull thru this one and become this unit of the 3. If planned well and done with some thought, I could see them teaming up with some tiny US-Air like airline thingy that has all the makings of what Pan Am had become in recent years, or becoming alligned with an AA Eagle type small shuttle kind of what you see when going to places like Key West or some remote ski area out west. There are all these little guys who dont do as much business as the SouthWests or Jet Blues, but who certainly are called upon to take over flights that connect in major cities...

I could see the above combo of AA, NW and CO, and seeing as how NW and CO seem strong, that makes sense, but I bet one day soon after that, it is either one of those that stays on. So that would leave us with only AA and NW or AA and CO. Highly unlikely there will only be two. I still think we need a Start Aliance player... But who? What, when?

This time of judgement... That is when I fear the demise of miles will come before us. Back to relious overtones again, I know, but I still fear it and I bet it comes sooner than we think!

Burn em up!
:)MM

The hotel programs are inherently more stable because they award points based upon the number of dollars spent instead of the number of minutes spent on the mattress.

All my credit card awards are hotel-based. I use my air miles as quickly as possible and do all my banking on the hotel side where I believe we'll see less point inflation.

I'm doing the same thing: I no longer do any FF-mile credit card earning unless I'm simply jumping on a sign-up bonus. SPG Amex is my #1 card, MR Visa is #2, and HH Amex is used when they have promotions or when I'm at a Hilton.

I find that the hotel points are easy to use. I earn 'em and burn 'em frequently and don't necessarily obsess about max theoretical value. I have a couple of weekend stays coming up where I could probably get a Priceline hotel for $75/nt. all-in. Instead, I'm spending 2000 to 3000 Starpoints a night. In my old way of thinking, I would gasp "My points are worth more than that! I can't use them here!" In my new pattern, I think "I just kept $75/day in my pocket and I'll still never run out of hotel points." Unless Amex comes up with a very lucrative no-bull no-strings 2+% rebate card, I won't change my new pattern.

I'm doing the same thing: I no longer do any FF-mile credit card earning unless I'm simply jumping on a sign-up bonus. SPG Amex is my #1 card, MR Visa is #2, and HH Amex is used when they have promotions or when I'm at a Hilton.

I find that the hotel points are easy to use. I earn 'em and burn 'em frequently and don't necessarily obsess about max theoretical value. I have a couple of weekend stays coming up where I could probably get a Priceline hotel for $75/nt. all-in. Instead, I'm spending 2000 to 3000 Starpoints a night. In my old way of thinking, I would gasp "My points are worth more than that! I can't use them here!" In my new pattern, I think "I just kept $75/day in my pocket and I'll still never run out of hotel points." Unless Amex comes up with a very lucrative no-bull no-strings 2+% rebate card, I won't change my new pattern.

I actually think the smaller trips or smaller stays are not entirely a bad thing. Your spending the 2-3k here and there to keep the $75+ money is good because then, well, you have the money!

I mean, you can pretty much always GET points, and my wife and I have Amex SPG and other cards too, but cash is king. Although I rarely need it because I always finding myself using the miles cards these days, I think it is good to use miles and points when we have them rather than wait for some big score. That is, unless you have plans for a family of 5 to go first class to Aussieland or something... That takes some planning, but by the time you get that many miles, the rules surely have changed. That's what stinks these days.

This further supports the good idea of using your points when you have them and using them to do things like stay in a hotel for only 2k a nite instead of spending only a few dollars. You are USING the points, which is the whole POINT! There is no gasping here, as long as this continues to work.
My worry is that it will become harder and harder to do these things. I hope I am wrong.

:)MM

At this juncture, with US getting the labor concessions that they wanted they will still be around through next year. They seem to have just enough cash to hang on for awhile.

I think it would be better if the consolidation of the Legacy Carriers started now. I agree with several who have noted we may get down to three in the next couple of years.

My $.02 is that AA, a possible CO & NW merged airline, and a player to be named later. It may end up that SW is the final player since their network and ASM put them near the top domestically.

I wonder if the potential acquisition of ATA by SW would make ATA the International arm of SW.

Today LCC's will be tomorrow's Legacy Carriers. Didn't Southwest just unionize? :rolleyes:


Southwest has been around for 31 years and has had the largest % unionized workforce of the majors.

Southwest has been around for 31 years and has had the largest % unionized workforce of the majors.
It is interesting that they have been around for 31 years and I only ever started hearing about them in the last 10 or less.

Marketing, I guess. That, and more routes including ones in my area.

I enjoy the concept and certainly did like the sections of seats facing one another in the rear of the plane, but I do not like the colors of their planes and the fact that in order to get to california from places like Manchester, NH, one may end up with 3 connections and spend all day going 3000 miles.

But that is not their fault, really, it's just a result you can find with them more than you would on other carriers.

I think I will start flying them more and also consider Jet Blue, because I like their ads.

Yes, it can actually comes down to things like advertising and color of plane!

I'm really looking forward to the advent of the trans-Atlantic LCC launch of some sort which can't be far off. I don't know if it'll come in the next year, but maybe in the next two.

Have a look at Air Lingus. They revamped their pricing structure and are apparently very successful with it. I booked a one-way AMS-BNA for a friend at $400 all-in on them, with round-trips going $700-800 and one-ways over $1000 on the others. There are not many gateways but they code-share with American and fly to a lot of places in Europe.

AA will survive.

UAL will survive

CO will survive and merge with NWA

US will be gone

HP will expand

AA will survive.

UAL will survive

CO will survive and merge with NWA

US will be gone

HP will expand


I pretty much agree with that. DL to go, merging in with NWA/CO as well.
:)MM