Randy Petersen

Question
I have a lot of USAirways miles. The airline seems to be on shaky ground, economically speaking. Do I need to be in a rush to use my miles for fear of the airline going under, or do most defunct airlines usually get taken over by another airline and the miles get transferred to another program? Is this likely for USAirways?
-- Ann

Answer
Ann, first of all congrats on winning the movie tickets, I’m sure all of us reading Wendy’s blog hope to hear of your thoughts on the movie.

You’ve got a question that more and more frequent flyers are beginning to ask … and for good reason. While it is true that there have been any number of airline mergers in the last several years (TWA with American, America West with US Airways and Northwest with Delta,) that is not to assume that all defunct airlines frequent flyer miles end up in happy homes. Outside a merger, the opposite is actually true; at least four airlines in the past year have gone out of business and left all the members of their frequent flyer programs with no dreams of ever using their miles and points: ATA Airlines, Aloha Airlines, Eos and Maxjet. Unfortunately no one saw it coming with these airlines. Make no mistake, these airlines were not in the same league as US Airways, but it wasn’t all that long ago that United Airlines made a run at buying US Airways and US Airways took a run at buying Delta. That is all in the past. Earlier this year Moody’s listed US Airways among those companies with the largest amount of total debt and among those with the worst probability of default ratings. Not a list you want to be on but if there is one thing we know about US Airways, it’s that they are pretty scrappy and have managed to outlive reports of their premature death. There are very few who thought they would last this long. As for the here-and-now? Last fall they were able to raise close to a billion dollars and their lean and mean approach to fees and others decisions that effect both infrequent and frequent flyers while never to be popular with the flying public has brought some relief to this airline given its successes – this is the only North Amercian airline that charges mosr members a fee to actually redeem their frequent flyer miles toward flight awards.

From all the research and opinions we’ve gathered on FlyerTalk, there does not seem to be any concensus that US Airways could find much safe harbor with another airline at the present time. Both American and Delta are locked into a battle to wrestle more control in a partnership with Japan Air Lines and thus unlikely to have additional financial resources or focus to pursue US Airways. Frankly American could use US Airways as they have been locked out of domestic alliances (except for their Alaska Airlines alliance) that can make a big difference for them competively. One would logically assume that US Airways broad north-south East Coast routes would go a long way toward ensuring that American does not get lost in an industry countdown. All other major airlines have already cast their faith elsewhere and if one were to read the headlines, it would appear that Continental and Unites are getting along just fine and have almost forgotten their other domestic partner, US Airways. This sort of limited engagement of their partnership with these two airlines tells a huge story.

So, there is some optimism for US Airways in this area, but frankly it might be a headline for someone to just imagine Southwest Airlines buying US Airways, but that’s just a rumor for another day.

At this time, we do continue to hear the Chairman of US Airways, Doug Parker, refer to more consolidation in the industry but not a single analyst can point toward an interest of any scenario involving US Airways in this area. As for ourselves, we actually continue to be upbeat that US Airways is in no absolute danger of collapse at this point.

However, having said that, we do have a few solutions that can make for a better night’s rest for you:
1) You could continue to fly US Airways and enjoy most of the benefits of their program by using a more stable partner. For instance, begin to use the Continental OnePass program to collect your miles when flying US Airways. This will give you some piece of mind and yet allow you to fly US Airways if that airline is best suited for you. This is a s simple as supplying US Airways with you Continental OnePass membership number when flying that airline. You can still redeem awards on US Airways from your Continental OnePass account using many of the same destinations and we have absolute the highest regard for Continental as a surviving airline.
2) As we previously mentioned, there’s the danger that none of us can see the potential of a collapse for US Airways at this time and to manage that, you could take a few minutes and plan out your dream trips using your current mileage balance and go ahead and redeem them for awards nearly one year out. Essentially this is considered ‘cheap insurance’ since these awards should be for partner awards on either Continental or United or other Star Alliance partners. If US Airways were to disappear at least your awards would still be there for you to use as per your reservations. Of course with this scenario, you would pay for redepositing your miles to your Dividend Miles account if (and we assume) US Airways is still here a year from now.
3) There is also the idea of why risk worrying about miles and simply move your business to a competing frequent flyer program and airline – no hassle, no hustle.
4) And that brings us to the common sense appeal of any member and that is if this airline and its frequent flyer program works for you, be happy and stay with it. There are any number of happy members of Dividend Miles and given that we see no immediate danger of collapse over the next 3-6 months (barring any other drastic changes to the industry), many of us have miles with US Airways and are adding to them -- they really have been fairly good at some imaginative promos with partners and for elite status.

So, there you have it, a look at some of the past of airline mergers with respect to your frequent flyer miles, a more recent recap of the latest situations involving the safety of your miles and as well four different things to consider based on your own level of comfort with this airline.