Most AA pax are enthusiastic about the airline's decision to increase legroom in coach class but some FF's wonder if the extra space may limit their ability to fly for free. Steve Brooke, a software engineer from Dayton, Ohio, says he is pleased that the airline has chosen to remove seats from its planes to increase the comfort factor in economy class, but he's decided to use most of his 500,000 miles to claim free travel on AA's partner airlines instead...

According to Randy Petersen, editor of InsideFlyer magazine, 1999 was the first year when FF partner companies, rather than pax, accounted for a majority of AAdvantage miles issued. "American has always been among the most liberal in terms of the percentage of people flying on free tickets," he says. "Now they can make more seats available because the partners have paid for them already."

Companies, ranging from Citibank and Countrywide Home Loans to Golden Bear Golf and Kellogg, purchase miles from AAto encourage consumers to sign up for their products or services. Consumers no longer have to fly in order to fly for free: they can rack up substantial mileage balances by signing up for a long-distance service or eating Cracklin' Oat Bran.

Mr. Petersen estimates "partner miles" accounted for 58% of the total AAdvantage mileage earned last year, the average for other major airline programs is closer to 40%. Partners pay anywhere from a half-cent to two cents a mile for the right to award AAdvantage miles to their customers. "Those seats may be free to passengers, but we're making money on them," says Mr. Kienzle.

This was not always been the case. When FF programs first took off in the mid 1980s, there were no partner miles, and a frequent-flier seat represented potential lost revenue. As the frequent-travel industry expanded and became more sophisticated, airlines began to use programs not only to reward passenger loyalty, but to generate income.

Now that the programs have evolved into a profit center of their own, airlines must cater not only to top fliers, but to a new class of clientele with corporate clout...
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