Hey, folks, cut me a break. I was just upset at my tax bill when I wrote that. No offense, ok?

After reading this I will gladly forego all of my miles from the frequent flyer club, whatever that is.

I hereby waive my ownership to all of my Infinity Airways miles.

If the airlines have any sense at all (make your own judgments on that one) FF programs are a profit center.

There is a vast "economy" in FF miles; you can earn them for buying just about anything, either directly from the seller (certain purveyors of such things as flowers, groceries, magazines, and automobiles offer miles) or through a payment facilitator (bank, via checking account or credit card).

These folks buy their miles directly from the airlines for cold hard cash. If the airlines can't figure out how to make money on that deal they're worse off than I thought.

B747-437B:

Since this joker urges all who get his e-mail to write the Dept of Transportation to let them know their thoughts, I was wondering whether you had his e-mail so that we might "educate" him.

Don't be silly; he probably didn't pay for it...
Regards,
alex

ROTFLAO !!!!!!!!!!!!!!!!!!

Of course they cost money. Everything any company does to build business costs money. Advertising costs money, but should airlines stop advertising because they're losing money or receiving government help? Of course not - that would just put them in worse shape than they already are!

Frequent flyer programs are no different.Most airlines have decided, correctly IMHO, that they bring in more than they cost. In other words, AA's bottom line is better off with its program than it would be without it, and ditto for all the others.

One could ask a theoretical question as to whether all airlines would be better off if all these programs were eliminated. If the total amount of flying everyone did was a fixed quantity, maybe. However, FF programs motivate some people to fly when they otherwise wouldn't, as witness any thread in the Mileage Run forum. That may affect the matter.

BTW, regarding reservation agents: they get paid, but most people outside the travel/hospitality industry would be surprised how little.

Point well taken, but, exactly what kind of fare would grandma pay (or any of the infrequent fliers) if we road warriors weren't paying the top dollar fares. It doesn't matter who's footing the bill for the high fares. All that matters is that it allows the airlines to let grandma fly for $148 RT to see the kids. This is a huge point lost on just about every infrequent flier, especially the ones who gripe about the elite's. The people who might complain about the FF programs, like the infamous emailer, should be careful what they wish for especially if they ever want to fly to their favorite destination again for less than $500.

Edited because I didn't know b_tch was not allowed.


[This message has been edited by ORD1Kguy (edited 03-08-2002).]

i remember reading a blurb from an a/l exec which said.... business flyers want frequent departures. we provide them (on some routes) . we need the leisure flyer to fill up the planes. might be something to it. i don't think that there are idiots running the a/ls, however some make errors. i like the skeds and the prices for advance purchase.

If the travel which a company is paying for is a legitimate expense associated with conducting business (and the company assumes the risk of having to prove this in an audit, though admittedly audits are rare), then begrudging that company the right to deduct the cost of the travel is silly. Roughly by the same argument, then a widget manufacturer should not be allowed to deduct the cost of goods sold (raw materials) from their revenue to arrive at the amount of income which is then taxed. Allowing the widget manufacturer to do that is taking dollars out of Grandma's pocket to line the pockets of the corporate bigwigs....

It's also worth emphasizing that we're talking about expenses being tax deductions, not tax credits. For a company to authorize an extra $10,000 of unnecessary travel (which does not reduce its corporate tax bill by $10,000) to help one of its employees earn additional incremental frequent flier benefits valued at probably significantly less than $10,000 is horribly non-cost-effective.

Well, let's go a little slower here. Imagine we had a magic wand that could make all FF programs vanish tomorrow. I suspect that if there were one thing every CEO of every airline could do by waving a wand it would be to get rid of his airlines FF program. But Airline A can't as long as Airline B continues to offer FF miles and upgrades. Each airline has to keep its program roughly in line with every other airline. With airlines comping each others elites, the loyalty built up by amassing FF miles is fragile indeed.

But our magic wand solves that problem by getting rid of all the FF programs instantly. What would the air travel world look like in a world without FF programs?

Businesses would still have the same meetings to attend, the same clients to visit. Sure, there might be fewer mileage runs to Singapore, but I can't believe they account for very much on the bottom line. There are going to be the same business flights by Road Warriors at the same business fares, and the same yield management attempt to lure grandma into an empty seat on Thursday afternoon. That is not going to change. In short, the same revenue base would be there.

What will change is that airlines would have to build customer base and customer loyalty based on service. Just imagine, an airline attracting customers based on the level of service!!

If Frequent Flyers fill about 5% of seats, airlines could cut seats flown by 5% and save that cost, along with all the associated cost of special services. First Class could be reduced in size and prices set at what people think it is worth. Imagine paying for airline services based on value!!

As to lounges, apart from such things as 1K clubs, I suspect they pretty much pay for themselves. In fact, they should bring in more money if memberships can't be bought by miles.

All in all, I see very little negative in getting rid of all FF programs. Prices on the whole would be lower both for the leisure traveler and for the company that buys the road warrior's ticket. And the airline would be rid of tremendous headaches and whining. With service the basis for flier loyalty, competition could only bring better service and better schedules.

Frequent Flier Miles is an idea whose day is past. Be gone, I say, and the sooner the better.

Bruce



[This message has been edited by brucemcal (edited 03-08-2002).]

Well I'm glad to see someone on the 'other side' of the majority side on this issue. Personally I think it's simple. Let airlines decide if they need frequent flier programs. There a few smaller ones out there that don't have any. If the larger ones felt it was a cash drain not worth the hassle, and it wouldn't put them at a competitive disadvantage then it'd be gone too.

We saw Northwest stop paying online travel agents comission. No one else matched this but it's still around. Guess they decided it didn't make much of a difference..

Bottom line is many of us pay money to airlines for two reasons : to get us from point a to point b and to get our miles/status/etc. Of course, mileage runs make light of the former, and those in fortress hubs may get a measly couple thousand miles on a $500 ticket (I know that feeling).

The last thing we need is the government screwing things up some more and more regulation.

It isn't just silly, it plain wrong. No one is arguing that companies should not deduct legitimate business expenses. What the IRS has maintained (and has not denied in their recent ruling, just forsworn attempts to collect for past offense)is that FF miles and upgrades amount to a rebate on the ticket price, and that that rebate is taxable income either to the company or to the recipient of the miles. The logic is impeccable, at least to my simple mind. What the IRS has found impossible has been to develop a scheme to assign value to FF benefits. It would require cooperation of the airlines to track sources and use of FFmiles and upgrades, and that, the airlines have refused to do, and Congress, in its ultimate wisdom, has refused to require.

It is, however, something that any US District Court Judge could order tomorrow if the Judge found that upgrades and free trips effectively amounted to untaxed compensation. What I cannot understand is how anyone can maintain that it is not untaxed compensation. And, if compensation, then there is that little thing called equal protection that says that if you and I receive the same compensation, we should pay the same taxes.

So far, no one has filed that suit, but be patient, somewhere out there there is certain to be some public service group that will take it on some day.

Bruce

FF miles are not "untaxed compensation" any more than a 25c off coupon for breakfast cereal is "untaxed compensation". It is a fancy way of creating a discount which has more value to the customer than it does cost to the vendor. Everybody wins, but it is in no way "untaxed compensation".