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Airlines bristle at sale of vouchers

Airlines bristle at sale of vouchers

Old Mar 22, 02, 10:31 pm
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Airlines bristle at sale of vouchers

Airlines bristle at sale of vouchers


By Greg Sandoval
Staff Writer, CNET News.com
March 21, 2002, 6:10 PM PT


eBay is at odds with the nation's airlines as they try to halt the long-standing practice of selling travel credits, just as the busy summer travel season gets under way.
For years, airlines have tried to discourage passengers from selling frequent-flier miles and other incentives. The airlines have made headway in curbing the practice, but the vast reach and popularity of eBay has reinvigorated sales. An Internet marketplace such as eBay allows buyers and sellers to barter more easily than ever before.

Last week, eBay promoted the airline-credit auctions prominently on the front page of its Web site, coinciding with sweeping price cuts announced by most airlines. One example: a round-trip ticket anywhere American Airlines flies in the continental United States for a starting bid of only $49.99. But as the seller observes, "Best if you were to have a destination in mind, because I will have to make the reservation in your name and then deduct the miles from my account."



eBay has allowed the sales despite complaints by airlines. On Wednesday, Delta Air Lines threw down the gauntlet, e-mailing people selling Delta vouchers on eBay to inform them that they were violating the airline's rules.

The sale of vouchers "subjects the violator to liability for damages and litigation and transaction costs," Delta said in its message to Gerry Murphy, who has been selling and trading the vouchers online for more than a year. "Improperly obtained Certificates/Tickets are void and will be confiscated."

"I don't know what I'm going to do," said Murphy, a carpenter from New York who has racked up scores of vouchers because of frequent visits to his sick father. He counts on the income from the vouchers to help pay for more airline tickets.

The airlines say this backdoor exchange hurts their business and customers. Northwest Airlines' incentive programs were "designed to recognize our customers for their loyalty, and not created for third parties to profit on," said spokesman Kurt Ebonoch.

Airlines are in particularly tough times now, posting record losses, locked in fierce price wars and eliminating commissions to travel agents. The airlines cannot afford to lose any sales to this "gray market" online, but their efforts to work with eBay to end them have failed.

eBay: Our hands are tied
In the past, eBay has been contacted by several airlines and asked to shut down the sales, said eBay spokesman Kevin Pursglove. So far, the auction house has refused. eBay says the sales are not illegal, and they don't violate any of the company's selling policies.

"We are not in a position to interpret the policies of each airline," Pursglove said. "Essentially, our hands are tied."

Other airlines besides Delta have contacted customers directly to stop the online bidding for their vouchers.

An eBay search on Thursday for the words "airline tickets" generated more than 50 listings for vouchers good for either a free trip or heavily discounted fare.

One Southwest Airlines voucher for sale on eBay was good for "either a roundtrip flight or two one way flights," according to the description. Other items for sale were the equivalent of cash, such as a $500 Delta Air Lines voucher good on any flight. As of early Wednesday, it had been bid up to $305.

Some people "are machines out there--brokers, travel agents, frequent travelers who spend their entire day buying, selling and swapping these vouchers," Murphy said.

Profits in freebies
People started selling their frequent-flier miles almost as soon as American Airlines popularized the first frequent-flier program two decades ago, said Jared Blank, travel analyst for Jupiter Media Metrix.

"The brokers who offered to buy people's frequent-flier miles would stick ads in USA Today," Blank said. "The paper became famous for them. There were oodles. The brokers would take your miles and then give you money."

Then the airlines sued the brokers and won--and the sales went underground.

Southwest, like most airlines, prohibits sales of its vouchers, but does allow customers to give them away. This loophole makes them among the most trafficked vouchers online. Sellers online will say they are selling Southwest "beverage coupons" or envelopes, and as a freebie they will throw in a free round-trip ticket to wherever Southwest flies. That way, they don't break Southwest rules.

Southwest still frowns on the sales it sees online. "The most effective thing we think we can do is educate the consumer that it's not in their best interest to do it this way," said Beth Harbin, a spokeswoman for Southwest.

Drafting rules is one thing, but enforcing them is another. Without the help of eBay and the other auction sites, the airlines will likely continue to watch as incentive vouchers are exchanged on the Net.

"I bet I could sit in front of my computer six hours a day and make the same money I make as a carpenter," Murphy said.

The airlines maintain that the loser in such sales is often the buyer.

"People sometimes buy expired tickets and they have no cash value, and they look to SWA for help," Harbin said. "Or they might buy a ticket for $300 round-trip and Southwest might have a cheaper fare, so that customer may be paying too much."

Henry Harteveldt, a travel analyst for Forrester Research, says there is likely another reason the airlines don't want the vouchers sold.

"Frankly, they give these vouchers and coupons out hoping that they won't be redeemed," he said. "The airlines want to reward or satisfy or placate the customer, but they know many people will forget about the vouchers."



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Old Mar 23, 02, 10:35 am
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by tixx:
On Wednesday, Delta Air Lines threw down the gauntlet, e-mailing people selling Delta vouchers on eBay to inform them that they were violating the airline's rules.

The sale of vouchers "subjects the violator to liability for damages and litigation and transaction costs," Delta said in its message to Gerry Murphy, who has been selling and trading the vouchers online for more than a year. "Improperly obtained Certificates/Tickets are void and will be confiscated."

</font>
Oh no!!! The dreaded "Delta Secret Police" is back!!!

[This message has been edited by Andrew14302 (edited 03-23-2002).]
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Old Mar 23, 02, 1:31 pm
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I got a nasty email from AA when I was auctioning off some Kellogg's cereal coupons in September. It came from someone in their security department in DFW. A few days later came 9/11. I was sorely tempted to email her back and ask if AA security didn't have bigger issues to deal with...

But I thought it would have been in poor taste so I let it go.

Sold 2 5000 point lots of coupons for over 2 cents a mile. Never understood why people were willing to pay so much on Ebay.
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Old Mar 23, 02, 1:55 pm
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"Southwest, like most airlines, prohibits sales of its vouchers, but does allow customers to give them away. This loophole makes them among the most trafficked vouchers online. Sellers online will say they are selling Southwest "beverage coupons" or envelopes, and as a freebie they will throw in a free round-trip ticket to wherever Southwest flies. That way, they don't break Southwest rules. "

&gt;&gt;&gt; I know of a Southwest employee who "sells" buddy passes in this manner. It is the drink coupon that she is selling for $200 or whatever. The B/P is free .
I am assuming that she knows that she can be fired for doing that. (she is not alone)

Ok, my take, in case anyone is interested.
The airlines do have a right to police their own products. The miles belong to them and they created the program. What scares me more( and I think I would have a heart attack if they did this, not LOL - so many miles!!!)
is that they could always discontinue the programs-FF if they are being abused. A friend of mine has over 800K NW miles.

We should have had a red light go on after 9-11 to not keep such high balances. For some reason, USAirways was my concern, although now that is only 30K. It would still hurt to lose the 30K- a free trip in Business within Europe.

On the other hand, I don't like the airlines, or my employer, my neighbor, the gov't, or anyone else policing what I am doing in my private time. E-bay is a private thing, and I don't want the airlines snooping around in there. In fact, E-Bay and perhaps Flyertalk!? should set up more private screens to protect the customers, posters. Could an airline take revenge on a FT poster for writing a negative post on them?

Obviously, have different e-mail addresses!!! Don't use the same e-mail that you use on E-bay as your registered address at an airline. Sorry, but that is just plain (stupid) and I will bet that someone does that, then they will find you, for sure.

I think that we need to be allowed to have individual rights to buy/sell on the net and not be told what to do by the airlines. It is different if you are an employee, as I have friends who are airline employees and they are very careful what they say/do out there. AA is probably the biggest watchdog out there.

What do you think?



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Old Mar 23, 02, 5:03 pm
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ebay is all about the auction fees they will sell bootleg music and videos till the cows come home until someone complains , thats why they are trying to tell the airlines they cant police it , the issue is a tough one because if award travel was widely resold , they would make it harder to obtain knowing that it had a higher value than it currently does ...lets see Who wins this one EBay $$$$ or the airlines $$$$$$
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Old Mar 24, 02, 10:18 am
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Two miscellaneous thoughts:

1-The folks who "sell" the drink certs that just happen to include a RT ticket are selling the ticket. This holds true regardless of how much "wink-wink" activity goes on or how they word the transaction. I.e., the substance of a transaction takes precedence over its legal form. Much akin to the purported gifting in the FT venue; when in fact these folks are trading, regardless of the terminology used. -Yes, that having been said I am not against either of the above practices, I am just telling ya that you are selling, trading, etc., regardless of how you word the transaction. -This is a wide paintbrush, but I really don't think the airlines mind the true trading activity all that much. Outright sales are a different matter and I am glad to see that those are pretty much verboten here in the FT venue.

2-As to the high prices on e-bay, that is interesting. Do note this, auctions do not work in a manner that derives a market price. They function to achieve the highest price that any buyer is willing to pay for a specific item. Interesting approach, but think it through. Hence the reason for an auction, to get the highest price you can for an item, not necessarily indicative of market.
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Old Mar 24, 02, 11:58 am
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by tixx:
Airlines bristle at sale of vouchers


By Greg Sandoval
Staff Writer, CNET News.com
March 21, 2002, 6:10 PM PT

....The sale of vouchers "subjects the violator to liability for damages and litigation and transaction costs," Delta said in its message to Gerry Murphy, who has been selling and trading the vouchers online for more than a year.......

....."I don't know what I'm going to do," said Murphy, a carpenter from New York....
</font>
I wouldn't want to be in this guy's shoes..... 1. Delta polices so hard; 2. He admitted to selling vouchers for years, and 3. DL has his address, thus his acct. number. It would be interesting to hear a USA Today follow-up on the DL Police's course of action.

Glad I'm not in his spot!

[This message has been edited by Viajero Joven (edited 03-24-2002).]
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Old Mar 24, 02, 1:02 pm
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There are no federal laws or state laws (Some people will cite a California law but to date can not give an example of when someone has been charged with this law) that are broken when you sell vouchers/miles. The airlines have every right to terminate your account but how can they go after legal fees if no law has been broken?
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Old Mar 24, 02, 1:05 pm
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I don't see any reason to restrict airline's access to E-Bay or FT. Especially not FT, it's a goldmine for market research.

The airlines have rules and we all agree to them by virtue of participating in the program. We're free to take our business elsewhere or not participate in the FF programs.

You're not supposed to sell FF miles, awards, etc. That we know. You can contact the airlines and try to get them to change, but I doubt they would.

If you decide to break the rules, then you can't complain if you get busted. People always complain when they get a speeding ticket; but they don't seem to be as concerned with the fact that they were the ones speeding, it's not the cop's fault for setting up a speed trap.

On Butcher Bird's point, I fully agree. I don't know why anyone wastes their time saying "I'm going to sell a plain white envelope, that happens to have 1 million miles in it." We know what they're selling, the airlines do, and so does the legal system. That defense isn't going to work.

If it did, I'd say, "I'm looking to buy a plain white envelope for $20,000, all you have to do is deliver the envelope, and, by the way, it would be nice if you happened to kill my wife."

d
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Old Mar 24, 02, 1:54 pm
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Worldtraveler36:
Obviously, have different e-mail addresses!!! Don't use the same e-mail that you use on E-bay as your registered address at an airline. Sorry, but that is just plain (stupid) and I will bet that someone does that, then they will find you, for sure.
</font>
I have no reason to hide my email address (it is the same here on Flyertalk as it is with all the airliens and every other thing I am registered for). I guess it's stupid if you're doing something against the rules ...

The airline rules pretty clearly state that vouchers are not to be sold, so I don't see what you have to complain about. If you don't like it, don't collect the miles, it's your choice.
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Old Mar 24, 02, 3:39 pm
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Beckles:
I have no reason to hide my email address (it is the same here on Flyertalk as it is with all the airliens and every other thing I am registered for). I guess it's stupid if you're doing something against the rules ...

The airline rules pretty clearly state that vouchers are not to be sold, so I don't see what you have to complain about. If you don't like it, don't collect the miles, it's your choice.
</font>

Same thought here, nothing to hide. These are the rules. Change the rules, abide by them or take your business elsewhere. Seems simple to me.
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Old Mar 24, 02, 4:39 pm
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One has to sit back and analyze "who" the people selling on EBay are, and what real risk they are at. If you had 800,000 miles (I actually reached that point last year before spending a bunch), I think I would be less likely to start selling miles than someone who just has 25-50,000 miles, as they have a lot less to lose it the airline takes all the miles away. Maybe the people are selling are really at minimal risk because they don't have a lot of miles to risk?

I've heard tales before about people showing up at the airport with frequent flyer tickets they have bought, and being denied boarding. Who does the ticket holder pursue then? They're going to want compensation from someone. I guess it really is a case of "buyer beware" when you decide to market your miles to the highest bidder.
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Old Mar 24, 02, 4:52 pm
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United used to be very tough on FF mileage awards and would grill the people checking in to make sure they did not buy the award ticket. Several years ago they denied boarding to a couple becuase they thought this was the case--it turned out it was legit and the owner of the miles sued United and United lost. Ever since, they are not as trigger happy with award tickets.
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Old Mar 24, 02, 6:35 pm
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">I wouldn't want to be in this guy's shoes ..... 1. Delta polices so hard; 2. He admitted to selling vouchers for years, and 3. DL has his address, thus his acct. number. It would be interesting to hear a USA Today follow-up on the DL Police's course of action.

Glad I'm not in his spot!</font>
Viajero - agree entirely with you.

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Old Mar 25, 02, 1:14 pm
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I say if u can get away selling or trading your miles then do it. I think it is a load of crock that the airlines prevent a true secondary market for miles. I mean they sell them by the millions. When they know that a large majority of these miles will go unused. They also control the inventory of award seats, thereby controlling the value of the miles. So what really is the problem of having a secondary market out here?
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