Compensation to partner airlines for awards?
Feb 12, 2008 | 2:26 pm
#1
Original Poster
Join Date: Mar 1999
Location: Toledo, OH USA
Programs: UA1K, Marriott Titanium, Hilton Diamond, Million-Miler
Posts: 564
Compensation to partner airlines for awards?
I am OnePass member. For the past, I have been able to book overseas standard business awards on Skyteam partner airlines, mainly DL and AF. Does anyone know what sort of compensation CO has to other airlines when CO miles are used to get an award? Is there a standard in the industry?
Feb 12, 2008 | 8:25 pm
#2
Join Date: Mar 2005
Location: MSY
Programs: AA Plat Pro, UA Plat, VS Silver, Marriott Titanium, Hyatt Explorist
Posts: 2,546
It's usually set out by contract between the airlines. The FFP buys a seat at a negotiated rate from the partner airline, and gets to write the value of the miles off their books. Any difference is either a profit (value of the miles exceeds cost of the flight) or a book loss (value of the miles isn't enough to pay for the flight).
Overall the plans tend to turn a profit, because if redemptions are costing too much, the airline can capacity control "saver" awards and encourage double mile rule-buster awards. And redemptions between similarly sized airlines tend to offset- CO miles used to redeem NW flights are usually about equal to NW miles used to redeem CO flights.
Overall the plans tend to turn a profit, because if redemptions are costing too much, the airline can capacity control "saver" awards and encourage double mile rule-buster awards. And redemptions between similarly sized airlines tend to offset- CO miles used to redeem NW flights are usually about equal to NW miles used to redeem CO flights.