Frequent Flyer Miles to be Worthless?
 

Just watched the President of Aviation Dynamics interviewed on the Business News Network...he states there will be a number of smaller carriers in the U.S will enter into chapter 11 proceedings in the near future due to the cost of fuel, inefficient/ineffective management and lack of cash liquidity. Air Trans to be the first?

He also states the he expects that Frequent Flyer Miles will become worthless as all airlines strive towards 100% payloads, he reiterated "worthless" at least twice.

I wish I had a link for you...

Well that's pretty scary. I personally think Spirit will be the next to go but I do thing that there is hope for the miles/points of CO, UA, etc but do agree the smaller carriers have got to be in trouble.

With airlines charging more and more fuel surcharges on frequent flyer mileage tickets, "free tickets" have become worth less -- and as fuel surcharges increase (instead of being reflected in the fare directly) miles become worth less and less.

Worth less - yes, in general but not for all programs for all flyers.

Worthless - can't see that happening.

I currently have two trips ticketed in F, trancons for the family (two adults, two kids) (SFO<->JFK & SFO<->MCO). The month in which I booked the MCO trip is still wide open for F & coach. Each ticket cost me $10 to support the comical TSA. That's it.

I have been hearing people complaining for years how there's no availability for seats. Bull-puckys. I've never had a problem getting seats if when I am willing to think ahead a few months--and my kids have been lots of places on award tix.

I have to agree with Pushback. I've never had a problem redeeming miles, and I've used them to travel both domestically and internationally. While I've never tried to redeem miles for a trip to Hawaii at Christmas (and have no interest in going to Hawaii, anyway), I've always gotten tickets to my destinations of choice within a few days of my planned travel dates.

That's the key. Bottom line? Burn 'em as you earn 'em. Inflation is coming and your mileage investment earns no return.

The Link has been posted on the BNN website:

http://watch.bnn.ca/the-business-new...008/#clip57573

Talk specific to frequent flier miles is at 6:25 although I encourage you to listen to all of it.

To my knowledge, no US-based airlines apply fuel surcharges to award tickets for US-based passengers, so fortunately this is not something a lot of us have to worry about (yet). There was some speculation on other threads as to why this may be, but there never was a definitive answer.

Doubtful. FF programs are the only profitable business operation at many carriers.

Now you will certainly find miles depreciating in value as the redemption requirements go up and the inventory disappears as capacity shrinks. So in some sense the programs will be worthless for certain awards.

But the programs are here to stay.

As for bankrupt carriers, well, that's always been a risk. Sometimes things work out great (PanAm, TWA) where another carrier buys the program, and sometimes they don't (Braniff, Aloha).

as long as i can get longhaul F i dont care what it costs...

after watching the report I'm inclined to agree--it isn't so much that the airlines will inflate the miles needed to redeem rewards tickets (although they may in fact do that), but they will limit the amount of reward seats available for flights. This in turn will make it more and more difficult to book. Thinking very seriously of cashing in a good chunk of my miles in the next 6 months.

This is not necessarily true. If the number of miles needed to redeem a particular ticket remains steady while the free market price of that ticket rises, the frequent flier mile currency is actually gaining value along the lines of the price increase. In recent months, this has been precisely the case with major US carriers. (There are exceptions, of course, but in general, prices in dollars have risen while prices in miles have remained the same.)

I don't see Air Tran going under anytime soon. I think DL would like to see them go however.

Isn't DL now charging fuel surcharges for ex-EU itineraries, regardless of where the customer is based?

BA is still OK for award business class seats
 

Despite $400+ in taxes and fees, trips from US to UK in business class are still good value for 100,000 miles. Also plenty of availability, even over the summer.
BA has so many daily flights NY-LHR, each with a large number of business class seats, that it's very rare that there's nothing available.

Correct. Southwest Airlines awards are now capacity controlled, albeit more lightly than legacy carriers' saver awards. Nevertheless with higher fares these awards are worth as much to me now as the last-seat availability awards were 2 years ago.

Perhaps this factor presages more devaluations...

I believe that American Airlines does for transatlantic flights (please correct me if I'm wrong, but I pay much higher fees for AA award tickets than for Delta of Continental for the same itineraries).

AA does not add fuel surcharges to award ticket, at least the two I've booked to London this year. I have one next week that has $140 in taxes, which is actually about $40 less than a paid ticket would be. The fuel surcharges on that route are well over $200 and I'm not assessed any of that.

So why are their (AA) fees on award tickets a lot higher than other U.S. airlines? I pay $30-$60 (never more) for transatlantic award tickets on CO or DL and with AA I usually have to pay upwards of $100 and sometimes as much as $250 for the same routing.

Destination is important for taxes
 

Transatlantic flights are not all taxed the same. Do you remember why we revolted from the British? They tax the HELL out of you. Same with the french. I take it you're flying mostly to Germany, which has significantly lower tax rates. Try booking a BA award and you'll see real fuel surchages upwards of $400 for an economy ticket.

A lot depends on the route and connections. I just checked SFO-FRA and there are only $67 in taxes on an award ticket. If I fly the nonstops ORD-FRA, the taxes drop to $62.

I've never seen $30 in taxes on international itineraries. Can you provide a sample routing where the taxes come out that low on award travel on a competitor?

I paid $33 for a CO award ticket EWR-TLV roundtrip business class (economy was the same).

Yes. And if you get an ill-formed DL agent and are making a schedule change on a US-EU-US itinerary after having flown the US-EU portion, they may try to hit you with the kind of charges that EU-originating itineraries are hit with but US-originating ones are not (yet?) supposed to be charged.

Hmmmm.

Just finishing putting together a family reunion in Europe for next spring.

I got 8 40K tickets on AA at the dates I wanted (+/- a day) and the taxes/fees per tickets were about $57.

One heck of a bargain, if you ask me.

You are definitely right about this. Any flights to London or with a stopover there have significantly higher taxes than anyplace else. I actually fly mostly to Italy or Switzerland in Europe and sometimes to TLV.

I agree with this statement. I have used 1MM+ points for free tickets over the past 10 years. I flew my mother to Frankfurt 4 times in BE on Delta, one time in FC on UA to Frankfurt. Does it matter that I could have saved a lot of points by flying her in coach? Nope! At least I could use the points and get her the good seats.

I have not paid for a domestic ticket in 10 years. Yeah so what there are fees... still beats the average $500 for a coach ticket. I flew my entire family of 5 from Austin to Green Bay on 125k DL points. Saved what I figured is about $2k in cash.

I grumbled a bit when I booked a 50k ticket on CO for my son to fly with his mom to D.C. Did I really care? Nope! Cuz it still saved me cash that is now needed for $4/gallon gas.

People who think the programs are worthless need to quit whining and stop remembering the old days... they'll never come back and it's simply a new world. Stop being spoiled...:rolleyes:

Perhaps because I'm ex-MSY, I'm finding it almost impossible to get the awards I want, and that's despite being a Northwest Gold in one of the programs still believed to actually have a reasonable number of award flights. I also have pretty much unlimited flexibility -- can go anywhere at any time. And yet I have issues finding awards. And whenever I throw open suggestions for where I can find awards, I get replies like, "Well, I was able to get this and that fabulous award in 2004." Which suggests to me that others are having the same issue but are reluctant to admit it in public, out of loyalty to a program that was very good to them in the past. IMHO it can only get worse. I say if you're collecting elite miles for status and still enjoying benefits of status, fine. But if you're collecting miles in hope of future travel at a discount, it's gambling. Just my humble opinion. Expect to be on the phone, paying fees, to use your miles. Too much work and cost for a supposed award. At least from my airport. When I do find awards, they always start me off by flying out of MSY at the very crack of dawn, and then rushing to beat the clock because of the most miserable, shortest legal connections possible. In fact, we're burning such an award starting tomorrow. I suppose we should grateful just not to be seated on the wing of the aircraft involved, but airlines are forgetting the reason for offering awards -- loyalty. They've made redeeming and using awards into a part-time job.

I don't agree that people should "stop whining," I just think they should target their whining. The more people who say, "whatever," the more "whatever" we'll all get. A complaint is the only way that an airline knows that you're unhappy with an issue. People who don't complain aren't helping themselves or anybody else. Of course, complain WISELY. I air my issues with the frequent flyer program here. I do not bend the ear of gate agents or flight attendants or CSRs who have absolutely no power over the issue.

Dont know about others. We have relative easiness to get our award seats.

We booked our AA business class partner awards in January, for travel started in May, and trip will finish in Sept. I could not find business award seats from BCN to JFK for the whole month of May, while coach award seats were available everyday. Determined to fly business, I looked thru other routing possibilities - found what we needed by flying BCN/MAD/ZRH, than ZRH/JFK on AA 2-class plane. I did use QF tool to find avaibility first before I called AAdvantage. Got it done in less than 15 minutes. Over half of the time was trying to make the AAdvantage agent understand the trip was originated from Europe, not US (as most others were.)

The awards are for 2 transatlantic cruises. We changed our mind on the westbound transatlantic on which ship we will take. Upon our return from Europe in mid May, I called AA to change our flights to later date, with almost identical flights - MIA/YYZ on AA as a stopover, and then YYZ/LHR/BCN on BA. The only difference is the LHR/BCN flight which we picked a longer connection as we dont want to chance the T5 to T3 connection. The best part of the call was, the AAdvantage agent said, "You really have done your homework - everything you requested is there. Congrats. And thanks a lot for making our work much easier." :p

Well, I am very willing to spend a few hours to work on QF system to piece up an itinerary that has very high probability of availability, for a trip that if travel in paid ticket, would be in the range of $8000 to $10000 (because of stopovers) for business, and close to $3000 in coach. Yeah, I know we would never pay the ridiculous price tag for the business seats. Still, it would save us $3000 pp for not buying the coach tickets. Therefore, the $149xx tax pp, and $15 telephone booking fee pp, is money well-spent in my book. I understand if we dont connect at LHR, the tax would drop drastically. Alas, we want to fly BA, so we pay up. :)

Again, Y awards are widely open on every day, multiple carriers in Oneworld. Coach awards have never been an issue, it is the international premium cabins that require some work and creativity. So, dare I say, I am in the camp of those who think people are just whining when they said there is no award available whatsoever - for our experiences definitely are the opposite.

At least for now, with flexibility and creativity, we are able to book our awards pretty much as we wish. (We did that last year with UA's partner awards to Australia on NZ business class.)

I can imagine though, for those whose airports are regional ones, they may have more difficulties. I would suggest people to secure the longest leg of their itinerary first, then look for ways to get to the departure point. I believe in AA system, if you need to go thru 2 connections to the gateway city, the system would not display award seat. However, you could find award seat by doing one-way search, then piece them together. That was what happened on our trip to Alaska with stopover in Vancouver. Of course, on partner award, you dont see it on AA website at all - then you resort to QF, BA, IB or JL sites to check availability. It is so much easier when you can "feed" the agent segment by segment info to let s/he to check, versus your telling the agent, "I want to travel on such and such date, and alternatively such and such date. Is there availability?" It is just so much more work for the agent to do, and it is entirely possible the agent would not look at every single possibility to search for your seat(s). Given the pressure they are under, I dont really blame them for that.

Yes, AA just announced the higher miles requirements on certain routes and classes - as long as the new levels can stay for a couple more years from now, and the seat availability remains at current level, I would be very happy.

Just to clarify: There is a speicifc high "premium class" (the second-or-higher class on any plane) when departing out of the UK on anything other than a short connection ticketed as a connection. Separate the tickets (because you want to use an LCC within Europe) or put a stopover in the UK and you're assessed this "premium class tax".

There may be something similar in one or two other places (I think maybe CDG?).

Which is why it can misleading comparing different airlines if you're not comparing the same iteneraries.

(As more and more US airlines start flying to LHR, the comparison between airlines becomes a little easier, if you want to do it right.)

Thanks for this info. I will do my homework when booking award tickets and try to book through airports with lower fees. Also, I noticed that the taxes and fees shown on expedia.com are totally different than those shown or charged when booking directly with the airline - besides for their $5 fee; the fees directly with the airline could be significantly less than just $5. I recently had this experience when booking a CO flight for both my husband and myself. I used onepass miles for one and paid $33 in fees and TYP (which buys their tickets from expedia) for the other and paid over $75 in fees - identical classes, intineraries, and flights; I didn't gripe about the expedia fees since it was still A LOT less than paying full price!

Yes the DL bandits are!

Expedia price breaks out the Federal Excise Tax which I believe is 7.5% or in that ballpark.

US Airlines include the Federal Excise Tax in the price you see. Therefore the add-on tax and fee are lower than what Expedia shows.

Award tickets, as well as tickets bought by travel vouchers, are not subject to Federal Excise Tax.

Such variances have been discussed multiple times in the Other Credit Card forum. Do a search there you will find lots of actual calculation examples to illustrate the issue.

Of course, that Expedia price does not include Federal Excise Tax, means that when one redeem TYP ticket, one has to pay a higher tax & fee, than one would if purchase directly from airline.

[QUOTE=AndrewC75;9831217]deleted reply.

Be careful when booking through third-party engines to make sure you're booking the same fare code as the airline's web site does (or at least a fare code you can live with). Sometimes the third-party engines get "consolidator" fares which can be lower but which may sometimes not qualify for earning miles or not qualify for earning status miles or not qualify for upgrades.

These "consolidator" fares may, in turn, have lower fees simply because they were bought in bulk weeks or months earlier, when the fees might have been lower.