How do alliances work?
Dec 30, 2016 | 11:04 am
#1
Original Poster
Join Date: Mar 2011
Programs: TK *G, Spirit Gold, Marriott Plat, Hilton HHonors Gold, Amex Plat, Chase SR
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How do alliances work?
I have a basic question about alliances. If I am TK *G and I use that status to enter a UA lounge, does TK pay an entry fee to UA for my visit? Also, if I credit my flight on UA metal to my TK account, does UA pay TK a fee?
Dec 31, 2016 | 12:39 pm
#2
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jackal
Moderator, Information Desk
Dec 31, 2016 | 1:06 pm
#3
A FlyerTalk Posting Legend
Join Date: Apr 2004
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In effect, yes, though these are generally not direct payments. These costs get accumulated across the alliance and reconciled as batches. So, if 100 TK*G members use UA lounges, and 100 UA*G members use TK lounges, it's a wash. Throw in all the other members and lounges, and it can be a bit of a combinatorial explosion.
Dec 31, 2016 | 6:57 pm
#4
FlyerTalk Evangelist
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Frequent flyer programs sell miles to airlines, credit card companies, hotels, etc for cash. Its a good business, and better than running an airline most times. FFP's are increasingly a separate legal entity from the airline. Those business that buy miles then reward (bribe) you with miles to get your business (and money).
Jan 1, 2017 | 2:30 am
#5
Join Date: Jul 2013
Location: AMS/RTM
Posts: 2,848
Let's try with an example.
LH has deep discount fares in economy with fare class "K". This fare pays 25% of the miles flown when credited to LH's program, and no miles in any other FFP. This is because if it did, LH would have to purchase miles from the FFP you'd credit your flight to, and that would be a cost that would increase your fare.
Since LH has access to "cheaper" miles in their own FFP, they can still afford to pay you some miles, but the price of these miles is folded into the fare.
LH has deep discount fares in economy with fare class "K". This fare pays 25% of the miles flown when credited to LH's program, and no miles in any other FFP. This is because if it did, LH would have to purchase miles from the FFP you'd credit your flight to, and that would be a cost that would increase your fare.
Since LH has access to "cheaper" miles in their own FFP, they can still afford to pay you some miles, but the price of these miles is folded into the fare.
Jan 3, 2017 | 4:54 am
#6
Moderator: Aegean Miles+Bonus
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This is why most people believe that FFP's do not like pax using their elite status for lounge access, but crediting flights to another program.
Basically when you visit a lounge the FFP of the card that you show pays for your visit (Somewhere between $10 and $40). They recuperate those costs when you credit the miles of the flight(s) to that FFP - meaning the FFP receives cash from the airline. That cash is used to pay for your lounge visit, and to credit your FFP account with some earned miles.
So when you use FFP1 for lounge access, but credit the flights to FFP2 - then FFP2 receives a cash amount (payment from airline), while FFP1 loses a cash amount (payment to lounge operator). Which FFP1 would not be happy about.
Basically when you visit a lounge the FFP of the card that you show pays for your visit (Somewhere between $10 and $40). They recuperate those costs when you credit the miles of the flight(s) to that FFP - meaning the FFP receives cash from the airline. That cash is used to pay for your lounge visit, and to credit your FFP account with some earned miles.
So when you use FFP1 for lounge access, but credit the flights to FFP2 - then FFP2 receives a cash amount (payment from airline), while FFP1 loses a cash amount (payment to lounge operator). Which FFP1 would not be happy about.