How Exactly Do *A Awards Work?
 

Disclaimer: These are hopefully general enough in nature that they belong here and not in a specific member airline forum - and I did try a search (but not a very good one probably)... :)

I've booked lots of *A awards using UA or US miles, but I've never really understood how the whole thing works and I keep getting annoying responses that would seem to contradict logically how availability works. So my two questions on how *A awards work are:

1. Often when I see availability on the ANA tool and call the airline to book, I'm told "oh, we don't see any availability" and "each airline releases a block of seats to each partner - we might have used our block already". Do *A members release award seats individually to other *A members (e.g. NZ releases one seat on NZ005 to UA and one to US), or do they simply open up O, I, and X for any member carrier to book (for example opening up I5 and X5 on NZ005 for all to see)? I suspect it's the latter, but I am not an expert on how this stuff works... :)

2. How do partner-to-partner payments work (realizing this might be carrier-dependent)? When the miles are deducted from my account for an award ticket, is another transaction immediately completed between the ticketing airline and the operating carrier(s)? Does it happen in a batch sequence weekly/monthly/yearly? Does it happen after I complete each segment of the trip?

2b. Does the ticketing carrier pay the operating carrier(s) in miles or dollars/euros/pounds/currency? Is payment completed on a per-segment or per-route basis? For example, if I'm flying North America to South Asia, is it a set value regardless of segments, or is there a cost per segment? If flying LAX-KUL, the most direct routing would be LAX-SIN-KUL, but I might also be able to fly LAX-NRT-HKG-BKK-KUL. Do both itineraries "cost" the ticketing carrier the same? Does the cost vary based on the operating carrier (for example, does a SIN-BKK flight on SQ cost more than the same on TG or LX?)

I realize this may not be public, but I've always been curious - especially with US *A members (excepting new member CO) in not-so-rosy financial situations.

Part of what's prompting question two above is this thread: http://www.flyertalk.com/forum/showt...d+compensation

And I did read this thread: http://www.flyertalk.com/forum/showt...ight=pay+award but didn't find answers to all of my questions above.

My sincere apologies if these questions have been asked and answered in the past - my simple search didn't return anything obviously similar.

Thanks for any information!

Sean

I should have mentioned that I am well aware of UA and the StarNet filtering they do and that is an obvious reason for UA's excuses about no partner availability.

Do carriers other than UA employ such consistent (or perhaps frequent is the more appropriate term ;)) filtering of *A partner flights?

You suspicion is correct. Each carrier just releases award inventory to all and not to each member individually. And all are equal. But as we know, some are more equal than others and there are a few more restrictions in the fine print.

I'll take a crack at it:D

More likely the latter. Its far simpler to manage the availability as a single bucket, rather than up to 20 mini-buckets that roll up. Also, if they did it the first way, they would potentially have to make it available to all 20 carriers, and we know they don't open up 20 F seats on each flight! If they really do release it in blocks, its easy to keep track of the total redemptions per FFP separately. When an airline queries the partner system to check for availability, it would be easy for logic to check and see if they have exceeded their quota.

There is a miles clearinghouse. This might be the same clearinghouse used for truing up multi-carrier tickets, FIMs, endorsements, etc, or it might be solely for miles. Carriers get paid after trips are completed, but I don't know how often. I'm guessing batches are sent once a week, just because the potential float lost is too great if its much longer than that.

They probably use the same logic that they use for revenue tickets. LAX-NRT-HKG-BKK-KUL probably costs UA more to issue than LAX-KUL, which would explain why agents are so reluctant to ticket that, even if that's all that's available.

I don't know which currency they use, but I'm guessing the alliance is either on a dollar or euro standard based on the volume of tickets purchased in those currencies. When the alliance was started, the dollar was still the strongest major currency, and its a pain to switch currency standards.

Excellent questions, and I have wondered the same.

But I am sure that overall, the miles usually net out at close to 0.
That is, the miles accumulated by members in any given FFP on a given partner over time will off-set almost exactly the redemptions by those
members on the same partner.

I would also suspect that on a multi-airline reward, the points are
apportioned in the same ratio as miles flown on each carrier.

I would also guess that the accounting takes place when tickets are
issued - that would account for the " no changes after ticketing" rules that
applies to Star rewards that may not apply to rewards wholly on one
airline.

It would be nice if an actual airline insider could give definitive answers.

Because a *A award could include so many different flights and carriers, the revenue is probably shared based on a percentage of miles flown.

Using the example of a N.A. to Europe award in Business class using 80,000 miles transferred from Amex to Aeroplan, the discounted revenue would be about $.01/mile or $800.

A potential revenue-sharing scenario could work like this:

PHX - ORD (US) 1,439 miles / 12% / $96
ORD - ZRH (LX) 4,435 miles / 37% / $297
ZRH - FRA (LH) 177 miles / 1% / $8
FRA - YYZ (LH) 3,946 miles / 33% / $264
YYZ - PHX (AC) 1,874 miles / 15% / $120

While these revenue estimates seem ridiculously low compared to what Business class tickets cost on the open market, most frequent flyer awards are loss leaders (or followers...). Alliance members agree to make a small percentage of seats available in order to create a sense of perceived value for the frequent flyer members.

This scenario is complete conjecture on my part, so if someone has better information I would be very interested in hearing it.

Had a weird issue today with availability. Both ANA tool and BMI CSA could see award availability on an SQ flight but when he tried to book it, it comes back as "waitlisted." Huh? I've seen issues like this with SQ flights on revenue bookings but I've not experienced it on award bookings. Spoke to a supervisor who mentioned that it was an ongoing computer issue with SQ and TG flights, they'd show seats as available but in reality they might not be there. Or could this be a new method of 'filtering?' In the end I booked the next available flight, lengthening the transit in SIN by a few hours - not ideal but hey.

Great question. I just booked two awards in Biz on CPH-(SK)-LHR-(NZ)-HKG-(SQ)-SIN-(SQ)-CPH and wondered how NZ and SQ are paid for these flights.

I am confident that awards are released in buckets (and I have not figured out why UA cut inventory on these yet) - but how is payment made. The above has cast some light on it - but would love some insight.

And yes Intercon Biz awards must be loss leaders.

Not true in all cases. NZ has a lot more UA flyers wanting to redeem on NZ across the pacific than NZ flyers wanting to redeem on UA (mostly across USA). That is one reason why UA blocks MP members from redeeming on NZ LAX-LHR vv - to prevent the cash outflow from being even worse than it is.

Actually what I meant is that there are probably a lot of UA ( or Mileage Plus)
customers flying revenue NZ flights to earn their MP points, and that THAT
amount should net out with the MP redemptions on NZ.

That's even less true IMO. While there may be some paid UA MP economy flyers, in business class there would be very few UA MP who pay to fly NZ (after all can pay UA economy and upgrade for far less $$$$$). Whereas for redemptions NZ is a popular choice.

Not to mention Fly America policies, and the fact that very few people outside of FTers actually know or care that much about flying different or the best airlines on a given route.

Although I doubt that for S. Pacific travel Fly America makes a huge difference, I'd bet there are more people (and UA members) flying paid business to Australia than there are flying paid to NZ, and many would consider the NZ LAX/SFO-AKL-SYD routings as a bit of a detour when a non-stop is available.

I'm curious to know about how exactly multi-airline itineraries on the same fare basis are paid (I've always figured that there was a per-mile rate, but don't know) in general. It seems we're all in the dark about how exactly that works and how it relates to award tickets.

I'm sure it's not as simple as miles earned vs. miles redeemed for each carrier for each program, though. That just doesn't make sense, since "miles" as such are not really a unit of currency that translates well from one program to another.