Frequent-flier programs here to stay, airlines say

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Frequent-flier programs here to stay, airlines say
By Christopher Elliott, Special for USA TODAY

Peter Dowling is a Premier Executive 1K member, the most elite United=20
Airlines frequent flier. He's not sure how long that will last. I have just=
=20
cashed in all my miles," says the Los Angeles foreign affairs consultant.=20
He booked two trips: one to Tonga on United partner Air New Zealand, the=20
other to Portugal on Lufthansa. "I believe, unfortunately, that United will=
=20
go the same way as Braniff and Eastern." With United and US Airways in=20
bankruptcy reorganization and other carriers changing the rules of their=20
programs, some travelers are quietly redeeming their frequent-flier miles.=
=20
Based on the recent actions of both airlines and anecdotal reports of=20
passengers rushing to redeem their points, it's possible that more=20
travelers are trying to unload their miles than at any time in recent=20
memory =97 perhaps even since the creation of these loyalty programs. "It=20
isn't so much a run on miles as it is a trot on miles," says Tim Winship, a=
=20
mileage expert who edits the Web site FrequentFlier.com. "People are=20
worried about the safety of their miles. A lot of them are cashing in their=
=20
points earlier than they would have."

The ailing airlines insist there's nothing to worry about, that the points=
=20
are perfectly safe. When a major airline stops operating, frequent-flier=20
miles and benefits normally transfer to another carrier. In announcing its=
=20
Chapter 11 filing late last year, United assured its customers they will be=
=20
able to continue earning and redeeming mileage. At the time of US Airways'=
=20
bankruptcy filing, CEO David Siegel promised travelers that his airline's=20
mileage program "will continue to offer millions of fliers significant=20
award benefits throughout the restructuring process and beyond." Dowling=20
says he isn't buying it. He lost both his miles and his elite status when=20
Ansett Australia went under last spring. "I'm not willing to lose my miles=
=20
again," he says. Neither United nor US Airways will say what's happened to=
=20
their mileage redemption levels since they filed for bankruptcy=20
reorganization. Airlines typically disclose such information in annual=20
reports filed with the Securities and Exchange Commission, but the 2002=20
reports aren't out yet.

Hal Brierley, one of the architects of American Airlines' frequent-flier=20
program and a loyalty program consultant, says passengers are "prudently=20
accelerating their use of miles." Among travelers with a preference for=20
United, he says, 34% of respondents to a recent survey say they've stepped=
=20
up their mileage use. That doesn't necessarily mean road warriors think=20
these programs have reached a dead end. Brierley says only about 3% of the=
=20
frequent travelers he's polled believe their program would be terminated.=20
About two-thirds think future mileage programs would be "less rich," and=20
slightly less than a third of them are convinced that their program would=20
be "significantly less rich." "It's virtually inconceivable that the=20
industry would walk away from a program that identifies its best customers=
=20
and provides a meaningful reward," he says. "But I think mileage programs=20
are going to evolve."

At the same time, the airlines are trying to entice travelers =97=20
particularly business travelers =97 with generous mileage deals. US Airways,=
=20
for example, offered triple miles for United frequent fliers who booked=20
shuttle flights last month. United is giving Mileage Plus members double=20
miles on all flights, but the offer is limited to existing frequent=20
travelers within certain geographic areas, according to Winship. He says=20
the carriers hope the deals will restore public confidence in the mileage=20
programs. Travelers like David Smith, an advertising executive from San=20
Francisco, are skeptical. "I've been aggressively using my miles," he says.=
=20
"To me, it's like money in the bank that doesn't earn interest and could be=
=20
eliminated if an airline went belly up."

Although most experts believe the odds of any airline =97 even one under=20
bankruptcy protection =97 eliminating its frequent-flier program is remote,=
=20
it's hardly unanimous. Charles Leocha, author of the book Travel Rights,=20
says he thinks the mileage programs could face serious cutbacks, if they=20
aren't eliminated entirely. He points to changes by the likes of Delta Air=
=20
Lines, which recently announced that on deeply discounted coach tickets,=20
passengers would only earn half the miles they used to that can be counted=
=20
toward elite status. "Believe me, when push comes to shove, loyalty=20
programs will be curtailed in order to contain potential costs and future=20
liabilities." His advice: cash in your points while you still can. That's=20
exactly what Jacquelyn Peterson is doing. She redeemed 360,000 miles on=20
Delta (which isn't in bankruptcy court) for three business-class seats to=20
South Africa. And, while she's not quite ready to give up her United=20
Airlines mileage account, she says, "I'm keeping a close eye on it."



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