This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ Explore more of Starbucks at Starbucks.com. http://www.starbucks.com/default.asp?ci=1015 \----------------------------------------------------------/ The Anger of the Long-Distance Flier September 23, 2003 By JOE SHARKEY SAY it ain't so, Gordo. "Gordo" is how the correspondents on the leading online frequent-flier forum, FlyerTalk.com, usually refer to Gordon M. Bethune, the chief executive of Continental Airlines. But in the last week, Mr. Bethune has also been routinely referred to by names my wife and I would discourage our pet parrot from using. There is no fury like an online forum unleashed, and Continental's unexpected announcement last Tuesday that it was effectively slashing benefits for its OnePass frequent-flier members who travel on the cheapest fares kicked up a major storm from outraged customers. Here is what Continental did last week: On Monday, Mr. Bethune staged a news teleconference to announce a new program that would reward those who buy full-fare tickets with various perks previously reserved for elite-status OnePass frequent-flier program members. Elite-status members get their perks by flying a certain number of yearly miles or flight segments. (For example, a customer needs to fly at least 75,000 miles in one year on Continental to qualify for the highest elite status, Platinum, in the next year.) Monday's announcement posed no real problems for elite-status business travelers (disclosure: like me) who have been accumulating miles by buying Continental's lowest coach fares whenever possible. On Tuesday, however, Continental quietly announced a new policy that would punish those who fly the cheap fares that the airline has been promoting to combat competition from low-fare carriers. In e-mail messages to its OnePass members, Continental said that, effective Jan. 1, the cheapest fares would yield only a half-mile credit for each mile flown. Many airline elite-status members actually fly on a variety of fares, buying the cheapest when possible, but sometimes paying top fares for last-minute trips or schedule changes. But the bottom line of Continental's message was that in 2004, achieving OnePass elite status - which at its highest level virtually guarantees an upgrade to a first-class seat on many domestic routes - suddenly was going to require flying a lot more miles a year unless you pay a lot more for your ticket. Suddenly, Continental seemed to be pulling the rug out from under a core of loyal, if frugal, customers. The reaction on FlyerTalk was immediate, as it was last year when Delta Air Lines - arguing, like Continental, that it needed to equate fare paid with perks received - infuriated its frequent fliers with similar changes in mileage credit. "I am so gone," one Continental Platinum member wrote. Another said: "What Gordo fails to realize is that the number of folks who buy full fare is shrinking, and that the name of the tune is to drive the loyalty of the flier who buys a mix of fares." Another shrugged: "Well, back to finding the carrier with the lowest fare and most convenient routing.'' Another correspondent suggested glumly that other big carriers might soon match the changes in elite programs made by Delta and Continental and drive even more customers to the low-fare carriers. "Then it's off to JetBlue - comfy seats, personal TV - and all of the stress and worry about frequent-flier miles, upgrades, status etc. will be finally gone and done with," that person wrote. Continental, Delta and their competitors among the major network carriers all argue persuasively that the rock-bottom fares they have made widely available on many routes cannot continue indefinitely, not in tandem with the costlier levels of service that differentiate mainline carriers from their limited-service low-fare competitors. Yet the major airlines remain so desperate for any and all revenue that they continue offering loss-leader fares on many competitive routes. But at the same time, industry critics have been saying for two years, the big carriers stubbornly and foolishly cling to the idea that the happy days are going to return, even while low-fare carriers continue to grab greater market share. Executives of the major carriers define happy days as those days before economy soured in early 2001 - followed by the Sept. 11 attacks - when business travelers provided the bulk of airline revenue by routinely paying the highest fares, which are usually three or four times higher than advance-purchase fares. In his teleconference last week, Mr. Bethune reiterated his basic faith in the complex fare structures that underpinned major airlines' fortunes during the happy days. "This has always been a cyclical industry," he said, "and just because we're at the low point of a cycle, I don't believe that business travel has gone bust or that the traditional yield-management system is never going to work again." After the uproar, Continental modified its policy and, according to a spokeswoman, Julie King, has "extended the date that allows customers to earn full elite qualification miles and segments for discount purchases booked via Continental.com to Dec. 31, 2004." The reason for this was to "ease the transition" for those customers and to "show that we are listening to them," she said. In other words, OnePass members who buy their cheap tickets directly from Continental's Web site, where the best discounts are usually found, now have an extra year in which they will receive full-mileage credit. Yesterday, Delta also announced changes in its SkyMiles Medallion elite-status program, providing easier domestic and international upgrades for its highest level members paying the top fares and a variety of enhanced benefits for lower level members paying those fares. Last December, when Delta changed its elite programs to reduce benefits for those paying lower fares, the move was greeted with skepticism by airline experts who said it would deplete the ranks of Delta's most loyal customer base. Robert Borden, the director for Delta's SkyMiles program, said yesterday that Delta had initially anticipated no change in those numbers, but in fact was now projecting a 3 to 5 percent increase this year in overall membership for its elite program. On the Road appears each Tuesday. E-mail: jsharkey@xxxxxxxxxxxx http://www.nytimes.com/2003/09/23/business/23road.html?ex=1065325671&ei=1&en=9bfeac83b0f335ec --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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