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Watch the trailer at: http://www.foxsearchlight.com/theclearing/index_nyt.html \----------------------------------------------------------/ For Frequent Fliers, Awards Seem Scarce June 22, 2004 By CHRISTOPHER ELLIOTT When Timothy Placek tried to cash in his miles to fly his daughter from St. Louis to Houston last year, Continental Airlines told him no seats were available. Disappointed, Mr. Placek, who is a Silver Elite member of Continental's frequent-flier program, asked whether he could use his points to travel to Omaha, to visit his parents in January, four months later. No award seats were available on any of those flights, either. Well, then, how about applying the miles to a family vacation he was planning to the Philippines, an increasingly frustrated Mr. Placek asked. Unfortunately, the airline replied, that would not be possible; all standard mileage-award seats on those flights were also taken. As his annoyance increased, a phone representative told him all was not lost. He could use his miles for any of those excursions if he were willing to spend twice as many as the standard 25,000 miles for a round trip within the United States, or 50,000 miles for overseas destinations. Continental's EasyPass program, she said, would make it possible. "I was disappointed," said Mr. Placek, a vice president for MicroMed Technologies, Inc., a manufacturer of medical devices in Houston. "I felt as if they were trying to steal my miles." He reluctantly booked the flight for his daughter, but not for the other two trips that he had wanted. His distress is shared by many business travelers. A survey by e-Rewards Inc., a consulting firm in Dallas that specializes in loyalty programs, suggests that many airlines are quietly cutting the number of seats available at the 25,000-mile redemption level while promoting their costlier premium-redemption plans. In the poll of loyalty-program members, 26 percent described their recent experiences in booking award travel as "much more difficult" or "virtually impossible," an increase of five percentage points from an identical survey last year. About two out of every five travelers reported that they had made premium redemptions in the last 12 months, and half of those who did said they had felt they had no other choice. Continental says it has not reduced the number of conventional award seats available to its frequent fliers. Julie King, an airline spokeswoman, says redemption rates are up 15 percent this year, with standard rewards accounting for 75 percent of the total. Ms. King said the higher redemption levels were meant to "give our customers more flexibility when seats are in high demand." But the double-or-nothing proposition has left many frequent travelers - and some loyalty program experts - with a different impression. "This amounts to a covert increase in award levels,'' said Tim Winship, who publishes FrequentFlier.com, a Web site. Mr. Winship said the changes made sense from the airlines' point of view. After all, most major carriers are losing money and have a reservoir of unredeemed miles that some industry analysts say could top 10 trillion this year. But, he said, they ought to be forthright about what they are doing. "There's no disclosure about what's going on behind the scenes, no transparency to the system," he said. "Consumers don't know what their odds are of getting an award seat. It's an outrage.'' Even when travelers try to work within the system, they are often foiled. "I have had nearly zero luck in getting the award travel I wanted at the lower mileage amount," said Dana Baldwin, a management consultant in Ada, Mich. "I've tried making reservations more than nine months in advance, tried flexible dates, different airports, leaving from different cities and arriving at different destinations, all with little luck.'' Mr. Baldwin believes that airline-capacity controls are limiting the number of 25,000-mile awards on every flight to a few seats. That way, he speculates, airlines can say they have them available. That is not so, according to at least one airline. "Customers on frequent-flier award tickets are occupying more seats now than they were five years ago," said Mary Stanik, a spokeswoman for Northwest Airlines. Indeed, the portion of the carrier's revenue passenger miles - an industry term for the total number of miles flown by paying passengers - on award tickets rose to 7.5 percent last year from 6.1 percent in 1999. Maybe both are right. Bruce Mainzer, a former director for the yield-management department at United Airlines - the office in charge of matching prices with demand - says basic economics are at work. It is not that carriers are somehow trying to cheat frequent fliers out of the miles they have earned, he says, it is just that they quite naturally choose to give priority to paying customers. "Award seats are made available after all the other revenue-producing demand is met - in other words, only excess capacity is allocated to award travel demand,'' Mr. Mainzer said. "But now there's less capacity, because airlines are more closely matching seat demand to capacity.'' Competition from low-cost carriers is driving the trend, he says. These upstarts mostly serve popular tourist destinations like Las Vegas and Orlando, Fla., and to stay in the game, the big airlines have to squeeze as many pennies as they possibly can from each seat. "They've pulled back even more seat capacity in the markets where award travel demand is the strongest,'' Mr. Mainzer said, "which is why travelers often find that an award seat is completely unavailable." If that is the case, then why would seats always seem to be available for people willing to spend double the miles on them? For the simple reason that airlines classify them as revenue producing and thus allocate more of them per flight than they do ordinary award seats, which they consider freebies. They also assume that any premium tickets they allot for high-demand routes will be snapped up, Mr. Mainzer says. But he wonders if they are forgetting about the deep-rooted human dread of being fleeced. "I think a majority of travelers think to themselves, 'I'm a loser if I have to redeem that many miles for a ticket,' '' he said. At the very least, they are irritated by the prospect of shelling out more points. Richard Puk, the president of Intelligraphics Inc., a computer-graphics consulting firm in Carlsbad, Calif., did not have that many miles. Last month, he says, he tried unsuccessfully to redeem his Delta award miles for two tickets from San Diego to Rapid City, S.D. "I started trying to book the trip in March,'' Mr. Puk said, "and was never able to find any available award seats." Delta told him he could have the tickets if he anted up 80,000 miles, but he had accumulated only 50,000, he says. Instead, he purchased the tickets for $300 apiece. He is still angry. "I was very frustrated," he said. "In the past, I've never had any trouble getting a seat for my miles. It's almost as if Delta had restricted the number of award seats to the point where no one could get any.'' The e-Rewards study found that Mr. Puk is in good company. Almost 44 percent of frequent travelers reported difficulty in booking an award seat more than once last year. It also concluded that some business travelers are skeptical about the future of loyalty programs (see chart). But the biggest surprise to Bill Russo, the executive vice president at e-Rewards, was that business travelers remained fiercely loyal to their programs despite their misgivings. "People are saying it's virtually impossible to book seats,'' Mr. Russo said. "People are afraid their programs won't have any value. Yet more than half of the respondents told us they're satisfied enough with their primary program that they would recommend it.'' What is going on? "These are businesspeople, and they understand the business reasons behind what the airlines are doing,'' Mr. Russo said. "Of course, when times get better, it's reasonable to think that they'd expect the airlines to make reward redemption easier than it is now.'' Readers are invited to send stories about business travel experiences to businesstravel@xxxxxxxxxxxx http://www.nytimes.com/2004/06/22/business/22redeem.html?ex=1088914072&ei=1&en=bab9ce313c807933 --------------------------------- 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! Click here: http://homedelivery.nytimes.com/HDS/SubscriptionT1.do?mode=SubscriptionT1&ExternalMediaCode=W24AF HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2004 The New York Times Company