Formula for Unhappy Frequent Fliers

For those of you hoping to cash in your frequent flier miles this summer for “free” travel, you are in for a big surprise. In case you haven’t heard, airline companies are hurting and looking for any way possible to re-coup dollars lost at the pump this year.

Sarah Nassauer and Stephanie Chen reported in the Wall Street Journal this week that airlines are increasing the number of miles required for flights, plus charging extra fees when travelers are cashing in their miles for travel.

Other factors are contributing to a gloomy situation for so-called loyalty programs. Here is the simple formula which highlights the current state of affairs:

	Increase in Fuel Costs	Oil jumps to over $125 barrel. Low-cost airlines need new sources of revenue to compete.
+	Decrease in Flights	Airlines cancel flights due to decreased demand
+	Increase in Points Awarded	Airlines form loyalty partnerships with credit cards and others which leads to increase in point allocations that outpace flight and seat availability
+	No change in %-age of seats for loyalty passengers	Most airlines have actually decreased number of seats allocated to frequent fliers, making
+	Increase in Surcharges	Fees include “convenience” (online, on the phone) domestic, international and fuel surcharges that range from $25-$50 each.
=	Unhappy Frequent Fliers	Less Seats for More Points, Plus Fees means it will cost you more to use your miles, if you can even get a seat!

Airlines are conflicted by the situation. Although they would rather not have to charge for everything from peanuts and soda to blankets and “convenience fees,” they are completely exposed and jockeying to stay alive.

It’s affecting travelers across all the brackets of loyalty programs. I tried to book a ticket to NY only last week with my United miles. It was going to cost me 50,000 miles, plus a $100 surcharge plus a $25 booking fee for speaking to an agent! Had I booked the same ticket online last month it would have cost me only 25,000 miles.

Here’s the skinny on exactly who’s doing – or not doing – what:

US Airways – Effective immediately, will no longer offer bonus miles to elite frequent fliers and will begin charging $25 to $50 for booking award tickets.

Delta Airlines - Effective August 15^th, a $25 to $50 fuel surcharge will be added to all award tickets based on US/Canada or other destinations.

Northwest Airlines will add a fuel surcharge of $25 to $100 to WorldPerks tickets issued in North America, starting on September 15th.

On August 17th, Continental Airlines will increase fees for booking award tickets close to the date of travel.

The Flybags.net take:

It is painful for airlines to hit their most loyal patrons with unexpected fees, but if the alternative is to charge more for a ticket up front (or bankruptcy), we are willing to pay the small amounts when we need to.