Just when you thought airline frequent-flier awards programs had slipped, most major airlines have commenced firing in what amounts to an all-out mileage war.
And it is occurring precisely at the same time as a major winter fare war. For passengers, it is nothing less than an incredible double bonus. But for some financially troubled airlines, it could spell disaster.
But first, the good news.
The indication that something was brewing occurred late last year when Delta Airlines offered members of its frequent-flier program the following deal: Fly on any Delta round-trip flight (or two one-way flights) until March 31 and use your American Express card to pay for the tickets.
In return, Delta will reward you with triple mileage for the flights, as well as three times the mileage for all future Delta flights taken during 1988 when an American Express card is used to pay for the trip.
The offer was a resounding success. More than 500,000 people filled out their forms to join the program. "We knew it would work," says John Crewe, senior vice president of marketing for American Express, "because it provided an exclusive value to our card members."
sh Rousing Success
Not only did more than 500,000 people sign up for the deal, but another 15,000 people signed up for the American Express card just to be a part of the program.
Why did Delta and American Express do it?
"Surveys have shown that nearly 90% of all frequent travelers carry an American Express card," Crewe says. "The benefit to Delta is that they have a very targeted way of getting to the frequent traveler, offering those travelers a powerful incentive to use the card."
Almost immediately, Eastern Airlines fired back. Eastern announced a similar program, with no plastic needed. Under the Eastern program, any form of payment--cash, other credit card or check--is accepted by the airline. And triple mileage is awarded throughout this year to anyone who flies one round trip or two one-way flights before March 31.
In the airline business, the first quarter is usually the toughest. Between January and April, passenger loads are down, there are few vacationers and airplanes fly half-empty.
It is not unusual to see airline seats go on sale at this time of year.
"We looked at our advance reservations a few months ago," one airline official says, "and we knew the first quarter of 1988 would be slow. It's not surprising to us that fares have been lowered. But the mileage thing took us by surprise."
sh Significant Difference
To be sure, while the fare reductions announced are not as deep as similarly timed reductions at this time last year, the changes in the awarding of mileage points makes the cost of flying significantly less expensive for anyone taking more than three round-trip flights this year.
For example, Northwest has announced its Mileage Match, a program that will now award its frequent fliers with a free ticket for every 10,000 miles flown. (Northwest's most recent program awarded free tickets after 20,000 miles, so the airline has, in effect, started a double mileage program.) Coupled with Northwest's recently announced fare reductions, it's a great deal.
A round-trip American Airlines ticket between New York and Los Angeles that sold for $298 a few months ago now costs $238. About 5,200 miles were awarded for that flight.
Under American's AAdvantage mileage program, a passenger needs to earn 50,000 miles to get two free tickets for travel throughout the United States, including Hawaii. Last year, that same passenger would have had to make, roughly, 10 coast-to-coast trips to accumulate the mileage.
Today, that same passenger earns a whopping 15,600 miles for each coast-to-coast round trip, and gets his free tickets in the middle of his fourth trip.
American, while matching the Eastern deal (no American Express card required), is not exactly thrilled with the idea.
sh Staying Competitive
"We didn't start this, but doing nothing doesn't sound very good either," says George Mueller, American Airlines vice president of passenger sales. "We fly a lot against Eastern and Delta, so what do you do? You match it to be competitive. Besides, it doesn't take a brain surgeon to know that this is a low traffic time for us."
Recently, both PSA and TWA moved to stay competitive with the other airlines, matching the triple-mileage deals.
TWA's plan, however, comes with a significant bonus. If you belong to any other frequent-flier program and have at least 20,000 miles in that program, TWA will not only give you the triple mileage, but will send you a coupon good for a free companion ticket to any TWA destination in the United States (including Hawaii) or the Caribbean.
Those frequent fliers with at least 50,000 miles in another frequent flier program will get a coupon good for a companion ticket to any TWA domestic desination, as well as 18 cities in Europe. But what happens a few months from now when millions of awarded triple miles are redeemed during peak travel times?
"No doubt about it," Mueller says. "It could be a problem. We know from past experience that if you don't manage what you offer, you can hurt yourself."
Many remember what happened three years ago when Pan Am told its frequent-flier members that they had to use their awarded miles by a certain date or lose them.
So many people redeemed their awards that Pan Am planes filled up with free ticket holders, and full-fare passengers often couldn't get seats. It was Pan Am's worst quarter in recent memory.
"For us, it could present a problem," says James Arey, a Pan Am spokesman. "We don't have a lot of short flights. Most of our flights start at 2,500 miles, so the awarding of triple mileage could be staggering. We are still looking into it."
Even if Pan Am jumps in, they may only award triple miles on flights within North America. Already, United, which also matched the triple mileage deal, only offers the extra miles on United flights in the United States, Canada, Mexico and the Bahamas. The airline is not offering the miles on its flights to or from international destinations in the Pacific.
And what about Delta, which started it all? Some argue that its triple mileage program is the most restrictive, since it only awards extra miles if you use your American Express card.
Delta thinks it's actually in the healthiest position of all.
"The response has been tremendous," a Delta spokesman said. "But it's a response we can deal with. With the other programs, some airlines could be in trouble down the road when all their passengers try to redeem all that mileage. It's going to be an obvious problem."
But American's Mueller isn't worried. "Even if we doubled the use of free tickets we can still absorb it in the system," he said. "Even with a load factor of 70% it still means that 30% of our seats are empty."
But something tells me they won't stay empty for long.
In a few months, look for new restrictions on the use of all the free tickets being earned now, as well as new blackout periods when the award tickets can't be used at all.