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Airlines consider prepaid passes for frequent travelers

There's an interesting piece by columnist Scott McCartney in yesterday's Wall Street Journal. He reports that the two largest domestic airlines, American and United, are considering following Air Canada's lead and adding new prepaid passes to their sales repertoire.

Air Canada's program allows customers to prepay for a set number of flights. The rates are typically more than the least-expensive seat on any given flight, but less than the most-expensive coach seat. In essence, it's a win-win for both the customer and the airline. Charles McKee, Air Canada's senior director of strategic marketing, tells McCartney, "It gives customers price predictability." For the airline's part, it locks in guaranteed revenue whether the customer actually uses the pass or not.

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Both American and United already offer prepaid programs for business travelers, but I see this new interest in extending the plan to leisure travelers as a significant step forward. On the international front, Cathay Pacific and Qantas already offer passes that focus on specific destinations or destination combinations.

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