More Miles, Fewer Smiles in the New Year

On Frequent Flyer Miles
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Editor's Note: This story was originally published on January 2, 2007. To see the most recent SmarterTravel articles on related topics, please click on any of the following links: American, ATA, Delta, frequent flyer, Hilton, Hyatt, JetBlue, On Frequent Flyer Miles, Southwest, Starwood Hotels, Tim Winship, US Airways.

I've made plenty of predictions over the years, with about as much success as anyone else who indulges in crystal ball-gazing. In other words, I get it wrong almost as often as I get it right. This year, instead of outright prognostication, I thought I'd try a more modest approach to grappling with the future. Rather than focusing exclusively on specific events I expect to come to pass, I'll step back and take a broader view, identifying a few key areas where important developments will play out. Within those areas, I'll discuss some possible scenarios.

More miles

Let's begin with the overarching trend in loyalty programs, which will continue through 2007 and beyond. The programs will keep growing their partner rosters, affording consumers ever more opportunities to earn miles.

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American, the industry's first mileage program and the largest, now boasts more than 1,000 partner companies. The list has grown to encompass far more than the obvious travel-related companies. Canny mileage collectors can earn American miles for purchases of almost any imaginable product or service. The same is true for members of the programs of other mainline carriers.

The resulting increase in outstanding miles sets the stage for other developments taking place this year.

The award forecast is gloomy

For all the millions of award tickets issued annually, capacity controls on award seats stymie many program members when they try to cash in their miles. Let there be no doubt: The airlines will continue to ignore this problem.

The situation will most likely get worse before it gets better. With the aforementioned trend toward adding mileage accrual partners, ever more program members will be earning ever more miles, increasing demand for award tickets. The airlines are not adding more flights to accommodate that demand, and if the number of complaints I receive is any indication, the airlines are less willing than ever to designate seats for award use, especially when those seats might be sold.

This year will see more program members, with more miles in their accounts, chasing after fewer award seats. That combination is a sure recipe for frustration and disappointment.

The Feds to the rescue?

A closely related question concerns the airlines' willingness to be forthcoming with their customers and allow their programs to be judged on merit. A Department of Transportation report issued in November confirmed what most travelers already know—that consumers do not have access to meaningful data that would help them choose one mileage program over another.

What are your chances of being able to cash in American AAdvantage miles for a free trip? How does that compare with your odds at Continental, Delta, United, and other carriers? If you manage to reach elite status with Northwest, say, how often can you expect to be upgraded? What's the upgrade rate at other airlines? The airlines are silent when it comes to the most basic questions concerning their loyalty schemes.

Can we expect better in the new year? I'm not optimistic, especially if the matter is left to the airlines' initiative. The fact that the DOT has raised the subject, and with it the possibility of federally imposed sanctions at least gets the conversation started—much to the discomfort of the airlines—and is a step in the direction of the sort of transparency consumers have every right to expect.

The nonmystery of disappearing miles

Over the past year, we've seen a flare-up in activity surrounding mileage expiration after years of relative stability.

Among the low-cost carriers, JetBlue and ATA both extended the life of points earned in their programs from one to two years. In both cases, the changes almost certainly came in response to competitive pressure from Southwest, which liberalized its points expiration policy in 2005.

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