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No US Airways valentine for frequent flyers

With today’s announcement of upcoming changes to its Dividend Miles program, US Airways takes its place at the forefront of airlines devaluing their frequent flyer programs.

First, US Airways’ rationale for the new policies, as explained in today’s email to Dividend Miles members: “As part of our continuing efforts to provide valuable benefits to our frequent flyers, US Airways is making a change to our Dividend Miles program. We’re making these changes to offset record fuel prices and rising airline related expenses while maintaining the benefits you’ve come to expect.”

Note the purported linkage between the changes and the current high price of jet fuel. As I pointed out in connection with [% 2506098 | | United’s new baggage surcharge %]—which was also rationalized as a response to rising fuel prices—the new policies will not be rescinded when fuel costs subside. So it’s disingenuous at best to suggest that what are certain to be permanent program changes are keyed to a temporary spike in the airline’s costs.

Now to the changes themselves. There are two, one affecting earning, the other affecting awards.

On the earning side: “Tickets purchased on/after March 1, 2008 for travel on US Airways on/after May 1, 2008 will earn the actual number of miles flown and will no longer earn a minimum of 500 miles per segment.”

And the award change: “Members redeeming miles for award travel online within 14 days of departure will be assessed a quick ticketing fee of $50 per ticket.”

Certainly the new minimum-mile policy will save US Airways a few dollars, as fewer miles will be awarded and ultimately fewer tickets will be redeemed.

But looking at the larger financial picture, abandoning the current minimum-mile policy fails the logic test. As anyone who flies short hops regularly can attest, ticket prices for such flights tend to be disproportionately high relative to longer flights. In industry parlance, short flights are generally high yield, meaning more profitable.

So US Airways is reducing the incentive to travel on higher-profit services. That amounts to muddled thinking and marketing mismanagement.

As for the “quick ticketing fee,” in the age of online booking and e-tickets, it costs no more to issue a ticket closer to the date of travel than it does 14 or more days in advance. So the implication that the surcharge is being assessed to cover extra work on US Airways’ part rings false.

Finally, and less substantively, there’s the question of timing. Bad news on Valentine’s Day? And barely two weeks’ advance notice of a significant, negative change to the program? This is a textbook example of botched corporate communications.

The moves are clearly negative for US Airways’ customers, and especially for a particularly profitable segment of the carrier’s customer base: frequent short-haul flyers. To the extent that the changes drive those customers into the arms of Southwest and Delta, they’re bad for US Airways’ bottom line as well.

US Airways has perpetrated a Valentine’s Day massacre which has bloodied both sides, and benefited neither.

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