Competition is the wellspring of frequent flyer miles.
In 1981, it was American’s search for competitive advantage that inspired the creation of the first mileage program, now the largest: AAdvantage.
It was Delta’s appetite for a larger slice of the market that prompted the greatest mileage bonanza in the programs’ history—the triple-mile offers of 1988.
As recently as the first quarter of this year, it was competition—American battling JetBlue for control of the transcontinental, New York, and Florida markets—that sparked an unprecedented wave of free-ticket offers.
Competition takes place on different levels. Major airlines constantly battle other majors, and increasingly, the majors go head-to-head with the discounters. And there are even instances of intermodal conflict, such as Amtrak versus the Delta and US Airways shuttle services in the Northeast corridor.
Whatever form it takes, competition often spells opportunity for mileage-earners.
As we go to press, on the cusp of the summer travel season, there are skirmishes—and mileage windfalls—in several competitive hot spots.
Low fares and bonus miles come to the Capital
Dulles, D.C.’s largest airport, has long been known as a United stronghold and, not coincidentally, as a high-priced destination.
On June 16, Dulles will be on the receiving end of an extreme makeover, instantly becoming “the largest low-priced hub in America,” according to Independence Air, the discount carrier that will begin Dulles-based operations on that date.
Independence formerly operated as Atlantic Coast Airlines, whose principal business was as a regional feeder for United. In the aftermath of United’s bankruptcy filing, Independence reinvented itself as an unaffiliated discount carrier, and is now poised to compete with its former partner.
Independence will feature a mileage program, [% 6667 | deal | iClub %]. While iClub isn’t offering bonus miles, members will receive a $25 discount for their first round-trip purchased and flown by September 30. (Be forewarned: iClub suffers from what I call the Southwest syndrome, in that its iPoints expire after a consumer-unfriendly 12 months.)
To blunt the effect of Independence’s invasion, United countered with a one-two punch combining bonus miles and free tickets.
Between June 15 and September 30, Mileage Plus members will earn 2,500 bonus miles for round-trips to and from Dulles, up to a maximum of 15,000 miles for six trips.
In addition, Mileage Plus members who fly at least two round-trips to or from Dulles, Washington Reagan, or Baltimore on United, United Express, or Ted by April 30, 2005, can earn a variety of free tickets, including a round-the-world trip after 24 qualifying round-trips.
The battle for Philly
In Pennsylvania, Southwest has begun a major assault on the airport that has for years been the lynchpin in US Airways’ route network—its largest and most profitable hub, Philadelphia.
By July 6, when it launches its second wave of new flights, Southwest will offer frequent nonstops to no fewer than 12 cities from Philadelphia. As if Southwest’s incursion weren’t enough of a competitive prod, Denver-based Frontier, another low-fare operator, recently began service to Philadelphia. And unlike Southwest, Frontier is promoting the new flights with bonus miles: double EarlyReturns miles for travel to and from Philadelphia between May 23 and July 23.
US Airways’ response? Triple miles through September 1, for flights booked online between Philadelphia and Birmingham (AL), Chicago, Ft. Lauderdale, Houston, Indianapolis, Kansas City, Little Rock, Los Angeles, Manchester (NH), Nashville, New Orleans, Orlando, Phoenix, Providence, Raleigh/Durham, San Diego, Seattle, St. Louis, Tampa, and West Palm Beach. Flights booked through US Airways Reservations or a travel agent earn double miles.
While our focus is frequent flyer miles, it should be mentioned that the Philly battle has also forced US Airways to introduce GoFares—a cheaper, simpler pricing scheme that marks a radical departure for a mainline carrier like US Airways. This could in fact be the beginning of the pricing overhaul that analysts have been predicting, and business travelers have been demanding, for several years.
Look south for miles
For a number of reasons, airlines are currently in a battle for flyers’ business to select cities in Latin America and the Caribbean.
On June 10, JetBlue begins service from New York to Santiago, Dominican Republic. And a week later, the airline launches flights between New York and Santo Domingo, Dominican Republic.
Hard on the heels of JetBlue’s announcement, American and Delta responded with double-mile offers for flights between New York and Santo Domingo. American’s promotion runs from June 10 through August 31, while Delta’s is in effect from June 1 through July 31.
Continental has been sucked into the fray as well, offering double miles for flights between Newark and Punta Cana, Dominican Republic, from June 10 through August 10.
There’s a similar scenario playing out for summer flights to Puerto Rico.
Once again, JetBlue was the catalyst, launching new flights to Aguadilla, Puerto Rico, and increasing the frequency of its service to San Juan, Puerto Rico.
In response, American and Delta are both offering double miles for flights between New York and San Juan, from June 10 through August 31.
Looking ahead: More battles, more miles
To be sure, consumers cannot always take advantage of these outbreaks of promotional activity. Bonus miles for flights in the Milwaukee market, as Northwest and Midwest Airlines duke it out for dominance in that region, don’t factor into the travel planning of someone flying between, say, the Northeast and Florida. And mileage or free-ticket offers for full-fare flights to Europe are no more than a nasty tease to the great majority of travelers who fly on advance-purchase fares.
But savvy travelers with a yen for miles will do well to remain on the lookout for flare-ups of competitive activity. Typically fares decline and mileage bonuses rise, a double benefit for consumers.
In particular, over the coming months, the expansion of Southwest, JetBlue, Frontier, Independence Air, and other low-fare carriers can be expected to continue spurring the larger airlines to retaliate by flooding the market with frequent flyer miles.
And even more specifically, some time this fall I predict we’ll see a veritable cat fight between Diners Club and American Express.
Reason: Diners Club will be partnering with MasterCard to expand the network of retailers that accept the Diners Club card. That will give Diners Club a competitive advantage over archrival American Express, whose retailer network and roster of travel partners will then significantly trail Diners Club’s. Diners Club is sure to press its newfound advantage, and just as surely, American Express will move aggressively to protect its customer base.
Watch the miles fly!