A Look Back at the Most Important Year in Frequent Travel History

It is both painful and instructive to take a look back at the events of the past year – yet that’s what makes it worthwhile. In 2001, the world of miles and points was tested like never before. Who could have predicted that, in the midst of celebrating the 20th anniversary of frequent flyer programs, those very same programs would be called in to fight the scourge of international terrorism, leading travelers back to the skies.

This past year featured shocking headlines, unheralded program changes, and a number of surprises centered around events that never happened. Here then is a look back at a year that was truly stranger than fiction …

Gone with the Miles
Remember alladvantage.com? How about flyfree.org? And remember trying to figure out the best of greenpoints.com and mypoints.com? These organizations, and many more like them, met their untimely demises in 2001, or were hamstrung by restrictions that no longer made them attractive destinations for frequent flyers.

And then there was ClickRewards. This powerful, well-funded and public company drove to a stock price of some $97 a share before being melted down to a penny a share and a public asset sale in bankruptcy court. While we don’t yet know what will happen to your points and miles (unless you took our earlier advice on MilesLink and cashed in), the Web site continues to operate and claims it’s business as usual. But with new owners on the horizon, it’s anyone’s guess where this part of the industry is headed. It’s a good bet though that these types of programs will continue to blossom — dot-com or not.

Also rumored to be in trouble is the AOL AAdvantage program, which awards and redeems miles by the millions for members who can’t get enough of the seemingly omnipresent AOL. While some announcement or change may be in the works by year’s end, this is one story that may truly be “Gone With the Wind.”

May Madness
When the merry month of May rolled around we geared up to celebrate the 20th anniversary of the frequent flyer programs as fathered by American AAdvantage. With its interesting 20 partner for 20,000 miles promotion, the AAdvantage program set the tone for a year-long celebration.

Interestingly though, the AAdvantage program was beaten to the marketing punch. Before AAdvantage could get the candles lit on its anniversary cake, the Delta SkyMiles program had already announced its 20th anniversary on March 5th – a full six months before its true 20th anniversary. And, even odder still, the United Mileage Plus program didn’t celebrate at all. With designs on completing an announced merger with US Airways, the executives at United Mileage Plus decided to combine a big celebration combing the two events. Sadly for members of the United Mileage Plus program, neither the merger nor a birthday party became events worth celebrating.

The Retailing of Miles
While for many years there have been “buy up” programs from the likes of Continental OnePass and Air Canada Aeroplan, 2001 saw programs take a different direction in the area of selling miles. America West, American and United were among the many programs who introduced Web sites and commercial efforts to sell miles. How popular were these efforts? Well, without going into specifics, we can tell you that more miles are being sold than tickets for the Harry Potter movie (now that’s a lot of miles).

But the purchase of miles is still flawed. For example, let’s look at the Personal Miles program of United. Their Web site declares: “This exciting program allows you to purchase up to 15,000 Mileage Plus miles per calendar year for only 2.5 cents per mile plus 7.5% excise tax and a .001 per mile processing fee.” So what’s the cost of each mile? We see one cost, then a percentage, and then some other number we can’t decipher. Airlines, please wake up – just tell us what the price per mile is and leave all of the details for the fine print.

What’s more, it appears that United, American and America West are all playing a game of protectionism with credit cards. With each of these programs, miles can only be purchased with a credit card from a company that has an affinity relationship with the program. Want to buy AAdvantage miles with your American Express? Sorry, no can do. Of course, American is happy to accept your AmEx card for ticket purchases, on which you will earn miles. And we are really disappointed that United doesn’t allow mileage purchase with a Diners Club card, especially considering how generous Club Rewards was on its redemption program that featured United.

Sorry, we were trying to simply review the year of news and found ourselves caught up in one of the stories.

9/11
This date will be forever remembered as the most important in 2001, or any other year in recent memory. Among the victims were countless members of these programs – some flying and some in between flights. September 11th was a day that changed these programs, changed the industry and changed the world as we know it.

Allowing for a respectful period of mourning, the airlines led the charge to get frequent flyers back to the skies by promoting award travel at previously unheard of levels. Could anyone have ever imagined domestic awards at 15,000 miles? That effort was followed by a cascade of elite-level re-qualification announcements, from extending with no requirements to lowering the activity needed in order to re-qualify. And finally, when it became apparent that frequent flyers still weren’t flying, airlines introduced broad based double-mile promotions, the likes of which hadn’t been seen since 1988.

The end of 2001 is just the beginning of what we’ll see from hotel, airline and other programs as they leverage our loyalty and desire to earn miles and points to regain that moment in time before 9/11. Fighting both a vague hesitancy to travel and the effects of a lingering and growing concern for the economy, this story will be continued.

Miles at Risk
Even before the events of 9/11, many frequent travelers were concerned about the fate of some airlines and, subsequently, about their miles in those airline’s frequent flyer programs. First, there was anxiety surrounding Dividend Miles, as US Airways’ planned merger with United fell apart. Then, after 9/11, we heard daily reports of the failing industry with quick targets being America West and even Continental Airlines (leaving out for the moment Northwest Airlines). Finally, the entire industry was stunned when the CEO of United Airlines announced that even this giant among giants might “perish.”

The fact is, for the final four months of 2001 (and who knows how long into 2002 and maybe 2003), losing miles because of an airline bankruptcy has become a real concern. Fueled by similar stories from Europe (Swissair and Sabena) and Asia (Ansett), members seem to have a real fear of losing their miles. In an October poll conducted on WebFlyer.com, 9.79% of respondents said that they have done something to protect their miles from possible airline bankruptcy problems since Sep. 11 (e.g., redeemed for awards, moved to “safer” program, joined AwardGuard program, etc). It is expected that this statistic will grow in the months ahead as the industry continues to falter on fears and economic worries.

Time Stands Still … Online
In a year that was a yawner in regard to online initiatives (receiving statements by email is not considered a major advancement of technology), we did see American, Delta, Alaska, America West and others finally introduce online award booking availability. The problem, however, is that it has been some two years since Northwest (followed closely by United Mileage Plus) wowed their members with the first online booking privilege, yet we’re still in version 1.0 of these systems. In fact, the current program offerings still limit the types of awards members may book and don’t include partner awards.

Perhaps the dot-com crash had something to do with the stagnation in this area. More likely though, we’re still seeing the effects of Y2K and the limited resources airlines have at their disposal to make this a priority.

Live!
FlyerTalk.com, that bastion of frequent flyers everywhere who love to share their travel secrets and so much more, introduced a new live chat format with executives from various frequent traveler programs as guests for an hour of Q/A each month. The most attended of these live chats saw United Mileage Plus president Robert Sahadevan and marketing manager Jim Davidovich chatting to a record online crowd and staying overtime to address the many questions for their members. The year’s first guests were Christine Pierce and Kevin Pinto of Delta SkyMiles. And this year’s chat schedule will conclude on December 13th with representatives of the Star Alliance joining the discussion. In between FlyerTalk welcomed guests from Starwood Preferred Guest, American Express Membership Rewards, Citibank, Diners Club Club Rewards, Northwest WorldPerks, Southwest Rapid Rewards, British Airways Executive Club, American AAdvantage and Hilton HHonors.

The Freddies
What would a year be like without the Freddies? This year over 160,000 ballots were cast, and again, the Continental OnePass program captured Program of the Year honors, along with the Starwood Preferred Guest program in the hotel category. Interestingly, OnePass’ once seemingly insurmountable dominance in this category seems to be waning somewhat, while Starwood seems to be increasing their lead. Other winners from this years voting included Southwest Rapid Rewards and Starwood Preferred Guest, who both won for best award redemption, and Continental and Starwood took the honors for best elite program. As in years past, we look forward to seeing who the members choose as next year’s top programs.

Alliances
The SkyTeam alliance, featuring Delta SkyMiles and others, celebrated its first anniversary and is still working to synchronize its miles programs and, more importantly, its elite benefits. Star Alliance on the other hand, continues to lead the way by announcing in October a new global award chart for its members. This much-needed change to awards among partners of the alliance was long overdue and was almost the only thing wrong with the Star Alliance. Now they leave little to criticize.

The oneworld alliance made news again as American and British Airlines tried to patch things up with the support of both governments. But, it seems that even the strength of the governments couldn’t change the last stronghold for frequent flyer protectionism. Today, as in years past, members of each program are still unable to choose which miles they want to freely earn over the Atlantic.

A Year of a Million Miles and Points
Not sure what it was about 2001, but the year produced more one-million bonus miles winners than any year ever. Partly fueled by 20th anniversary giveaways, all kinds of programs gave away that seven-figure dream. Priority Club gave away one million point bonuses to too many members to count, Hampton Inns gave away million-point bonuses with their Hilton HHonors relationship, Sprint/Alaska Mileage Plan gave away a million miles as did Delta SkyMiles and American AAdvantage. Forget the local lottery, the real winners are playing the programs.

The Highs
TWA Aviator members found a home for their miles with the American AAdvantage program. While there were the gains and losses that could be expected when two decidedly different programs combine, the merge saved many members from having to worry about their mileage savings.

In 2001, we also saw airlines continue to develop more special awards based on off-peak periods. Unlike formal off-peak awards, these unique offers may find you cashing in 35,000 miles for a trip to London in December. Primarily offered by city and regional destinations, they nonetheless provide members with a growing number of opportunities to get more for their miles.

WorldPerks’ 10,000-mile bonus for using 10 partners and AAdvantage’s 20,000-mile bonus for using 20 partners were different and they were fun. But the real bonus promotion stars of 2001 were the hotel programs. Starting in May, hotel programs began releasing one promotion after another. Some of the hits included Priority Club’s three qualifying stays that earned a 5,000-point bonus, Hilton and the return of the Double Double, Hyatt with its Stay, Pay, Play promotion, Marriott with 5,000 bonus points after every third stay during the summer months and Starwood with its free Fridays and free weekends promotion. Interestingly, while many of the hotel programs have experienced tremendous success offering the same branded bonus promotions year after year, few of the frequent flyer programs have attempted anything similar. In fact, only British Airways, which brought back the Diners Club point conversion in 2001, appears to have learned the value of the branded promotion. And the Executive Club members love it – often calling us six or more months in advance hoping we can tell them that this promotion will again be offered.

Delta SkyMiles added a new benefit for its members in 2001 with the introduction of a SkyMiles award hotline. Now, members who call (888) 750-6699 can receive tips about how to obtain the awards they want, and they are privy to bonus offers and information about awards that can be redeemed for far fewer miles.

A high for members of the British Airways Executive Club was the merger of the US and Canada programs, providing a better value of membership to both.

This past year will go down as the most generous ever for the donation of miles and points – with much of the efforts linked to the events of 9/11. In total, well over a billion miles and points were contributed to charity this year.

Airlines weren’t the only ones who achieved a landmark age in 2001 — American Express Membership Rewards celebrated its 10th Anniversary.

And, finally, members of America West FlightFund certainly had much to cheer about in 2001. Early in the year, FlightFund announced it would permanently lower its year-round domestic awards to 20,000 miles and its first-class awards to 40,000 miles. When you add these reductions to FlightFund’s unique Platinum Elite ‘nominate a companion’ benefit, it’s easy to see that the home office in Phoenix has been working hard.

The Lows
Unfortunately, the past year contained several low points. Among them the final resolution of the American AAdvantage lawsuit (Wolens v. American Airlines and Gutterman v. American Airlines) that “awarded” qualified members with mileage discounts in awards or a discount on their next airline ticket purchase. Why do we consider this a low? Namely, the benefit that members won was relatively small when compared to the astronomically large attorney’s fees (some $25,000,000).

Another low point was the failed merger between United and US Airways, and US Airways decision to end its partnership with the American AAdvantage program. To US Airways, the grass looked greener as Jim Goodwin (former CEO of United) spun a tale of bigger and better things for both airlines — frequent flyer programs included. The only thing that got bigger and better was Goodwin’s paycheck (can you say golden parachute?), as he was drummed out of an active leadership role at United in the wake of the failed merger.

In May, the National Emerald Club introduced a new award chart for members of this no-longer-open-to-the-public program. The new award chart, which was carefully designed before launch, was in operation for three months when we decided to laud it for the richness of the awards. Within days of reading our glowing report, they changed lanes and cancelled the award chart, substituting it with one that was paltry by comparison. This change from National Emerald Club earns them the “raspberry award” for the 2001.

The change of the popular 713 award, a long-time Freddie Award winner, from the Marriott Rewards program was a blow for program members. The changing economics of these programs and hotel availability made this a tough decision for Marriott Rewards.

Flyers in Canada trying to earn more AAdvantage miles seem to have hit another low. After Canadian Airlines disappeared, American AAdvantage partnered up with Canada 3000. Well, Canada 3000 disappeared from the ranks of operating airlines and that means it’s American or nothing to earn miles in Canada.

Among the lowest of the lows in 2001 was the decision by several programs to eliminate or scale back the generosity of system-wide upgrades (SWU’s). Changes were made primarily to control the supply and demand for the airline’s premium products. But, given the slow down of traffic, the decision might have been made too soon, as there might well be people out there right now who, for the right benefit, would still be flying. The frustration became most evident when members of Delta’s program created www.saveskymiles.com in an effort to convince the executives at SkyMiles to review their announced changes to the SWU policy. While these efforts were limited in their effectiveness, the stage was set, and it became clear what was going on in the minds of some of the airlines best customers.

The End
As the year closes, the industry is once again looking at how to best use frequent travel programs, both to instill loyalty and as a key tool in the fight for the survival of the industry. Whatever direction these programs take, whatever news they make, you can bet that Inside Flyer will continue to lead the way when it comes to covering the world of miles and points.