Opening Remarks – October, 23 2002

Opening Remarks – October, 23 2002

It was over almost before it began. I’m referring, of course, to US Airways’ flirtation with the idea of disallowing qualifying mileage accrual on discounted air fares. The controversy erupted shortly after we published our September issue and was over before we finished this October issue. But that’s not exactly what I want to talk about.

Over the past month it seems all everyone wanted to talk about was the introduction of change fees on discounted tickets. Everyone, that is, except for us here at Inside Flyer. It’s not that we don’t care about these types of things, but there was news we were following that is far more directly related to the topic of miles and points and will likely affect every member of every frequent flyer program.

Most thought that US Airways created the firestorm about change fees. Actually, American Airlines introduced the same policy before US Airways and no one noticed. On August 26th, AAdvantage quietly introduced a $100 change fee that would be charged when members changed routing or flight dates for a confirmed award ticket. For years, award use has been the absolute finest value for travel because it allows you to change dates, destinations and more – all within an award series. But this flexibility is beginning to fade as airlines – lead by American – begin to marry fees with convenience. Other frequent flyer programs around the globe, such as Qantas and Air Canada, have similar policies, and KLM charges points/miles for similar changes.

I think we’ll see a variety of fees imposed on services that frequent flyer programs provide, from award changes to award transfers. Priority Club Rewards introduced a policy earlier this year whereby members could transfer points between accounts – for a fee. So far the program seems to be working and has provided a little more flexibility to members.

While not a popular position, we have no problem with these change fees, as long as the fees don’t spread to the use of full-value awards. Our reasoning is simple – fees have existed for years for low-end services in every industry and maybe it is our price to pay for helping the industry get back to where we no longer worry if our miles and awards are safe. In fact, these types of policy changes might actually make the award system work a little better. As some of you know, airlines no longer allow members to hang unlimited award reservations out there without booking. If this new policy spreads and it causes members to be more careful when planning awards, chances are we’ll all be better off for it – however painful it may be.

I’m not ready yet, however, to give up the true benefit of frequent flyer programs – elite levels – which is why I held daily conversations with Mike Isom, the Director of the Dividend Miles program, after they implemented their policy changes. The night before they rescinded their announced changes they were leaning towards allowing members to earn 50% of miles toward elite on discounted air fares. An acceptable victory? No. I made sure that Mike understood the damage that had been done and that the only thing to do was move all the way back to no policy change at all.

But the bigger question is; What are we as members going to do to help airlines recover? Sure, United is in a big mess because of Jim Goodwin and the Board of United Airlines, but Delta and American and others are reasonably well-managed and yet they are still tilting. Popular or not, I can live with all these change fees that exist today and the ones I am predicting will come in the near future. They are the price of convenience and that’s a price I’m willing to pay. But if the base benefits and award redemption ability of these programs are harmed in any way, rest assured, we will be there protecting the basic rights and privileges of members of these programs.

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