Opening Remarks – August, 31 2004

Opening Remarks – August, 31 2004

Being Preempted
As I prepared my list of topics I wanted to address in this issue, it occurred to me that either I’d have to abridge my comments to conform to space allocations or continue online. It took me all of three seconds to decide “… keep writing.”

There is so much to write about this month: The 23rd birthday of Delta’s Frequent Flyer/SkyMiles program ; Our award redemption research (read what reader Mark Terry has to say in Letters To The Editor); The future of earning frequent flyer miles with residential telephone service; The upcoming change in credit cards and frequent flyer programs (banks may soon be issuing American Express cards, and an update on Diners Club/MasterCard); Comparisons between the original America West FlightFund program and the new Air New Zealand Airpoints program — all really interesting topics and I hope to address each and every one of them in the days and months ahead. I can tell you that reading through This Month in History (page 16) brings back very fond memories of those days gone by.

But what really needs to be addressed is the current condition and prospects of US Airways Dividend Miles. Whether we like it or not, that frequent flyer program is tied to the umbilical cord of US Airways. As long-time readers know, I’ve been a strong proponent of Dividend Miles since right after 9/11 and the original bankruptcy filing for the airline. I remember when, one by one, every other “travel expert” told members to burn their miles because the airline would not last past 2002. Well, the use of Dividend Miles was subsequently enhanced by the partnership with United Airlines and US Airways recent admittance into the Star Alliance. These moves have certainly benefited members of this program, especially the partnership with United, which has helped relieve some pressure that members have felt from the rolling changes of hubs and airline routes.

As we work to put this issue to bed, the daily news signals continuing woes with US Airways and, frankly, I’ve heard that some airlines are even working on plans that would be put into effect should US Airways face a liquidation. Passengers lost and gained. And as you might expect — millions of loyal memberships and billions of miles face the same fate.

My email inbox has been unusually flush these past few weeks with new questions concerning the future and what advice I might have. But as strange as it may seem, the emailers aren’t so much concerned about the future of US Airways as they are about the future of Delta Air Lines. I’d say that 75 percent of the emails I’ve received have to do with a possible Delta Air Lines bankruptcy. I would hope that you are all very clear that despite the current climate at that airline, I expect Delta and it’s miles to survive in full-value.

But wasn’t I just talking about US Airways? Indeed, which is why I mention Delta. I have a rule in this business — when members quit talking about a program, that program is in trouble.

I clearly remember this very same climate surrounding TWA and it’s long and very painful demise as an airline. While TWA Aviators members were not harmed, they were displaced by years of uneasy loyalty.

In one of the most painful decisions I’ve ever had to make, I think I need to alert you to the possibility that the miles and benefits you have earned to date in the Dividend Miles program may be in jeopardy. I don’t expect to see much change during the next six months, but the miles are almost certain to face a diminishing value in the US Airways you have known.

I really don’t expect any immediate liquidation to this airline and don’t want to panic any readers, but there are some things you might consider as you plan out your travel in the months ahead. First of all, I don’t think you need to worry about replacement travel should US Airways fail. During the days after 9/11, the Bush administration enacted some fairly helpful guidelines to assist travelers should an airline fail. While we’re thankful those guidelines were never acted upon, they nonetheless serve as a platform for travelers to be assured that with or without US Airways, you will still have travel available to you on other airlines — regardless of what type of ticket you have in your hand. Face it, an airline failure right before our national election would not look good on anyone’s resume.

There is still hope that this airline can find a niche and earn a stay of execution. America West, for example, has done a fabulous job of remaking itself. But time is quickly running out. I’m not calling for an all-out stampede to leave Dividend Miles, but I am recommending you pay close attention to this magazine and our online edition for our latest advice because the storm clouds could turn very ugly, very quickly.

But what of the miles? If you are a saver, save fewer miles. If you are a spender, redeem more. And while it is comforting that you can redeem your Dividivend Miles on United Airlines or choose to redeem miles with that program while still flying US Airways, I don’t consider that a suitable long-term strategy.

Bottom line, I have my yellow warning flag up and I know where the bottle of Pepto-Bismol is located.

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