Opening Remarks – January, 24 2005

Opening Remarks – January, 24 2005

It takes some time to realize that while you must always claim to take the side of the underdog, you should never admit to doing so. Do not be tempted to tell your audience, in the middle of a story.

The current situation that US Airways and its Dividend Miles program members find themselves in – part Hollywood movie, part soap opera – depends heavily on remaining supporters continuing to stick by until they emerge triumphant in the end. Unfortunately, members now seem hard pressed to understand how this airline can continue along the path it has wandered down.

Recently on a Monday in my first hour of work, I received nearly 60 emails from various frequent flyers asking for my advice regarding a single topic. The number of emails was not remarkable, but the single topic was: “What should I do with my Dividend Miles?” Usually I get emails on a variety of topics concerning frequent flyer miles and points, but never have so many come in so little time with but a single question.

It’s really the moment of truth. The carrier, operating in Chapter 11 bankruptcy for the second time in three years, certainly faces possible liquidation if it can’t get its GoFares strategy in synch with passengers and competition, as well as get lower costs — including labor costs — in place by Feb. 21.

I’ll admit that I might be tempted to pull back and distance myself from this imperiled underdog. But I’m still not going to. I still believe it’s the middle of the story for this airline, not the end, and I will continue with my advice that members of the US Airways Dividend Miles program continue to manage their miles as they have in the past (taking care to closely follow my updates). In other words, it is not time to burn the miles you have. Look for my step-by-step advice to unfold on as well as on

Here’s what else is on my mind this month: I’m impressed by the business decision of United’s new prepaid travel card for elite status. While the concept is not new, it nonetheless is a very new look at how to appeal to and claim the premium business traveler. Premium in this case is the “frequent flyer,” not the premium fare flyer. Would I consider the investment personally? Yes.

For months I’ve been very excited about two topics in the credit card arena: the expansion of American Express in loyalty cards issued by banks other than themselves, as well as the “official” launch of the Diners Club/MasterCard partnership here in the U.S. I’m convinced that both will further stimulate additional competition among those of us who make it part of our day to spend our way toward more miles and points. We’re preparing an update on both, though it has been rather quiet from the Diners Club corner.

I have mentioned in the past that I thought that Diners Club’s positioning of itself as a nonthreatening niche card might eventually stir the ire of and be challenged by the big-boy sole issuers of such cards in some programs…Only time will tell if this is indeed a sore spot that is holding up the rollout.

My chats with those in and around the Air Canada Aeroplan program tell me that there is a likelihood that the program will become the first in the world to be spun off into a separate public entity via a stock offering. At the end of 2002 that seemed destined to be the case when suitor Onex Corp. bid for 35 percent of the frequent flyer program. Air Canada’s bankruptcy changed all that. Word on the street is that the value has risen from then by nearly 35 percent as the direction of that program continues to meet with acceptance from possible investors. If this happens and the value of that program is estimated to be $800 to $900 million, could it be that far into the future when the market might accept the same of United’s Mileage Plus? (Hint, hint!)

Now, how about that BA bonus? Guaranteed 50,000 frequent flyer miles for a business class or better flight roundtrip to Europe? There have been richer bonuses in the past, but they’ve been many years in the past. What we like about this particular bonus is that there is no limit on how many times you can earn the bonus, and that it lasts through April. I know several frequent flyers who are on that route almost weekly, and it will be some kind of holiday when they start adding up the miles.

Now, there is something in this promotion that needs to be addressed. It affects the members of Alaska Mileage Plan and America West FlightFund. In the past, members of those two programs would normally fly British Airways to Europe and collect their local miles with these two programs. And frankly, members of those programs who don’t read InsideFlyer will continue to do so. However, we are mandating that those members put aside their local miles and earn BA Miles for all British Airways flights in Club World and FIRST during this promotion. The reason is quite simple – they can redeem BA Miles back into free tickets with both these airlines and more. In fact, since America West FlightFund does not have any current domestic alliances, members will rejoice to know that these bonus miles can be used for any of BA’s domestic partners such as American Airlines – something they could not do with more miles earned into FlightFund. It’s not just the mass of miles, but the flexibility that this promotion provides.

And finally, you are now in the voting period for this year’s Freddie Awards, and I appeal to you all to vote for those programs who in 2004 provided you with the highest value as a member. I know most of you belong to several programs, so hopefully one has exceeded your expectations. You can vote at, and please don’t wait until the last moment. Vote now, just as you are thinking of it. The location of this year’s event will be announced soon.

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