Customers Flood US Airways with Redemptions

Customers Flood US Airways with Redemptions

US Airways saw a 25-percent increase in frequent flyer mile redemption in 2004, setting the record for major U.S. airlines, according to Matthew Borghese of All Headline News.

The award trips accounted for approximately 8 percent of all the airline’s flights.

Analysts suspect US Airways’ financial trouble has prompted mile holders to redeem their miles for free flights.

According to a USA Today interview with the President of IdeaWorks, an airline industry analyst, frequent flyers claimed 14.7 million free trips industry-wide, down 2.1 percent in 2004.

“People are reading in the media that (US Airways) is in danger of shutting down and are thinking, ‘Gee, I’d better cash in my miles,'” President Jay Sorensen of IdeaWorks said.

Note: Its unfortunate that these “airline analysts” aren’t that knowledgeable. Sure, Dividend Miles redemption rates were up 25 percent. However, of that, 13 percent (or nearly half) was for new redemptions on the Star Alliance, which US Airways joined in 2004. Also, the increase in redemptions was from a decline the year before of almost 8 percent. What we see here is not that members are really cashing in their miles, it’s that many are following the advice of this magazine and booking advance award bookings on other airlines as “insurance,” to be redeposited as things improve for US Airways. Given the positive future for US Airways here in 2005, we fully expect that many of these awards will be redeposited and for the year 2005 US Airways will show another decrease in award redemption. Not because they are holding back award seats, but because members put back their miles following our advice. Numbers aren’t all they seem to be sometimes…

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