Winning The Battle – Award Redemption in 2006

Winning The Battle – Award Redemption in 2006

Earn and burn: The two most important words in the language of the frequent flyer. While the industry has made it easy to earn more miles and points than most of us will ever use (wishful thinking…), it’s the topic of the burn — award redemption — that gets the most ink.

InsideFlyer has for years researched and published an ongoing look at award redemption — research that actually makes includes test calls and determines where and why the bottlenecks occur. We not only rely on our test calls, but the analysis of redemption results for the tens of thousands of awards that the group books yearly.

While we’ve been fairly good at other predictions in past years, we decided we’d go out on a limb and predict that 2006 will be the first time since 1988 in which programs generally take huge strides toward making award redemption more acceptable to their members. These programs were first introduced in 1981, and the early years were a dream — there were no such things as restricted seats. You wanted a seat, you got a seat. Granted, award levels were a bit different back then, and membership number were smaller, but we must also remember that earning miles in those days meant truly being a frequent flyer. There were no large credit card bonuses, and no 100-percent elite bonuses. We can’t go back (in 1987, a coach domestic award on American was 35,000 miles), but we can give you some hope for the new year and repeat some of our best advice on the topic.

Before that, here’s our take on the current problems. They seem pigeonholed into three categories: 1) Too many miles chasing too few seats; 2) Airlines cutting back on award availability and 3) Downsizing of route systems means that many members won’t be able to use their awards.

Too many miles chasing too few seats. Partially true. Too many miles would actually mean that everyone could afford to spend whatever miles were necessary to claim their free award. It may be too many members chasing too few seats since program redemption is often not just the airline’s best customers, but rather many other industries’ best customers. Here’s a look at members by average account balance:

Under 10,000 miles: 33.7 percent of members
10,001-19,999 miles: 32.8 percent of members
20,000-29,999 miles: 13.2 percent of members
30,000-39,999 miles: 6.7 percent of members
40,000-49,999 miles: 3.9 percent of members
50,000-74,999 miles: 5.0 percent of members
75,000-99,999 miles: 2.1 percent of members
100,000+ miles: 2.6 percent of members

Airlines cutting back on awards. This is probably the worst observation going.

Some of the so-called “experts” now like to spout off comparisons of an airlines 10-K as “official reports” on award redemption. As we have previously reported, this is no longer an accurate measure in the wake of domestic and international alliances. As we have also noted, most redemption on partners does not accurately show up on an airlines 10-K. Combine that with the emotional roller coaster of the past few years for bankrupt airlines and the fact that in 2005, members of these programs donated nearly a billion miles to the relief efforts of the tsunami and hurricane Katrina. Our generosity contributed to the appearance of fewer awards being made available. Then you factor is such anomalies as “ghost” redemption (more on that later) and maybe things aren’t so bad.

Route system reduction. We have noted that any reduction in routes by major programs has been more than made up for by the adoption of strategic airline alliances that actually offer far more award ability than the seats available on the airline itself. We find that nearly 30 percent of award redemption is off-program.

But let’s start with a simple, if hard-to-believe fact. On any given day, 100 percent of airline seats are available for award redemption with most major frequent flyer programs.

We thought that would catch your attention.

One hundred percent?

Then how come you’re never awarded one?

To understand award redemption, we need to take a step back to 1981. When frequent flyer programs were invented, every seat on the aircraft was available to members each and every day. No blackout dates or capacity controls existed. The price? Awards were set at 35,000 to 50,000 miles for coach class.

By 1988, concern that the number of outstanding frequent flyer miles could become a problem for the airline industry in the future was a reason to reevaluate. United Mileage Plus began to let miles expire after a certain period of time. Members weren’t exactly thrilled with the idea, so to ease the pain, programs began to offer new awards at lower levels, that at the time started at 20,000 miles. These lower-level awards came with restrictions limiting the number of free seats per flight.

Members clamored to take advantage of these new, lower-cost awards, later adjusted in the 1990s to an industry standard of 25,000 miles. Today, nearly 83 percent of all awards are at the lower, more restricted level.

Nonetheless, the fact remains that 100 percent of airline seats daily are available in most major programs for award redemption at the original, higher level–a category often referred to as “any time” awards.

The past few years have been particularly difficult for the redemption of frequent flyer awards. Because a number of airlines are in and out of bankruptcy, and the possibility of labor strikes and mergers is so real, a significant number of award redemptions have “ghost” itineraries. That is, they are being redeemed solely to protect miles should an airline liquidate.

For instance, during the past two years, many members of the US Airways Dividend Miles program redeemed their miles on partner United Airlines, fearing that US Airways was not going to make it. Of course, this made it even more difficult for members of United’s program to redeem their miles. In this case, US Airways members were booking only temporary awards, hoping to redeposit their miles upon news that US Airways would survive.

Even in the best of times, many frequent flyers report not being able to redeem award tickets. This is especially true for elite-level members who have followed all the correct procedures. Even the Delta SkyMiles membership guide specifically states: “Seats available for Award Travel are limited and may not be available on all flights.”

In 2006, we believe that airlines will begin making an effort to structure their award redemption processes with less mystery and difficulty, although many frequent flyers consider these efforts to be too little, too late.

Toward this end, we know that both American and Delta will relaunch their online booking tools for awards. As it is now, most of these tools do not contain complete award inventories, and that is driving some of the reported unavailability of awards. Members are not being savvy enough to use other methods to secure possible award seats.

But until some of our predictions come true, here’s a collection of our best advice for planning your award travel:

10. While the attention has always been on redeeming frequent flyer miles, we advise members of all programs to brush up on the value of hotel points. Hotel points have much more flexibility than airline miles based on the variety of “brands.” If you have a problem redeeming hotel points with Marriott, then inquire about other brands in the Marriott family: Courtyard, Renaissance Hotel, Residence Inn or Fairfield Inn properties. Fact: we rarely hear complaints about hotel redemption. Also consider that hotel rates have been climbing while airline prices have been falling.

9. You’ve heard about planning frequent flyer award redemption early. Try this: Plan late. Airlines are getting better at releasing seats at the last minute for award redemption. Best time? Try two weeks before a scheduled flight. Even better is to know the airlines’ “sweet spot” for seat inventory adjustment. In recent research, Continental’s award availability was spotty at 330 days in advance, six months in advance, 30 days in advance and even two weeks in advance. However, in the test, which involved 12 different city-pairs for award redemption, awards were available at the three-month advance time frame 100 percent of the time. This does not mean you’ll be so lucky, but it does mean that Continental has a sweet spot.

8. Codeshare an award. With airline alliances, sometimes airlines only have half the plane to give away as awards, since their codeshare partner owns the remaining seats. Since one airline will only see their available seats, try asking about their codeshare program’s free seats.

7. The family plan. Most people don’t have enough miles for the whole family to fly for free and often purchase a ticket for one of the kids to go along on the vacation. Tip: Whenever you have to purchase a ticket along with an award, transfer your award to a family member and fly on the purchased ticket yourself. Why? You’ll replenish your miles; plus you’ll qualify for selected benefits like upgrades when using a revenue ticket. Other tricks for using miles for a family vacation include using miles from one of the airline’s partners. Perhaps you can only get a single award seat using your SkyMiles on Delta. Try using your Continental or Northwest miles (either you have them or can redeem them from a credit card or hotel program) for other seats on the same Delta flight. Sometimes, each partner has a different award bucket and seat allocation for a particular flight.

6. Mini-awards. Both American and Continental offer weekend awards to select cities for fewer miles than normal. Fly out on late Friday or Saturday, and return Sunday, Monday or Tuesday. While restrictions do apply, you can claim an award for as few as 7,500 miles. Very few members we’ve ever talked to even know these special award offers exist. They do, and it is a great way for a savvy traveler to find awards at only 12,500 miles or less.

5. Use your mileage pool. If you’ve been smart, in addition to your airline miles, you also have points with American Express or Diners Club or hotel programs like Starwood Preferred Guest, Hilton HHonors or Priority Club Rewards. If so, take advantage of these programs’ flexibility, and try award travel on an airline other than the one you normally fly.

Remember that you can transfer points from all five of the programs named above directly into an existing or new frequent flyer airline account for award redemption. Just because you haven’t flown with an airline doesn’t mean that you can’t redeem an award with them.

Again, there is no loss of miles points for conversions here because we are only referring to a single redemption, not an “exchange” in which a member will likely lose some value.

4. Know the best days to travel. Best Days within the United States: Monday, Tuesday, Wednesday; to Florida: Monday, Tuesday, Wednesday; to Hawaii: Tuesday, Wednesday, Thursday; to Asia: Tuesday, Wednesday, Thursday; to the Caribbean: Tuesday, Wednesday; to Europe, Tuesday, Wednesday, Thursday; to Mexico: Tuesday, Wednesday; to South America: Tuesday, Wednesday. Worst Days within the United States: Friday, Sunday; to Florida: Friday, Sunday; to Hawaii: Friday, Saturday, Sunday, Monday; to Asia: Friday, Saturday, Sunday; to the Caribbean: Saturday, Sunday, Monday; to Europe: Friday, Saturday, Sunday; to Mexico: Friday, Saturday, Sunday; to South America: Friday, Saturday, Sunday.

3. Go where no one else has gone (yet). The secret is to look for new routes opening up. Those seats haven’t been available for either sales or award redemption before, which means everything is available.

This requires you to read travel news about an airlines new “second daily flight” or their newly released “winter schedule.” Frequent Flyer Magazine’s Regional Updates are great sources for new routes.

2. Book an award by segments. Because of the “hub and spoke” system that most major airlines use, the problem with getting a free ticket is not that the entire route is booked, but that a single segment of the award request is unavailable. You may want to try to book each segment separately, and once done, ask the airline to combine them for a single award. An example: A Delta award request from Dallas to Honolulu reads as not being available. So, try to book a flight segment from Dallas to Salt Lake City. Then from Salt Lake City to Los Angeles, then from Los Angeles to Honolulu. Once you’ve got that done, then have the airline combine all the segment bookings into a single award. (The airline’s booking engine would have looked only at Dallas-Los Angeles-Honolulu).

1. Pick up the phone. Many programs have worked hard to convince members to book their awards online. The unfortunate problem with this is that most programs have faulty online award booking systems. Most do not include the award inventory for their airline partners. Most do not intelligently reroute a member through various hubs or city pairs. Most do not identify the problem with the award request such as a single segment not being available, etc. Most do not allow you to register and be notified later on if a seat becomes available.

Because of these limitations and more, we suggest that if you have any problems booking an award online that you take the request to the phone line and try to work out the award though a reservation agent. Most programs will now charge you for this, but we feel it is worth the cost.

And if all else fails, and sometimes it really does, consider plan B:

We suggest the following alternatives:

– Don’t get hung up on free airline travel. We find that many travelers make the mistake of assuming that miles should always be redeemed for airline tickets. Here’s something to consider: Many flyers complain about not getting the free ticket they want due to capacity controls, and yet they spend hundreds or thousands of dollars on hotel rooms. Consider purchasing an airline ticket and applying your miles to a hotel room.

– Combine paid and award travel. For example, you could pay to fly to Los Angeles or New York using a low-cost carrier and then pay for the next leg of your trip with miles as you continue on to Hawaii or Europe. Or simply buy the extra miles you need. Many programs allow mileage purchases if you have accumulated close to the necessary amount.

– View companion awards and upgrades as viable alternatives to free awards. Airlines always want to sell a seat — even if it costs them one. The airline considers it a sale, because to qualify for a companion mileage award, it must be in conjunction with a paid published fare.

– As strange as this might sound, unless you are an elite member of a program, consider switching to a program that has a better history of providing awards. Among the programs that have the best award seat availability are Alaska Mileage Plan, Southwest Rapid Rewards and American AAdvantage.

Now that we have ruined your day, here’s one of our best tips, which we have saved for last. Most members only know how to “talk coach” when redeeming their miles, and for good reason — they tend to go further. But if you are facing spending 40,000-50,000 miles for a coach award because none of the 25,000 mile awards are available, it’s time to “talk first class.” Here’s why. In the Northwest WorldPerks program, a saver award is 25,000 miles. A “Rule Buster” award for that same coach seat is 50,000 miles. Did you know that a saver first-class ticket is only 45,000 miles? That’s right, when coach is not available, ask about the availability of a saver first-class award before paying double miles for coach. In this example, you would have saved 5,000 miles and felt better about it.

We think 2006 will become the best year in a long time for some positive news about award redemption — at least that’s what we are predicting.

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