Randy Petersen's Opening Remarks – February, 27 2006

Randy Petersen's Opening Remarks – February, 27 2006

Let The Voting Begin?

In this year’s Freddie Awards balloting which began Feb. 1, we had just over 55,000 frequent flyers vote during the first week. That’s encouraging, and if you haven’t voted yet, I highly encourage you to do so. The polls close on March 15, so you still have time to tell the world and the programs who are doing the best job in providing value for your miles and points.

While there has been no official word from Phoenix, my guess is that later this month or the early start of April will signal the last you’ll hear from America West FlightFund. The program was first introduced in June 1987 for an upstart new carrier out of Phoenix. The name FlightFund came from the fact that the program was revenue based — that is, you earned miles depending on the fare you paid. For example, a flight from Denver to Phoenix earned 119 FlightFund “dollars” one way with B or Y fares; the same route would earn 96 FlightFund “dollars” one way with K fare; or 71 FlightFund “dollars” one way with Q, M, or V fares. Also, one “dollar” was earned for every dollar spent for car rental, and members earned 250 “dollars” for every hotel stay. In fact, you made far more miles staying at hotels than flying the airline. Members had to look at a matrix of each fare code to determine the number of dollars they would earn on a particular flight. Truly one of the more difficult programs to figure out, but one of the more flexible programs to redeem from.

These “dollars” — yes, that was the original currency — could be used to obtain free flights, hotel awards, car rental and even cruises. To figure out the award chart, you had to look at a matrix that connected all their city pairs and determine the “cost” of the free flight. Most city pairs cost 1,250 “dollars,” while some were at 1,090, 990, 950, 790, 590 and even 510. When the airline started service to Honolulu, redemption was available for 3,000 FlightFund dollars.

Other awards started at 3,000 FlightFund dollars for 50 percent off one coach-class ticket to London with the purchase of another coach-class ticket, and the top award was 18,500 FlightFund dollars for two free roundtrip first-class tickets to Hong Kong or Singapore. On the miscellaneous award redemption offers, they started with 200 FlightFund dollars for a free weekend rental of an economy class car from Dollar and went up to 25,000 FlightFund dollars for free passage on the QE2 in transatlantic sailing berths E-H, Columbia Restaurant without air return.

They later converted dollars to miles and started to issue award checks.

And FlightFund went through many iterations of their logo. To begin with, it was “flightFund.” Then someone got to change things and it became FlightFUND, and then it morphed into the now familiar FlightFund.

Through the years they did some unique things, one being when they introduced a miles-for-gasoline-purchase program with Circle K. Who the heck could have done that except for FlightFund? They became over time one of the fiercest competitors of Southwest Rapid Rewards, and both programs made the other one better.

This story of FlightFund is a little like that of TWA and even Pan Am. The miles change names, but the memories live on.

In this month’s Award Search, we have added Southwest Airlines Rapid Rewards to the list of award redemption research. Previously they had been omitted because of their policy of few if any restrictions on award redemption. That all changed on Feb. 10 when they adopted a more traditional (I hate that word for this purpose) stance on capacity controls. I don’t believe that it will change much the success rate of their members in using their awards, but nonetheless, we will be watching and researching.

Elsewhere in this issue, you’ll read about the first financials for a publicly traded frequent flyer program — Air Canada Aeroplan. As I gazed over a recent Aeroplan member statement, I was getting a whole different feeling about what my miles might be worth and what the future of this program might be. As a potential shareholder (I have abstained so far for conflict of interest reasons) do I mind if they change rules and award levels in Aeroplan anymore? Take from one hand (my mileage statement) and give to the other (my investment return). While I have been a big proponent of the industry monetizing the value of these programs to help them recover from the current financial crisis, I can’t help feeling that my emotions about my miles are changing. This is going to require some getting used to for me. My sticking point is profitability. I guess in my altruism goals, I would hope that the program operates as a 501(c) and thus seeks to just break even. When I see a profit being posted, my gut feeling is that it should have gone toward opening additional award seats or funding richer benefits for elite members. Who wins? My emotions or my wallet?

And finally, I chatted with a reader recently that now makes me think that mileage runs will become passe. He was burning off some miles only because Continental reduced an award to China. Award runs?

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