Randy Petersen's Opening Remarks – November, 30 2006

Randy Petersen's Opening Remarks – November, 30 2006

Rules and Regulations Can Be Your Friends.

In 1996, Southwest Airlines issued a brochure for members of Rapid Rewards titled, Hey, Rules and Regulations Can Be Your Friends. Times have changed and I’m not sure that many programs would dare introduce such a document today, given members’ suspicions that every benefit of their local frequent flyer program is subject to change.

My first words will concern the recent changes by some frequent flyer programs regarding the expiration of miles with some frequent flyer programs; why we have them, and my amazement that it is such a big topic when in fact, it’s good news for virtually all members of frequent flyer programs. I can hear the peanut gallery now — there’s Randy again, telling us that life is good. Well, I always let the facts speak for themselves and in this case I think I am right.

In 1988, frequent flyer programs introduced expiring miles for the first time. There were a few unhappy members and InsideFlyer at the time carefully measured the pros and cons of this change to the programs. We decided at the time that it was a mixed bag; however, over time it got better and we can look back and declare that overall the mileage expiration policies of these programs are something we can live with. And the justification? Simple, in 1988, as part of a balance of give and take, the industry introduced expiring miles as the take, but gave us what is now the 25,000 saver award. Over the years, this award option has been extremely beneficial to members. It wasn’t all that long ago that nearly 87 percent of all awards redeemed by members was at the 25,000 mile level. We’ve heard many times over that this award is getting more difficult to redeem from certain programs and between certain destinations, but we can’t ignore that it has served many of us well since 1988. I still think it a good trade, especially in light that the original expiration that we traded lower award levels for with American, Alaska, Northwest and United was a strict three years and the miles were gone, no chance to keep them active no matter who you were or how many miles you had. For those newer to the program — you literally had three years to earn and burn, no exceptions. In 1999, American, Northwest and United followed Alaska and altered their expiration policy to mimic the now standard “passive” expiration policy that Delta introduced with the change from their Frequent Flyer to SkyMiles program. I think when you understand what we have gained over the years for the issue of expiring miles, you realize that it is something we can live with.

Live with? For 20 years it has been the goal of this magazine to provide the information and advice for every reader to stay ahead of the game and it is a very rare instance when any reader has been harmed by expiring miles. We introduced AwardExtender to our readers in the days when miles really did expire and to this day are helping some of you to redeem those old miles for awards. The underwriter on that policy is till smarting from the millions of dollars of losses they incurred with the program as we continued to advise members how best to use those awards. Also, in the 90s when we introduced MileageManager as the first program to keep track of your expiring miles and to issue advance warning whenever you were in danger of losing your miles. And of course, thousands of you have followed our simple tips from time to time on how to keep your orphan miles active without flying or spending much money.

I feel guilty in a way, if you stand a chance of losing any miles for the change to the US Airways Dividend Miles program. Many months ago the marketing executives of that program visited our offices and we spent time reviewing ideas for the future and how best programs could better manage award availability. When asked, I thought long and hard with the facts and told Dividend Miles that if indeed they could add tens of thousands of awards available to their members with just a minor change to their expiration policy, I have no problem in supporting the change. Why would I do that? Because my job is to make sure you learn the easy ways to keep those miles active. We all pride ourselves with being “frequent flyers,” and for the life of me I can’t imagine that anyone reading InsideFlyer would feel harmed by this change if in the long run award inventory will increase. I did have the opportunity to go over that program’s final research on the policy change and I estimate that at least $10 million of award inventory will be available to those active in the program. I could be wrong but am willing to take that risk. Two programs that just announced changes to their active clause for expiring miles are Delta SkyMiles and US Airways. Both are founding partners in the new e-miles program you’ll read about in this edition. Worried about your miles expiring? Simple, look at an advertisement once every year and a half or so and your miles will never expire. In fact, if you’re busy, I’ll look at the ad for you, but putting the bonus miles into your account to keep it active.

You see, it is my job to figure out how you can best manage your miles and points in any new environment, including this one. I traded for more awards because I strongly believe that is in your best interest.

Consider this — since 1988 when we traded expiring miles for lower award levels, more than 153 million awards have been redeemed at the 20-25,000 mile level and in 1989, the first year when members could redeem miles for the new reduced awards, redemption jumped 90.9 percent from the year prior. Deal or no deal?

In closing, my personal wishes to you this holiday season.

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