I was perusing through The Wall Street Journal (WSJ) recently and read a news piece mentioning a plan by US Airways for a public offering and something in the article caught my eye. It read that Derek Kerr, the CFO of US Airways “was considering selling frequent flyer miles to its credit card issuer …” That would be Barclays (since Bank of America is exiting the picture) and would be similar to virtually every other major airline that has sought or is seeking liquidity in a tight credit market. Chase recently bought $600 million of advance frequent flyer miles from United Mileage Plus. And Chase has worked similar deals with Continental, as has American Express and Delta, etc. So, no ground breaking story there. BUT. But, it begs the question–would this be a smart move by Barclays? And the answer to that question is mixed. If we look at the recent decision (a very bad decision IMHO) by US Airways to dismiss the value of their elite-level program by ending elite flight bonuses, we see that this decision may come back to haunt US Airways in this matter. While US Airways can claim that they have detected little or no loss of elite flyers to other programs, and there might not have been a complete loss as depicted on various Web sites and passenger action groups like SaveDividendMiles.com, there is little doubt that there is some bleed out from the elite ranks at Dividend Miles.

It should come as no surprise that elite members have the highest concentration of program credit cards, and it follows, typically the highest annual spend. So, with elite flyers exiting, so goes revenue from Barclays Bank. What exactly does US Airways not understand in this whole picture?

So, I think that the very next move for those who registered on SaveDividendMiles.com is to let Barclays know exactly how you feel about the “value” of the US Airways Dividend Miles program given their latest cutback of benefits. If US Airways won’t listen to Dividend Miles elite members, then maybe they will take a call from the Chairman of Barclays Bank. In some respects, I hate to suggest such action because it may put US Airways in a situation they had not anticipated, but, the reality is they put themselves into this situation. Elites are much more than the BIS (butt-in-seat) miles that most connect the programs to.

Now, taking this topic a little farther, I wonder if US Airways has been doing much thinking lately about this? It seems to have not had any effect at the Rio Salado headquarters. But, if SaveDividendMiles.com has some merit, then perhaps there is a solution at hand. US Airways could ask elite members to acquire the Barclays card and US Airways to give back any elite flight bonus miles they missed out on since Aug. 6, 2008. Small favor to fix a huge problem for US Airways. BUT. And there’s that word again: US Airways and Barclays should not and I repeat, NOT, see this as a fix. It’s a temporary band-aid, and one that is easier for other programs to adopt–and I’m not wild about suggesting that.

So, more thoughts on plastic in regards to the Delta-Northwest merger which by all accounts is a done deal, just awaiting the “paperwork.” I wrote in a prior column that it was likely that American Express would win the credit card supremacy battle over US Bank for SkyMiles. I was thinking recently that this might not be exactly true. I thought that in the heat of all the airline merger rumors at that time. Now that I’ve had a chance to think a little more, I think there should be two banks in the new SkyMiles program. I would suggest to SkyMiles (hey, this is free advice, just like I’m giving to US Airways above …) that they convince American Express that’s it’s okay to not be Supreme Commander of Delta plastic. While AMEX has a very excellent product, they aren’t a bank. And while SkyMiles can pummel you with offers to acquire a “credit” card, they aren’t offering you a “debit” card and debit cards are very popular. In fact, in a report I read recently from the Federal Reserve (don’t you read their stuff?), I noticed that from 2003-2006, credit card use remained steady at 23 percent while debit card use rose from 19 percent to 27 percent, besting credit card use. And if you look over at American, Continental and United, you’ll see that they all have a bank-issued debit card that earns frequent flyer miles. It would be foolish to ignore a positive partnership where both US Bank and American Express could live equally happy since they do not compete on the same product offer. Now, American Express MAY believe that they can convert possible debit card users in the SkyMiles membership base to their credit card, but I’ve got to say, “it ain’t so.” So I suggest this is a good decision for all members of these programs.

And there is more to this. US Bank can offer other types of products and services in the financial area that American Express can’t or doesn’t, so no one has to blink. But then again, this idea may entice other banks to enter the fray in an effort to outbid US Bank. I hope not since I think US Bank has earned the right to remain part of this larger plastic pie.

And that, my friends, are my thoughts on plastic.