Randy Petersen's Opening Remarks – February, 24 2009

Randy Petersen's Opening Remarks – February, 24 2009

TMI

Daily, with the number at times into the dozens, I get emails, calls and other types of queries from the media. Most of those who chat with me always comment that I’m guilty of TMI–Too Much Information.

As a student of these programs, I always like the person asking the question to really know and appreciate the facts around the news that occurs about these programs–and from the detailed information I give them, they can choose to take their three-second sound bite for publishing purposes. I thought I’d show you an example of a simple question I received recently. He was looking for a short answer–and this is how I answered it.

Question:
I’ve been seeing a bit about people finding it easier to book award tickets. Would make sense with the downturn in capacity, but I don’t know if it’s true. Have you heard anything?

My Answer:

It probably is not really related to fewer people flying. An increase in award redemption (a measure that is not a measure of award availability) started just more than a year ago because of two very specific reasons:

1) Various programs had finally been able to complete the technology to add partner inventory to their online award booking tool. While not all partners are now available for online award redemption for all programs, there has been a huge increase. And in fact, Delta SkyMiles noted that in 2008, they were showing 97 percent more award seats online to members. Not because they were being more generous, but because partner inventory such as flights with Northwest, Continental and Air France were finally being listed online.

2) The impact of the general economy meant that more travelers were opting to redeem flight awards. It was because more and more people were less concerned about what a mile was worth and decided they would rather use miles and save money, rather than in the past where they might continue to save miles and spend money.

As well, when there is an impact like the economy, it is easier to use awards because a lot of travelers are choosing to spend miles on less glamorous locations and are not all going for high-demand tourist destinations–more business trips using miles for the self-employed, miles for family emergencies, miles for general non-vacation travel, etc.

Furhermore, the downturn in capacity really has no real overall effect on redemption–as was proven after 9/11 and at other times in the past. Typically people are not redeeming to the types of destinations that are being cut. Airlines typically cut money-losing and low-capacity destinations and if people aren’t willing to pay to go there, or there aren’t a lot of people flying there, then who would really want to redeem their miles to get there?

As well, the newer generations of the online “calendars” that programs have adopted for award redemption are helping people plan better for award redemption and that makes a lot of difference. They can easily see where they can actually spend their miles and it cuts down greatly on the mystery and frustration of booking awards.

And there is an “ugly” side of award booking as well. If you were to read closely the recent comments by Delta regarding their original reason for adding redeposit fees for awards for elite members of the Northwest WorldPerks program, they refer to the fact that not many understand that it is typically high flyers who redeem multiple awards for various reasons and end up canceling most of them. The problem Delta was referring to is that if this continues unchecked, it causes real problems since a significant part of the award inventory is being locked up by their elite members–even though the award travel might get canceled later on–by that time, it is not going to do the other members much good.

From our experience in award travel planning with AwardPlanner, we annually saw that nearly 25 percent of awards would be changed at some time during their booking period. That is a lot of awards “off the books.” With the threat of fees and the impact of the economy on overall travel resulting in less travel, these types of elite-level “award layaways” are not happening as much and are freeing up more awards for everyone else.

I know, TMI, but it is what I do.

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