Article about Airline Rewards on Yahoo

Discussion in 'General Discussion | Miles/Points' started by mlarso85, Mar 20, 2011.  |  Print Topic

  1. mlarso85
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    mlarso85 Silver Member

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    Here's the article, thought it was interesting. It's not really anything profound though....

    What Airlines Are Hawking

    For travelers swimming in a sea of airline miles and hotel points or just frustrated that they can't redeem them for a desired flight, there's an alternative: Get a face lift.

    Plastic surgery, big-screen TVs, iPods, lawn tractors, diamond necklaces, VIP passes to sporting events, casino gaming chips, dinner with the New York Yankees and designer handbags. The catalog of merchandise that can be purchased with miles is growing rapidly and becoming at times oddly creative.
    But beware: Airlines charge customers radically different prices, depending on their status and credit card.
    David Yu, who travels so much he has platinum status in Delta Air Line's frequent-flier program, figured he'd be the one to get the best prices. Using miles, he's bought a computer printer for his college-age daughter, a handbag for his wife and TV speakers for himself.

    "I've got miles to burn so I consider it free," he said.

    But when he told a co-worker he was thinking of spending 42,600 miles on the Bose headphones, she said she had just purchased the same product from Delta for 34,100 miles. They compared offerings on side-by-side computers, each logging in with their Delta frequent-flier number. Her price was 20% lower than Mr. Yu's, even though she's not an elite-level frequent flier with Delta and has fewer miles in her account.

    "I don't think that's right," said Mr. Yu. "In my opinion, this is an insidious way to take the miles back."
    Delta (NYSE: DAL - News) says it doesn't price merchandise based on the number of miles in a customer's account or past buying history. Instead, elite-level frequent fliers like Mr. Yu get a big discount -- the regular price of the Bose headphones at Delta is 68,100 miles. But Delta gives an even bigger discount to holders of its co-branded American Express (NYSE: AXP - News) credit card -- like Mr. Yu's co-worker, Katie Palasek, who has a gold card.


    "We differentiate the exchange rate based on customer type," said Jeff Robertson, Delta's vice president over the SkyMiles program. A diamond-level frequent flier, Delta's highest level, with a fancy American Express SkyMiles card can get triple the buying power out of each mile than a regular frequent flier without the co-branded credit card, he said.

    [article continued on this link]
    http://finance.yahoo.com/family-home/article/112254/what-airlines-are-hawking?mod=family-travel
     
  2. JohnDeere19
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    JohnDeere19 Gold Member

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    Interesting about the price discrimination...wonder if they've ever considered that type of model for award redemption...
     
  3. kenbo
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    kenbo Silver Member

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    If Mr. Yu flies so many miles with Delta, I wonder why he doesn't have the AMEX branded card. How many miles has he lost out on and what type of rewards has he been receiving, if not Delta miles?
     
  4. mht_flyer
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    mht_flyer Gold Member

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    I would be annoyed too, but I have seen using miles for merchandise rarely if ever to be a good deal.
     
    Horse and PAinNY like this.
  5. FLYERIL
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    FLYERIL Silver Member

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    The funny part is that he thought he was getting a good deal (he was going to make the purchase) until he found out someone else was getting a "better deal." (I realize that neither were getting a good deal.)
     
  6. Wandering Aramean
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    Wandering Aramean Gold Member

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    I don't care too much about this on its face as I would not redeem for merchandise based on the horrible return. But in the bigger picture of airfare pricing and the ongoing debates between airlines and travel agencies over distribution (i.e. GDS v. Direct) this issue is tremendous. One of the main plays that the airlines - as represented by their trade group OpenAXIS - have made is that they will provide the most transparent information possible and the best possible deal because they will know who the customer is. This DL tale is a great example of the airlines using that information the other way, screwing over a customer because they know who he is.

    At the end of the day if the customer thinks they got a good deal then it doesn't really matter, I suppose. After all, beauty is in the eye of the beholder. But when the airlines are promising transparency with one hand and increasingly obfuscating things with the other it is hard to trust them at all. This doesn't bode well for the future airfare distribution developments.

    Read more about the Direct Connect v GDS debates here.
     

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