How do alliance partners reimburse each other on award tickets?

Discussion in 'General Discussion | Miles/Points' started by olmangsr, Nov 1, 2012.  |  Print Topic

  1. olmangsr

    olmangsr Silver Member

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    Here's something that came to my mind and would be really interested in your opinion.

    Today US Airways started the 100% promo again, AA has a 33% promo and United has (here-and-there) their 40% bonus promotion.

    This makes me wonder: HOW DO ALLIANCE PARTNERS REIMBURSE EACH OTHER ON AWARD TICKETS?

    With the US Airways promo u can get to Asia on biz for only $1600 (45+45k). I'm sure those guys at TG aren't to happy that its not even them selling those tickets on their new A380 just for one example. The easy answer i guess would be that it goes either way but outside the US most of the time you actually have to get on a plane to get even a couple of extra miles.
     
  2. Wandering Aramean
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    Wandering Aramean Gold Member

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    The airlines have contracted rates for what they pay each other for award seats. It is based on the seat, not the number of points required for the redemption.
     
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  3. olmangsr

    olmangsr Silver Member

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    So that means (looking at USair case) that other members are giving them those Asia bound seats for less then $1600 since I assume they are making money on that,right?
     
  4. Wandering Aramean
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    Wandering Aramean Gold Member

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    I have no idea what the actual costs are negotiated between the carriers but I would guess that most don't regularly operate in an environment where they sell things for less than cost. Keep in mind, however, that the average revenue per point may be higher than the number you're seeing in that once instance.
     
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  5. Steven Schwartz
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    Steven Schwartz Gold Member

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    But there also has to be a solid reason why US Air, who loves the income from selling miles, is also reticent to purchase things like Swiss and Lufthansa First Class (back when they were readily available to all partners). But like the OP, I too have long wondered about the economics of miles. Posted about this maybe 4-5 years ago on FT and never got a knowledgable response.
     
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  6. guberif

    guberif Silver Member

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    Figured US Airways paid their A* partners in Dividend Miles too.... :)
     
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  7. Fredrik
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    Fredrik Silver Member

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    Do you know if they pay in advance or if we are out of luck if the carrier I got the award ticket from goes bankrupt?
     
  8. guberif

    guberif Silver Member

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    Wouldn't worry too much about bankruptcy. Bankruptcy seems to be old hat for airlines; everyone with AA tickets has been fine.
     
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  9. olmangsr

    olmangsr Silver Member

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    i guess there is a good balance lets say between european carriers but not the other way since i dont think anyone is killing to fly US.the new biz class is really nice but we all know we can do way better....:)
     
  10. Wandering Aramean
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    Wandering Aramean Gold Member

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    Filing for bankruptcy protection is very different from dissolution and cessation of operations.

    My understanding is that the payment isn't made until the flight coupon is used. So it is possible that awards issued by a carrier which ends up bankrupt would not be honored by the carriers still in business, knowing that they won't get paid.
     
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  11. Fredrik
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    Fredrik Silver Member

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    Thank you for explaining. I have almost enough SK Eurobonus points to fly F somewhere and I don't want to lose that. I don't earn miles/points like a lot of you do.
     

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