Mergers, acquisitions, airlines shutting down, and miles… People are clearly (and understandably) nervous. A question in the comments on the last thread:
How do mileage programs work during mergers and stuff. I’m pretty deep in the United Airlines Mileage Plus program, but if United/Continental goes through, what happens to those of us that are in the program? Please share if you know…
Well, there are no guarantees in life, but historically, merged airlines have combined miles into one program, with no immediate loss. Note the word: immediate.
If you exclude Southwest and JetBlue (which offer points or credits rather than miles) most airlines’ frequent flyer programs have a similar currency with a similar redemption schedule. Not the same. Similar. Granted, there are differences between programs, but, say, American, United, and Delta all give you a base rate of 1 mile for 1 mile flown and charge 25,000 miles for their average capacity-controlled “saver” domestic award.
According to press releases, Northwest miles will be incorporated into the Delta program 1:1. So far so good.
But make no mistake: Down the line, you’ll lose. Mergers will result in diminished flights — older planes won’t be replaced, unprofitable routes will be retired, and the airline executives’ mantra of “overcapacity” will finally be answered with capacity reductions. But all the miles in the frequent flyer programs didn’t decline in capacity. If anything, they increased in number. So a boatload of miles will be chasing fewer and fewer award tickets.
It’s an inflationary scenario. Unless a miracle happens, going forward, the cost of “free” tickets will go up. Fees will increase. And all that means is your miles will be worth less.
Add to that the fact that such inflation is already underway, even without the mergers. Things don’t look good for miles.
To the reader’s question re: United and Continental, I would expect the same as above. I don’t think you have any immediate worries, but long-term worries are sensible concerns.
Bottom line: Start spending your miles. And if you work for it, you can still get decent value. (My yardstick is still an aggressive 1.7 cents/mile or better. Anyone who repeats the conventional wisdom that you should only count on 1 cent per mile — or worse — isn’t trying hard enough. If they were a financial advisor, it would be like proudly earning you 2% a year. Fire that advisor.)
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April 15th, 2008 at 9:33 pm
Thank you for answering my question. I would have expected that a major customer loyalty program would not disappear. I love Mileage Plus, perhaps because I’m so baked, but am actually excited for the possibility of a Continental merger. They fly places that I typically go that UAL doesn’t (and since they don’t I’ve had to take Air Canada to get miles instead). And years ago, if you asked me, I would have said no, because United quality was so much superior to Continental, but these days…sheesh. Let’s cross our fingers and hope that the Star Alliance survives.
April 16th, 2008 at 8:12 am
Another question: the Delta/Northwest merger will maintain the miles in the SkyTeam, since both companies are part of that alliance. But how about a United/Continental merger? Will Star Alliance or SkyTeam prevail? My bet is Star Alliance, since SkyTeam will have the largest airline in the world. And how about the program itself? Will it be Mileage Plus or OnePass? So many questions to be answered.
April 16th, 2008 at 12:13 pm
I recently used 100,000 for four tickets to Kalispell, MT (FCA) – two from BHM, two from PHL – flights are for mid June – when I used my miles, tickets were going for $680+ – essentially giving me 2.72 cents per mile. All to say, it’s not that hard to approach the aggressive goal you’re talking about (and, admittedly, I wanted to gloat).:-)
April 16th, 2008 at 2:45 pm
As Luciano implies, the bigger change will be for a Continental OnePass member (assuming a United-Continental merger/takeover happens). For those people will be forced to move from Sky Team to Star Alliance as a result. Elite benefits, destinations, award availability – all different when you switch airline alliances.
For some this may be better than what they currently get, while for others it will be worse off.
Delta-Northwest is simpler as it remains in Sky Team.
Anyway, the merger(s) haven’t happened yet (still need approvals), and a lot of details yet to be announced, so there is no point fretting.
April 16th, 2008 at 9:28 pm
Luciano and Global Traveller –
As the ‘Traveller says, it’s far too early to know. No deals are approved, and in the case of CO/UA, no deal is even announced.
Continental and United have very different programs, especially as pertains to upgrades. Continental offers “unlimited” free domestic upgrades to elites on a space-available basis, while United requires certificates or miles for upgrades from everyone, no matter the status.
As you mention, Continental is SkyTeam, United is Star Alliance. I’d bet on Star Alliance prevailing, but that’s all subject to negotiation.
But as I said, no CO/UA merger has been officially announced yet (though it’s nearly inevitable at this point), so let’s not jump the gun… Just keep spending those miles. Miles don’t earn interest. They’re not a retirement plan. Spend wisely.
And G. Twilley, nice work! Booking multiple tickets is always harder. Funny about your destination, I was interviewed by Minnesota Public Radio yesterday (shameless self-promotion!), and asked about the value of miles, etc., and I said flying to Kalispell, Montana was likely a better deal than flying New York to Chicago. Glacier National Park is somewhere I’m planning to visit some day soon, myself, so I’m amused that we’re on the same wavelength!
April 17th, 2008 at 11:13 am
Yeah, I would bet on the Star Alliance surviving, the brand is stronger, alliance more discreet and hell, they even have their own airplanes. And my guess is that a few partners from SkyTeam would gladly make the switch to that stronger brand.
April 18th, 2008 at 1:19 pm
I’m spending my United miles on a trip to Europe, so basically I’m getting around 1.75 cents per mile (Buenos Aires – London via DC flying United // Barcelona – Buenos Aires via Frankfurt flying Lufthansa.) Long live Star Alliance!
April 28th, 2008 at 7:37 am
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