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SPECIAL REPORT: FFPs challenged by airline uncertainty

Published: 02/07/2008 - Filed under: News »

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In the light of soaring costs, airline cutbacks present a new challenge for frequent flyer programme members.

In the past, one of the chief complaints from readers of Business Traveller centered on the lack of award-seat availability when they needed to travel, but new challenges are emerging. How can members be sure that the airline or route they wish to take will even be operating? If airlines carry fewer fare-paying passengers will they then allocate more award seats to FFP members? On top of all this, there is concern about the rising cost of so-called “free” award tickets.

Go back a few weeks, and who could have predicted that Delta would be axing its Gatwick-New York service (a link for which Delta paid United millions of dollars for the route-rights before “Open Skies” was announced), that American Airlines would ditch Stansted-New York (even though it spent a small fortune on a business class lounge at the Essex airport) or that United would decide to scrap Heathrow-Denver, a route launched amid much publicity only three months ago?

At least passengers living and working within easy reach of the UK capital can find alternatives of one sort or another. But those really at the losing end will be those wishing to book routes where there are few, if any, options. Pity any FFP members who expect to fly with Malaysia Airlines between Kuala Lumpur and Cape Town during July and August (when numerous services are being cancelled owing to poor demand) or who had booked to take Emirates to Durban (a route which was recently cancelled) this coming December.

Ravindra Bhagwanani, managing director of FFP consultancy Global Flight, says: “It’s essential to ‘burn’ FFP miles on a regular basis. If you don’t, you will end up with your miles being devalued. Some of our clients tell me they’re saving up for a trip to New York ten years ahead, but who knows what the award levels will be at that time, let alone the carriers who will be plying the route?”

Other challenges

FFP members must also take a carrier’s financial viability into account. The issue surrounding Italy’s loss-making flag-carrier Alitalia is a case in point. Bhagwanani says: “Alitalia relaunched its FFP on January 1. It’s one of the most generous but it comes at a risk.”

When an airline fails completely, FFP members lose all their miles and points and so on. On the other hand, if that carrier gets taken over by another, your FFP awards will be protected but the award-status may change. So the best-case scenario for Alitalia FFP members would be if Air France were to merge with Italy’s national carrier, because then both airlines’ schemes would be merged. But if private Italian carrier Air One were to take over Alitalia, it’s not clear what would happen, because the former doesn’t have its own FFP. (Air One is purely a partner in Lufthansa’s Miles and More scheme.)

Another myth that needs shattering is that some readers believe emptier planes mean easier access to award seats. In fact, the reverse could be true. Bhagwanani says: “In the 1980s [because of higher fares and less competition] the airlines were happy with load factors in the 70s. Today, loads in the 80s and 90s have become the norm, and still the carriers are losing money.” So if and when flights are cut, they will still be running as full as today.

Another reader-concern focuses on the rising cost of extras, which airlines are imposing on their so-called “free” award tickets. Not content with levying the standard taxes and charges, most airlines are applying oil surcharges. It means British Airways’ extras for a return business class London-Sydney award ticket now exceed £450.

Bhagwanani says: “Adding oil surcharges is a customer-unfriendly way of doing business which is devaluing FFPs as a whole.”  Indeed, there are discrepancies with these fees even within the same alliance. Bhagwanani says: “If I redeem points to fly transatlantic with United, I don’t pay the oil surcharge, but if I redeem with fellow Star-member Lufthansa [which has a different policy] then I have to pay US$300 more [for the same award ticket].”

Report by Alex McWhirter

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COMMENTS » 

VintageKrug - 02/07/2008 13:28

Interestingly, Qantas have today announced changes to their programme which for an additional amount of miles, WILL allow the payment of taxes and fees using FF miles:

http://tinyurl.com/6y5m9n

jophn_nugee - 04/07/2008 10:29

The first time I used my FFP points (with BA, 10 years ago), it was genuinely a free flight. The last time I tried to use them, BA's "free flight" was more expensive than another airline's all-up ordinary ticket for the same routing, taxes and surcharges included. FFP points are easy-come, easy-go: they cost almost nothing to acquire and the best appproach is to treat them as worth almost nothing. That way any disappointment at what one can get for them is minimised ...

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