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- <text id=94TT0598>
- <title>
- May 09, 1994: Commerce:The Fee of Free Flying
- </title>
- <history>
- TIME--The Weekly Newsmagazine--1994
- May 09, 1994 Nelson Mandela
- </history>
- <article>
- <source>Time Magazine</source>
- <hdr>
- COMMERCE, Page 62
- The Fee of Free Flying
- </hdr>
- <body>
- <p> Cash-strapped carriers boost the mileage travelers need to earn
- a ticket without paying
- </p>
- <p>By John Greenwald--Reported by Kathryn Jackson Fallon and Jane Van Tassel/New York
- </p>
- <p> Frequent-flyer miles have long been the closest thing American
- travelers have to a free lunch. But the adage about there being
- no such thing seems to be coming true. In the biggest overhaul
- of frequent-flyer programs since American Airlines launched
- the first one in 1981, most major U.S. carriers are boosting
- from 20,000 to 25,000 the miles required to earn a free domestic
- coach ticket. And the change, which the airlines plan to phase
- in by next February, is only the beginning: the cost of free
- flying will rise as well for many travelers to Europe and Asia.
- "The airlines have become victims of their own success," says
- Randy Petersen, editor and publisher of the monthly trade journal
- Inside Flyer. "Frequent-flyer programs have simply become too
- popular."
- </p>
- <p> Such programs are both a blessing and a curse to a perpetually
- troubled industry that has lost more than $11 billion in the
- past four years alone. Just last week Delta Airlines said it
- would eliminate as many as 15,000 jobs, or 20% of its work force,
- in a move to help it compete with low-cost rivals like Southwest
- Airlines. And United said it lost nearly $100 million in the
- first quarter because of competition from the no-frills carriers.
- Amid such relentless bloodletting, some 10 million frequent
- flyers traveled free on U.S. airlines in 1993, an amount equal
- to 7% of all passenger traffic. While those freebies may have
- helped instill customer loyalty, they also cut into the airlines'
- bottom lines.
- </p>
- <p> Partly as a result, airlines have diluted the value of frequent-flyer
- programs by fully 25%. But few passengers have complained much
- since United Airlines kicked off the retrenchments late last
- year. For one thing, business travelers typically fly more than
- enough miles to qualify for free trips under the new requirements.
- And vacationers can earn the needed extra points from companies
- that offer frequent-flyer miles on everything from hotel rooms
- to rental cars to long-distance telephone calls. Says David
- Stempler, director of the Washington-based International Airline
- Passengers Association: "Our members find that they are gaining
- miles in so many ways that the 5,000-mile difference should
- not be a terrible burden."
- </p>
- <p> But travelers could start to howl if airlines make further cutbacks
- in their frequent-flyer programs, which some industry watchers
- see as likely. Reason: Southwest and such aggressive discounters
- as Continental are forcing larger rivals to cut ticket prices
- on their short-haul routes, which have been one of the few profitable
- sources of airline revenue. Such reductions are coming on top
- of the seasonal fare war that Northwest kicked off in April
- when it lowered ticket prices to Hawaii by 40%. To help recoup
- the income, major carriers could be easily tempted to cut or
- discontinue frequent-flyer miles on hops of 400 or fewer miles.
- </p>
- <p> Airlines are not likely to scrap the programs, however, because
- they have been so successful at pulling in business. When IBM
- recently proposed that United and American grant it lower ticket
- prices instead of frequent-flyer miles, both carriers declined.
- And shortly before Delta Airlines announced its latest job cuts,
- the carrier said it had joined forces with Varig Airlines of
- Brazil to expand Delta's frequent-flyer program. Frequent-flyer
- miles "are not going away," says Tony Molinaro, a spokesman
- for United. "We wouldn't do it if it wasn't really worth it."
- Especially now that consumers will pay more to fly free.
- </p>
- </body>
- </article>
- </text>
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