Traveling? Don’t leave home without this book

TODAY Travel editor Peter Greenberg has authored a comprehensive guide to travel, its jargon, dos and don'ts, scams, best-bets and much more in "The Complete Travel Detective Bible." Here's an excerpt:

Chapter 7: Frequent Fliers
There's a sucker born every minute.- P.T. BARNUM

Since they were first offered nearly 27 years ago, the frequent flier airline loyalty programs have been considered one of the more innovative, powerful marketing ideas of the 20th century. The result is that we've evolved into a country of mileage junkies. And, like addicts, that means we'll resort to just about anything to obtain those miles — we'll buy stuff we don't need, refinance our mortgage, even pay for our kids' weddings with a credit card just to earn extra miles.

The real truth is that more than 57 percent of all mileage earned these days is earned on the ground!

Now for the bad news. According to the annual 10K reports that airlines have to file with the Securities and Exchange Commission, there are more than 14 trillion outstanding miles floating around the United States. While the airlines claim that more miles were redeemed last year than ever before, the actual redemption percentage — that is, the percentage of eligible miles that were really redeemed by the airlines — hovered at slightly below 10 percent.

Basic facts and figures
For the airlines, the mileage programs have become one of their few profitable divisions, so there's no chance of their going away anytime soon. Airlines sell miles to thousands of marketing partners, including restaurants, banks, gas stations, even florists. That means you can “earn” additional miles when you make purchases. Some frequent flier programs have as many as 200 partners, selling miles to these partners for a total of about $2 billion a year. Partners pay airlines between 1 and 2 cents per mile for each one they purchase. What's a mile worth? For airlines, a mile is worth about 1.7 cents in revenue. This is where customers get screwed: Since the airlines also manage and control redemption of those miles — without any oversight, regulation, or control — they build in a huge profit. They might as well be printing money.

The airlines will argue that their members are happy with their programs and their ability to redeem those miles. Really? Dig a little deeper and you'll find that what the airlines are not telling you is that the airlines are playing a little game of extortion — which they are allowed to do under deregulation. Since these programs aren't regulated, no airline is required to provide any seat free of charge in these programs — in much the same way as the airlines can advertise a discount fare without revealing how many seats are actually available at that fare.

Since airlines control that redemption, redemption levels remain pathetically low. And for consumers, that's an amazingly painful experience.

Here are the figures.

• In the beginning of 2006, the world's frequent flier programs boasted more than 180 million members, 120 million of whom were U.S. residents, with 140 airlines.
• American AAdvantage is the largest frequent flier program in the world. It began with 283,000 members in 1981 and has grown to more than 46 million members. More than 11,000 new members enrolled in the program each day in 2001 — 20 years after the program started.
• Loyalty programs grow at a rate of 11 percent per year. The fastest-growing segment of these programs is “mileage consumers,” not frequent fliers.
• Credit cards are the number one way to earn miles without flying.
• The average active member of a frequent flier program earns 11,364 miles per year.
• It is estimated that some 307,000 frequent fliers have earned at least 1 million miles in their programs. And as you may know, I have earned at least 1 million miles on every major US airline — and at American Airlines, more than 6 million miles.

According to our friends at SmarterTravel.com, foreign airlines give reduced mileage on their cheaper fares. For example:

• Air France gives only 50 percent of actual miles on tickets booked in G and U classes, 25 percent on L class, and none on A, O, and X classes.
• British Airways gives 25 percent of actual mileage on "lowest" economy fares.
• Cathay Pacific gives 50 percent of actual mileage on "discounted" economy tickets.
• Japan Airlines gives 70 percent of actual mileage on "discounted" economy tickets.
• Lufthansa gives 50 percent of actual mileage on tickets booked in S and W classes.
• Singapore gives no credit for tickets booked in V, Q, G, N, and T classes.

SmarterTravel.com also points out how U.S. airlines that partner with foreign airlines have complicated mileage programs. Some examples are:

• American Airlines gives 25 percent of the full mileage for economy flights on British Airways classes K, L, M, N, O, R, E, G, Q, S, and V.  It gives mileage for economy flights on Cathay Pacific only in classes B, Y, and H (pretty much full-fare classes). It gives 50 percent of full mileage on Qantas flights in M, V, L, R, G, O, and S classes.
• Delta (SkyTeam) gives no credit at all on a handful of fare classes on Air France, Alitalia, Emirates, KLM, Korean, Singapore, and others.

Redeeming miles
As a whole, the airlines awarded 19 trillion miles in the past 26 years. Want to get really impressed? That's enough to circle the globe 760 million times.

One small problem with that gee-whiz statistic: It presumes those miles were redeemed for real flights. A majority of them weren't.

Almost all mileage programs of the major carriers get you to enroll by strongly implying in all of their advertisements and promotional materials that as soon as you get to the first redemption level — 25,000 miles — you'll  be sitting on a beach with a piña colada. But the reality is that, nowadays, airlines have doubled the ante. In almost all cases, when you call to redeem those 25,000 miles for a free coach domestic ticket or 35,000 for a free coach ticket to Hawaii, the airline then informs you that no seats are available at that level. But the airline somehow does have your seat for double that amount — 50,000 or 70,000 miles! It's a clever but painful way for airlines to dispose of their mileage liabilities — and that's if they want to release any seats at all.

MORE FROM TRAVEL

Travel Section Front

In these cities, fast food doesn’t come cheap World's coolest hotel pools Best U.S. places to live Great things to do in the airport 7 ways to avoid checked baggage fees Book now! 17 up-and-coming hotels The world’s best travel Tourist beware: Europe’s latest travel scams Send us photos of your rockin' road trips! Road trip essentials for kids Travel Section Front   Add Travel headlines to your news reader: