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Frequent Fliers Are Trying to Find Some Redeeming Value : Airlines: Cashing in mileage awards has become tougher than accumulating them. No laws require carriers to keep at least some seats open.


Earlier this year, when Jamie Zahn got engaged to be married, she told her fiance that she would handle their honeymoon air travel plans to Hawaii this coming August. Zahn, a TV news producer, had accumulated more than 100,000 miles on Continental's One Pass frequent flier program, enough to qualify her for two free business-class tickets between New York and Honolulu.

But when she called to redeem her miles for the Hawaii flight, more than six months in advance, she was told that no seats were available. This didn't seem possible. So Zahn called the main Continental reservations number and asked if Continental had any seats available for purchase on her desired flight. She was told the flight was "wide open."

So how could a flight with plenty of empty seats be unavailable to a loyal passenger who wanted to redeem her mileage for a free ticket on the same flight?

The answer is that airlines severely restrict the number of seats available per flight for frequent flier redemptions.

Unfortunately, Zahn's case is not unusual, and Continental is far from being the only offending airline. Within the travel industry, it is becoming one of the larger areas of consumer complaint: the inability of frequent fliers to redeem their mileage for the flights they want.

"It's tantamount to bait-and-switch," claims Chris Witkowski, director of the Aviation Consumer Action Project (a Washington-based public interest group that is active in airline consumer and safety issues), "and it's an issue that hasn't been addressed by the government. Someone needs to set guidelines for availability of discount seats as well as for frequent flier award seats."

Indeed, under current regulations and laws, there is no rule or requirement forcing an airline to allocate any specific number of discount or frequent flier award seats on individual flights.

"While Section 411 of the Federal Aviation Act prohibits unfair and deceptive practices by an air carrier," says Witkowski, "the Department of Transportation hasn't enforced this. Right now, the airlines feel that as long as they make one seat available for award use per flight, they've met their responsibilities.

"If airlines are going to use these programs to induce people to fly them," he argues, "and in many cases to fly inconveniently to earn these miles, then they should deliver the awards when they're earned."

The truth is, if a car dealer advertised his cars this way, or an appliance store marketed its television sets the way airline frequent flier programs are administered, they would most likely be indicted for false and misleading advertising.

For many years, state and federal laws have mandated that if merchants advertise a product at a certain price, they cannot tell consumers that the advertised product is not available, and then offer them another product at a higher price.

Not surprisingly, frequent flier programs--many of which celebrated their 10th anniversary this year--are still considered a major success by airlines.

"It's the most important marketing tool we have," says John Bloodworth, Pan Am's vice president of marketing.

"We are still amazed," says Henry Joyner, vice president of marketing for American, "at just how successful our program is at maintaining and expanding our customer base."

But how about satisfying a customer base?

The big, bad words on this issue are "capacity control." Airlines use capacity controls to severely limit the number of available seats on any flight for award travel.

"Yes," says Delta spokesman Neil Monroe, "we do capacity-control our flights. But we maintain a very generous seating allocation for frequent flier awards. When there is a problem, there's usually flexibility on both sides."

Assuming Monroe is correct, then Delta may be a very rare case.

"Capacity controls are a way of providing longevity to the frequent flier program," says American's Joyner. "We have them to insure long-term value."

The key is how each airline values its awards, and what their real costs are in giving them out. No airline would tell me how they do this, or what their specific redemption levels are for individual frequent flier programs.

But a United States Securities and Exchange Commission filing last month by TWA provides a specific, fascinating and candid look at how these programs work.

Let's say that you've earned 100,000 miles on TWA, enough to take a first-class trip to Europe. Ever wonder how much that redeeming your miles and receiving that first-class seat actually costs the airline? Assuming that TWA did not displace a full-fare passenger--and chances are minimal that it did--the figure is just $67.

Surprised? Read on: According to the SEC filing, TWA factors in food and beverage, fuel and liability insurance expenses to determine its "incremental" costs of transporting a passenger on a free/award ticket.

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