View from the Wing

Reader Martin writes in about the Chase Freedom Plus card which offers 10,000 points after first purchase, first year fee waived ($30 thereafter) and most importantly 3 points per dollar spent at whichever 6 of 16 categories you spend the most money in.

Those points can be transferred into United or British Airways miles at a rate of 6000 points to 5000 miles.

I redeemed 5k immediately for a 5k UA mileage cert and it arrived in the mail about a week later. I deposited it in my wifes mileage plus account, and the miles posted in 2-3 days. These certs can be deposited in anyones MP account.

Freedom plus points/miles can be earned at 3 miles/points per dollar spent “in the 6 CATEGORIES you spend the most each month — with 15 categories in all”. 6k Freedom miles/points transfer to 5k UA miles. UA Certs are available to denominations of 5k, 10k and 25k at the same conversion rates.

BA miles are also available at the above rates and can be transferred on-line. I do not know if you can transfer BA to someone else’s account, but when you do a mock transfer it only asks for last name and executive club member number…

The earning rate with this card is much better than with the Chase/MP cards. If you stay within the 15 categories, the earning rate is 2.5 UA or BA miles per dollar spent.

Read footnote #2 for the list of categories for bonus spending.

• grocery stores (that are not affiliated with or departments of superstores

• warehouse clubs or discount stores

• gas & convenience stores

• quick service payment/fast food restaurants

• telecommunications

• cable/satellite TV/Internet Service Providers

• video rentals

• department stores

• dry cleaners

• drugstores

• movie theatres

• local and suburban commuter passenger transportation (including ferries, bridges, tolls, parking garages, taxis/limos)

• pet supply stores and veterinary services

• utilities

• beauty shops (salons and spas)

• gym/recreation memberships.

Your top spending in whichever 6 of 16 categories each month qualifies for the bonus points, which is great, it adjusts automatically.

For me, it’s less valuable, since very little of my spending actually appears in these groupings. If travel-related spend qualified, this would be huge for me.

But it may work out for some of you, as 2.5 United miles per dollar depositable into anyones’ account is a pretty big deal.

Thanks Martin!

Citibank is offering 16,000 Thank You Points for opening a new checking account by July 31 and funding it with at least $1000 (if you open the account online you have until August 30 to fund with that $1000).

Additionally,

Within 60 days of account opening, you must (1) enroll your new checking account in ThankYou® Network and (2) complete one direct deposit per month, two electronic bill payments or five signature debit card transactions and continue for three consecutive months.

Citi is promoting the 16,000 Thank You Points as worth a $150 gift certificate. But if you link your checking account to a Thank You Points account that is eligible to use the fixed redemption chart (eg one of the premium credit card-linked accounts or an Expedia-linked account) then each Thank You Point can be worth 2 or 3 cents apiece.

And up to $480 for funding a checking account and doing a few direct deposits or bill payments is pretty good.

But if you’re not going to keep a decent balance with Citi then you may be looking at some fees which eat away at the bonus, so be sure your banking situation makes sense here.

In response to a post on Starwood Hotels in-hotel points-earning, reader Greg wrote:

Based on your comment about SPG not a great program based strictly on hotel revenue, which program do you think is the greatest value, and in turn, easiest to get rewards?

My somewhat meandering answer:

Easiest redemption is Starwood and now Hilton since they’re now advertising no capacity controls as well. (Starwood is going to have to come out with something new, at least for Platinum members, since Hilton has matched their unique selling proposition. I predict that they will.)

Starwood has plenty of properties that I actually want to redeem at, much more so than Hilton, but that’s a function of my luxe preference.

And Starwood is a great place to accumulate points via credit card spending in order to redeem for hotels (or to transfer to miles in those programs offering 1:1 transfers plus transfer bonuses, and LanChile is 1:2 + bonuses).

My only point earlier was that Starwood isn’t good for spending money at Starwood Hotels and expecting to get hotel room redemptions quickly, or at least as quickly as with their competitors.

I choose to stay at Starwoods in spite of the in-hotel earning, in exchange for the better elite treatment they provide, rather than because of the in-hotel earning.

Which program is most rewarding will depend on

• your stay patterns, do you have lots of 1-night stays or longer stays? (if the former, per-night offers are most rewarding)

• your statuslevel , Starwood is certainly better for Platinums on one night stays than for other members, given the 500 point per stay bonus given to Platinums at checkin.

• what are your reward goals? You want to earn points that will get you the quality of hotel you’re after.

And then of course recurring promotions change the calculations a bit, Starwood has had tons of promos the last couple years whereas Hilton really hasn’t.

Marriott is a terrible elite program in my view, it’s just not generous with upgrades. A few years ago they explicitly wrote suite upgrades out of the terms and conditions of the program. But their travel package awards are a great redemption value. Low point redemptions are poor value at Marriott, but put together a few hundred thousand points and redeem for stays and miles…

Hilton is a terrible elite program at the top tier, Diamond is virtually indistinguishable from Gold except at specific hotels (but Gold is the best mid-tier out there). Redemption has gotten much better. But outside of a few Conrads they tend not to offer the luxury factor I want for my vacation redemptions. Still, earn points and miles, and credit the miles to British Midland (and use your bmi miles for premium class Star Alliance redemptions via their cash and points award chart) and you’re in good shape!

Hyatt is pretty good at the Diamond level, though suite upgrades can be scarce especially in Asia where even lounge access isn’t guaranteed. Faster Free Nights is one of the best ongoing promos ever. Not enough properties, though. And no credit card partner.

Intercontinental Hotels has Priority Club as its points program but the separate Ambassador program for status (and Royal Ambassador for top tier). The Royal Ambassador program is the single best elite level out there, the best upgrades, 8am checkin in addition to late checkout, and drinks are free from the minibar. Problem is there just aren’t enough Intercontinentals out there.

Royal Ambassador gets you Platinum status in the Priority Club program, which is the most inconsistent top elite level there is, plus who really wants to step down from an Intercontinental hotel and stay at a Holiday Inn? (Admittedly there are some decent Holiday Inns outside the U.S.)

The Priority Club points program rather than elite recognition is outstanding, though, since the bonuses are so easy to come by. But their co-branded credit card offers very weak points-earning.

The right program really depends on your stay patterns and reward interests.

Personally, I like Starwood Platinum for the occasional suite and I love Interconitnental Royal Ambassador for its benefits. But I divorce my stays from my credit card and other partner earning, they’re really two separate decisions. And as I say, I like Starwood in spite of its in-hotel earning rather than because of it.

Flyertalk member bseller, whom I had the pleasure to sit next to on a flight from the West Coast to Chicago in business class on a 777 back in 2002, offers some experience with United’s Mileage Plus fraud folks.

He tells the story of an upgrade — which was technically traded for with another member against Mileage Plus rules — being flagged by United as possible fraud.

“There was a FRAUD ALERT in the PNR and it required that I verify the validity of the upgrade”, or words to that effect.
I should point out that this U/G was done ONLINE.

Here are the questions asked- AND they were REQUIRED to be anssered PRIOR to the issuance of a BP. This is NOT “optional” sh*t; You guys can proceed at your risk:
Q: How did you upgrade?
Q: How much did you PAY, for the upgrade?
Q: Who sponsored you?
Q: How do you know this person?
Q: Do you know where this person lives?
Q: Do you have a contact number, for this person?

Trading upgrades — just like selling upgrades (and award tickets — is against the rules of pretty much all programs. Occasionally the program flags an upgrade or award for greater scrutiny based on their own internal formula (and many programs do stalk eBay to track down sales). Consequences can include cancelling a ticket and requiring the passenger to pay full fare, and shutting down the sponsoring member’s account. If the sponsor has a very large stash of miles that’s obviously a serious consequence.

On the other hand, first time offenders sometimes get off a bit more lightly, especially if they ‘fess up to what they’ve done. There are plenty of threads on Flyertalk about this in the United and American Airlines forums.

It’s also why, whenever I give someone an upgrade or an award, I’ll also send them a gifting letter of sorts. It wishes them well, perhaps happy birthday or anniversary, it has my address and telephone number on the letter. That way they have my information handy just in case there’s any sort of problem. And I’d hate for a friend to know my work address when it’s my home address on my frequent flyer account, or vice versa.

I don’t worry too much when gifting an award or ugprade is perfectly within a program’s rules, but I am the cautious sort and knowing that flags on awards and upgrades do happen I want to make sure that there aren’t any misunderstandings.

And the consequence is severe enough that I wouldn’t gift an award or upgrade to someone I didn’t know and trust, e.g. selling something through a broker.

Starwood is offering quadruple points on spending at their new aloft hotels through the end of the year. Registration required.

General members will earn 8 points per dollar spent, while Gold and Platinum members will earn 9.. and paying with a Starwood American Express card, of course, earns an additional bonus point (plus the dollar for the credit card charge).

So a Gold member paying with an SPG Amex for their aloft stay will net 11 Starwood points per dollar. Which, of course, finally makes Starwood competitive with other programs when it comes to redemptions derived from in-hotel spend. But only for aloft stays, only through the end of the year, and only for members who register.

(Starwood is a great program, and the Starwood American Express is a great credit card, but make no mistake — promotions aside, it is not a strong program for earning based on hotel spend.)

This is already being much discussed elsewhere, but American has imposed a $5 fee for website award bookings.

The old argument was that reservation centers were more costly than web, an airline wanted to (a) push its reservations online to lower costs and (b) charge a fee for the ‘extra’ service of having a person handle the booking.

Now, even the cheaper online booking will come at a fee. Why? Because they’re looking for revenue sources, and because they can. Online booking is still cheaper than booking by phone, and American has a captive market to some extent amongst AAdvantage members looking to redeem their miles. With millions of awards redeemed annually, multiply those out by $5 and they’re predicting serious revenue.

Of course, AAdvantage members aren’t really captive at least in terms of their future earning choices, there are plenty of other mileage programs out there to choose from. Of course American’s bet is that the whole point of mileage rewards programs is to make consumer choice to some extent inelastic, and thus they believe a ‘modest’ $5 fee won’t drive members away to competitors that don’t charge such a fee (and there’s some change of course that other programs will follow American’s lead here).

Back in January I predicted that airlines would eventually pass on fuel surcharges like their European counterparts do. This doesn’t go that far but I do expect it’s a baby step in that direction. If this fee is passed on without much commotion or consequence, it will make perfectly good sense to add on additional fees. Somehow the old parable about how to boil a lobster seems to apply here.

An award redemption fee really does smack right at the heart of the very idea of using miles for a free ticket. What’s more, they’re imposing the fee at the very same time they’re also announcing increases in mileage award levels. Premium cabins to Europe, Asia and South America get (incrementally) more expensive. Several “AAnytime” awards get more expensive. Although in fairness the changes hardly represent a bloodbath. Of course it’s only been a few years since the last major set of changes.

Poor showing, American.

Horizon has announced new San Jose-Sacramento service. Umm, yeah, I’ll buy a ticket on that route. (Though sometimes an extra easy segment can come in handy.)

Cranky Flier explains what’s going on:

Billings to Helena? San Jose to Sacramento? Yeah, that’s just odd. Basically they’re creating round-robin trips where you fly from point A to point B to point C and then back to point A. These have never really worked well for airlines in the past, so I’m not sure what makes them think this will be a winner this time.

The Sunday Times (London) outlines Richard Branson’s plans for expansion into hotels:

Branson already uses Virgin Atlantic to drive customers to his mobile and credit-card companies. Now he wants to use the airline to fill a new range of Virgin hotels. The first will be in New York, London, Los Angeles and Atlanta. If they prove a success, India, China and Saudi Arabia will follow.

Virgin Hotels will be based on the Clubhouse, Virgin’s premium passenger lounge at Heathrow airport, which was developed with restaurateurs and hoteliers, notably Nick Jones, creator of Soho House.

“We have loads of hoteliers coming in and stealing our ideas from the Clubhouse, so we thought we had better do hotels ourselves. We are going to take the concept of the W hotel and move it on 10 years by creating urban, townhouse-style properties, halfway between a hotel and a private club.”

Virgin has been approached by leading hotel chains. It will take over their existing sites, gut them, and “Virginise” them. Some of the new Virgin hotels, starting with Atlanta, will have casinos but the emphasis will be on overall entertainment, rather than simply roulette and black-jack. “We think we can offer a more complete package than most resorts.” Branson also has his eye on a plot in Macau for a £1.5 billion casino resort.

The United Newark and Houston to Hawaii deal was aimed right at the heart of Continental — both Newark and Houston and Continental hubs, and United was apparently responding to cheap Continental flights to Hawaii out of United hub Los Angeles (although not quite as cheap as this, and from a market where lower prices tend to be common).

Continental has now fired shots in a different direction — USAirways — with dirt cheap Honolulu fares from Philadelphia, Charlotte, and Pittsburgh. So more folks than before may have an interest, although unlike United these Continental flights will be very difficult to upgrade since Continental charges a co-pay in addition to miles for bumping up to the premium cabin.

Free Frequent Flyer Miles points to the best signup offer I’ve seen yet for a Continental Airlines Mastercard: 20,000 miles after first purchase and a statement credit of $50 to offset the $85 fee.

Since I’ve never seen this card with a fee waiver, effectively offering a $35 annual fee is a great deal for 20,000 miles.

The card also comes with two Continental lounge passes annually after your first year so you only get those if you keep the card into the future, which personally I would not. But then I’m not a huge fan of Continental miles, at least such that I would put my spending towards earning Continental miles over all the other currencies that I might be earning with the same credit card spend.

As posted over at Flyertalk, United has Newark or Houstan to Honolulu for less than $300 including tax. Also available at this price, Newark to Kauai.

This isn’t a “jumbo” like $33+tax for business class to Cyprus, but it is a pretty good fare worth mentioning.

The fare is valid for flights on Monday, Tuesday, Wednesday, or Thursday (for the overwater segment) from August 21 through November 10, and December 5 through December 14. There’s a three-day minimum stay, and naturally the tickets are non-refundable. The fare is bookable most anywhere, such as the United website or Travelocity.

And since it’s on United, the flights are upgradeable with miles (subject to upgrade availability) without any sort of co-pay or buyup.

To find out in advance whether there’s upgrade inventory on a given flight, go to www.seatcounter.com. Enter your departure airport and arrival airport and date of travel, and then enter UA in the first airline box and UA in the second, leave the 3rd blank. This will bring up availability including the otherwise-hidden upgrade and award fare buckets. For upgrades from coach to first, you want availability in the R bucket.

Back in March I posted about a free Marriott Gold status offer, targeted to some Air France-KLM members but apparently open to all. I really thought that folks signing up but ineligible would lose the status, but so far that doesn’t seem tobe the case. And the offer is still there.

Meanwhile, I didn’t see it at the time, but this Flyertalk thread details a similar offer of free Marriott status for British Airways folks, the signup link is here.

There’s apparently a Virgin Atlantic version of the offer as well, but I haven’t seen the signup link. (Although if I were curious enough, a bit of playing around and based on the links of the other two offers, I might be able to figure it out.

Via Frugal Travel Guy, the Millenium Resort Scottsdale is offering a $100 rate with $100 daily food and beverage credit.

This isn’t a mistake rate, it’s a TravelZoo deal, and a pretty good one. Valid for stays from June 21st through September 17th, and book by June 4. There’s tax and a resort fee on top of this, and the food and beverage credit will be on the base food price only, and can’t be used towards tip. But it still makes the room almost free if you’d plan to spend your time on property anyway.

No doubt the hotel expects to be slow — first because this is true off-season for Arizona, and second because they’re apparently finishing up a major renovation so no doubt bookings haven’t been flowing in the meantime.

The TripAdvisor reviews of the property look pretty decent. It appears like a modest resort, certainly not the Phoenician (let alone the Four Seasons or Sanctuary on Camelback Mountain). But hard to beat for the price.

One Mile at a Time offers an introduction to United upgrades — the different instruments, how they work, and their waitlist priority. Good for the new United elite, or for those who would like to be.

What’s on your mind? A free for all in the comments, but please keep it civil (and clean).

Let me know what questions you have and I’ll try to answer. What are the biggest challenges you face with travel or miles and points? Are you having trouble accumulating the miles you need, or booking the award you want, perhaps I can help…

I’m not traveling this weekend, just playing with my new barbecue and relaxing by the pool (and working). I tend to hate ‘amateur day’ at the airport, Memorial Weekend isn’t quite as bad as Thanksgiving though, but if I can get my breaks in when the rest of the world isn’t around so much the better…

The Flying Critic says avoid the KLM lounge in Houston. And if it’s as bad as he says, why not?

Use the nice Air France lounge that is less than a minute away. Between the SkyTeam lounge sharing rules and the fact that both KLM and Air France are wholly owned subsidiaries of Air France-KLM it makes no sense why this KLM lounge is still open.

I recently posted on the very best airline lounges. But which ones are the absolute worst?

Surely the Alitalia Boticalli Lounge in Milan has to be up there, and far worse than KLM’s Houston offering. I say that even though the Milan lounge has showers. Ahh… But will it have towels? Luckily it did when I was there last year. Unfortunately, there was no hot water and the drain was clogged. Out of the shower, I just wanted a coffee, but the line was 20 people deep. So I thought I might sit down, but that would have required an empty chair . . . (Fortunately on my return I used the British Airways lounge even though I was flying Alitalia, ah the benefits of status.)

The Thai Airways lounge in Osaka, visited last year, was pretty sparse and housed directly beneath the trains which take you to and from the terminal. On the plus side there was free internet. On the minus side the whole lounge shook every few minutes as the train came in or out of its station above.

Surely there are others, please warn your fellow travelers in the comments.

Via Online Travel Review, Frontier has come up with a new fee increase, to my knowledge unmatched by any other carrier — they’re raising the cost to transport antlers from $75 to $100.

The end is neigh.

Northwest, always good for the complex-yet-fun promos, has pushed out Miles To Go. (registration required)

Not already a Northwest member? (Members who haven’t already signed up can take advantage for some of these…) Enrolling in the program, opting into their emails, and then enrolling in e-miles.. E-rewards.. and Thanks Again.. Is enough to earn 1500 bonus miles from the program. Other ‘free’ activities, if you arne’t an e-miles or e-rewards member through another frequent flyer program, include taking surveys from each of those two partners. Plus you can take a spin at their instant win sweepstakes for points in the program. Plus, new members can earn substantial flight bonuses, and those flights will earn points in the Miles To Go promo as well.

My only concern, though, is that registering for this offer could conflict with points earned shopping at the Northwest Mall under the other outstanding shopping promo which offers 500 bonus miles for every $50 spent through June 30, since the terms and conditions of that offer state:

Offer not valid with any other offers or promotions except for the special merchant offers mentioned above.

And the Miles To Go terms say:

This offer may not be combined with any other major offers or activities.

So I may have to wait to register for the Miles-to-Go promo until July 1 to ensure no conflict, since I’m not likely to credit any other points to Northwest in the meantime.

Perhaps some Northwest regulars, or those following the thread (which I presume exist but haven’t gone looking for) on Flyertalk have better information that these offers won’t conflict with each other? But I’m not taking any chances until I’m sure, and I won’t have time to research further until the weekend at least.

Update: According to this post on Flyertalk, Northwest will handle the conflict between promotions for shopping purchases as follows:

All qualifying WorldPerks Mall purchases made prior to June 30th would
go towards the Mom’s and Dad’s promotion, as you registered for this
promotion first.Your WorldPerks Mall purchases made after June 30, 2008 and prior to
August 1, 2008 would count towards to Miles to Go promotion.

So I’m going to go ahead and register for the Miles To Go promo now.

Accounting for frequent flyer programs on corporate balance sheets is getting tricky. There’s some pressure to book mileage liability at the market value of the rewards they can be redeemed for, rather than at the marginal cost of carrying an additional passenger on a flight.

Historically, airline yield management was able to restrict ’saver’ level awards to seats that would have otherwise flown empty. So an airline would ’sell’ the seat to its frequent flyer program at roughly cost, so order of magnitude perhaps $25 for a US domestic ticket. Of course that wasn’t the only element of redemption, or balance sheet liability. There are rulebuster type of awards which come at a higher cost, premium cabin awards, partner awards, etc. But to a pretty good approximation, mileage programs would sell miles at a huge accounting profit because the redemption side was so cheap.

There’s accounting rules pressure on the practice, and there’s also the reality of record load factors. There just aren’t that many otherwise-unsold seats. And rather than growing capacity at the rate at which mileage balances are growing, several airlines are cutting capacity. So there’s a greater likelihood than ever before that a redemption seat could be displacing a marginal low-fare but still paying passenger. So the presumed cost to the airline and its program is really higher than the old accounting practices would suggest.

One way out of the accounting conundrum is to sell the mileage program, or otherwise move it “off balance sheet.” If the frequent flyer program is a separate company, or something which resembles a separate company, then the price that frequent flyer program is paying an airline for seats is presumably the real market price and actual cost it’s incurring. There’s no need for accountants to make up a hypothetical cost to value mileage liability. They can use actual cost figures.

Now, in my view it would be a shame if an accounting rules change was the driving force behind loyalty program spinoffs. There are real reasons why airlines might consider such a move (although I’m increasingly skeptical that it would happen of its own accord in the current business environment, sure it could generate cash to avoid bankruptcy but avoiding the spinoff might be the best way to shield the program from current creditors if there’s a real bankruptcy risk.. Boy could that ‘prediction’ come back to bite me with you reader folk!).

But at the same time there’s a real conundrum out there in airline world. The current value proposition of frequent flyer redemption is predicated on booking passengers into otherwise unsold seats. What happens when those seats disapear? Programs still have members to satisfy. There’s also been a growing trend towards ‘miles as money’ with any seat available and miles worth a fixed amount (usually a cent). That solves the capacity control frustrations, but only by massively reducing the value of miles to the point that they’re no longer a preferred currency for things other than flying.

Mileage programs are a multibillion dollar business. The underlying profitability of some air carriers is dependent almost entirely on mileage sales from their frequent flyer programs. Alaska sells a couple hundred million dollars in miles to Bank of America each year, and on average their profit or loss as an entire company can be measured in the low tens of millions. United sees its mileage program subsidiary UAL Loyalty Services as the only consistently profitable part of its portfolio. Just to name two examples. And the biggest single component of the outside mileage sales business is credit card partnerships. But if a United mile earned from the Chase co-branded credit card is worth one penny, why not put your spending on a Citibank Thank You Rewards credit card instead — earning 3 to 5 points per dollar for certain cards, currently redeemable at 2 to 3 cents per point via their fixed redemption chart? That’s 6 to 15 cents a point, compared to just one. Boom. Value proposition over.

I’m not sure where all this goes, though certainly there’s a trend mirrored in the accounting rules towards handling frequent flyer programs as an arms length business and that makes the really high value redemptions tenuous. I have no great crystal ball, but I know it’s always best to redeem miles in the near term rather than holding onto them for an uncertain future.

That isn’t to say go on a redemption binge. Don’t use your miles unwisely. But if there’s an international first class trip you want to take, book it. Don’t put it off for a fre years. If you would normally book a business class redemption, why not consider first class instead? Enjoy the miles now, earn more, and enjoy them later. But don’t put off the dream redemptions for a future time.

The blogosphere and everywhere else is lit up about American’s decision to begin charging not just for the second checked bag, but the first as well.  They’re also cutting back on domestic flights.

The first bag fee doesn’t apply to (both paid and award) first and business class passengers, full fare coach (and full fare aka AAnytime award) passengers, and American and oneworld partner elites. Fortunately, though I’m not much of an American flyer, I do have lifetime elite status since they’re the only carrier which grants such privileges based on total miles earned in an account rather than miles flown.

Some folks describe the new policy as the end of the world, others just say the end of the world is $130 a barrel oil and what are you gonna do? Others think American is misguided, since they surmise American must believe consumers are foolish and won’t realize it’s a disguised price increase… and book competitors instead.

I don’t have a lot to add to the debate, except that I think some of the commentary misses the point. American is raising price, though it’s exempting it’s presumably already-profitable customers (elites and those paying premium fares). So it’s a price increase for passengers paying less. At the same time, they’re reducing supply, perhaps to a level that’ll support the lost customers they expect from the move. Basic economics, though their cost structure will reveal whether this is a profitable or unprofitable move in the end.

Meanwhile, they’re trying to cut costs having announced layoff plans as well (to go along with the capacity cuts).

My own bet is against American succeeding. But they are facing a very real bankruptcy risk (if their unrestricted cash falls below $2 billion they’re presumably filing) so they’re acting a bit desperately at the moment. And what they’re trying isn’t crazy, even if it’s infuriating.