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Cashing in Air Miles: Take a Flying Leap ...of Faith

September 9, 2010 By:
Adam Bell, JE Feature
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It's the end of summertime, and the living isn't easy for folks trying to cash in on frequent-flyer miles.

That's because there are many more people seeking those rewards than there are available seats, say industry experts. And it's a pattern that's not going to improve anytime soon.

Just consider this. One expert cited by The New York Times recently said that there could be at least 9 trillion -- that's a "T" -- frequent-flyer miles out there.

But look at another key measure, what the industry calls the "average domestic load factor," the percentage of seats that are taken up by paying customers.

In May, that rate stood at 83.5 percent for the nation's so-called legacy carriers -- U.S. Airways, United, Continental, Delta and United. The numbers typically float up more than 90 percent in the summer months, according to Tim Winship, publisher of FrequentFlier.com.

Seats available for frequent flyers also vary greatly by airline, according to a new study by IdeaWorks and ezRez Software. They made 6,610 inquiries about booking reward flights earlier this year for 22 frequent-flyer programs for travel from June through October.

There was a big range in the success rate of being able to book reward flights, from a high of 99.3 percent with Southwest Airlines to a low of 12.9 percent at Delta and 10.7 percent on U.S. Airways.

Then there's the curve ball thrown by at least one airline, changing the needed miles for a seat on some cherished routes by sometimes more than twice as much.

"There are far too many miles chasing far too few reward seats," said Jay Sorenson, president of Wisconsin-based IdeaWorks.

He and Winship noted that several factors are at work to cause that to happen:

· Airlines desperate for profitability in the recession are making fewer reward seats available or are waiting to release them at the last minute.

· Airlines also continue to trim capacity and flights.

· Much of the glut of unused miles comes from rewards linked to credit-card usage. But just because people have the miles doesn't mean they use them.

So what's a flyer to do? Tips from Winship and Sorenson include:

· Remain flexible and try to think about booking at least six months in advance.

· Using miles for hotel deals, instead of flights, might not be ideal, but would be better than not being able to use them at all.

· Consider calling the airline for help in booking a reward flight. While airlines have done a good job in programming consumers to book flights online, they still use call centers to help customers. Winship said that the $10 or $20 booking fee one might pay for talking to a call center could be well worth it if they are able to land the trip they are looking for.

· Think as a contrarian, looking for secondary sites like Wichita, Kan., or Oklahoma City, Okla., rather than routes likes Orlando, New York or San Francisco that many people covet. Or travel at off-peak times, such as Europe in October.

"You've got to try to be more opportunistic, so you sidestep the bottlenecks, or you are setting yourself up for frustration," said Winship. "Look where everyone else is going, and do the opposite."

As for future trends, Sorenson expects airlines to continue to increase the number of miles needed for a regular domestic flight. Rewards may eventually be tied to fares paid instead of miles traveled, he said.

To Winship, it simply makes sense to cash in on your miles now, rather than hoard them for some dream vacation in the future.

He compared miles to a stock you know will not be increasing in value. You should sell such a stock sooner rather than later; along those lines, you should do the same with miles.

"Use them today," Winship added, "because a week, a month or a year from now, if everything continues as it has been, you will get less for your miles by waiting." 

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