Sensible traveler Destinations Where they went Travel gear Student travelFrequent flier miles an iffy proposition
By Bruce Mohl, Globe Staff, 06/02/02
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Sensible traveler Destinations Where they went Travel gear Student travel |
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The recent announcement by US Airways that it could be forced to file for bankruptcy protection has brought mileage protection once again to the fore. The airline is pursuing a painful restructuring plan that calls for nearly a billion dollars in wage cuts and a billion dollars in federal loan guarantees.
"Because there is no assurance that this will occur, the company also recognizes that in order to successfully restructure the company, alternative restructuring scenarios in the context of a judicial reorganization also must be considered," the company's most recent quarterly filing said.
As of Dec. 31, US Airways owed the equivalent of 6.8 million travel awards to its frequent fliers. That debt is recorded on its books as a liability of $89 million, a liability that could be wiped out - eliminating the miles completely - if the company were to go through a bankruptcy liquidation.
Of course, a bankruptcy liquidation is unlikely. If its restructuring plans falter, US Airways would probably seek Chapter 11 bankruptcy protection from its creditors while it restructures. An airline spokesman said the frequent-flier program would continue uninterrupted through any bankruptcy reorganization.
There's also the possiblity that the airline, and its frequent-flier program, could be acquired by one of its competitors. That happened last year when TWA, facing a bankruptcy liquidation, was purchased by American Airlines. TWA miles became American miles after the purchase, and TWA frequent fliers actually ended up being better off since their miles were now with a stronger airline.
Still, the mere mention of bankruptcy has made many frequent fliers skittish. Some remember when the original Midway Airlines went bust in 1991 and 700,000 frequent-flier members lost their miles. That happened on a smaller scale last year with Ansett Airlines of Australia.
One way to protect miles is to exchange them for miles in another airline with better long-term prospects. Exchange options are offered by Hilton Hotels, Diners Club, and Points.com, but relatively few airlines participate in these programs, and the cost of converting is steep.
Diners Club, for example, is a credit card with a $95 annual fee. Points earned with the card (two points for every dollar spent) can be converted into miles with almost every US and foreign airline. The card can also be used to convert miles with American and United (US Airways does not participate) into miles with any other airline. The conversion cost is high, however. A cardholder with 100,000 American miles could convert them into 100,000 Diners Club points, which in turn could be converted into 50,000 miles with another airline.
Insuring frequent-flier miles is another option. Privilegeflyer.com has been selling its Award Guard coverage since 1991, and more than 80,000 frequent fliers have signed on. The insurance covers miles offered by the major airlines as well as some point programs offered by credit card companies.
The insurance costs $119 for a year or $214 for two years. The Award Guard coverage kicks in only when a frequent-flier program goes out of business and is not absorbed by any other airline. Miles may be redeemed for travel under the same conditions set by the failing airline up to a combined ticket value of $7,500.
Whether you obtain some sort of protection for your miles or gamble that those miles will survive the industry's financial turmoil, it's probably a good idea to redeem as many of your miles as fast as you can.
With airlines still recovering from the post-Sept. 11 slump, trading miles for seats is relatively easy now. Once the economy heats up again, seats may be scarce. There are just too many miles chasing too few available seats.
Outward bound
If you have US Airways miles burning a hole in your pocket, you may want to consider the airline's space promotions. That's space, as in outer space.
For 10 million miles, US Airways will book you a seat on the first craft taking private passengers into suborbital space. The trip is scheduled for 2004.
If 10 million miles is too rich for you, why not ride in a MiG-25 fighter jet to 85,000 feet. A ticket can be had for 275,000 miles plus $8,000. Or board a zero-gravity flight taking off from Russia for 250,000 miles plus $2,000. Or get the VIP tour at a space shuttle launch at the Kennedy Space Center in Florida for 30,000 miles plus $650.
US Airways is also running a sweepstakes where all the space trips will be given away. For details, see www.USAirways.com.
Two for one?
Swiss Air Lines is offering two tickets for the price of one for passengers who purchase the tickets with a MasterCard, but one reader thought the deal sounded better than it really was.
Using the promotion, the reader found a flight for two to London on Swiss Air costing $1,346. Her travel agent was able to book the same flight for $1,496. "It's a slight discount, not two for one," said the disappointed reader, who asked to remain anonymous.
Swiss Air quoted me a price of $2,560 for two on a nonstop flight from Boston to Zurich on July 20 and returning on Aug. 3, using the card offer. On Orbitz, I found much cheaper flights, but all of them had one stop. Flying British Airways through London, for example, I found a fare of $1,951 for two adults.
Interestingly, Orbitz, which bills itself as a one-stop shop for airline tickets, didn't even list the Swiss Air flight.
Bruce Mohl can be reached by e-mail at mohl@globe.com.