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Business Traveller
Frequent Flier Programs
Aired July 08, 2006 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN ANCHOR: It could be New York or a shopping weekend in London or visit the Adriatic on a replica medieval warship.
We mark a milestone in aviation, 25 years of air miles, on this month's CNN Business Traveller.
Hello and welcome to CNN Business Traveller. I'm Richard Quest, this month reporting from, well, all over the place.
We're starting the show off here in New York in the United States because it was in this country that the frequent flier program was born. American Airlines introduced it 25 years ago as a way of keeping their fliers loyal.
Since then, more than a 100 different programs have started around the world and several hundred million of us are now members in one plan or another.
UNKNOWN MALE: More miles to catch. Here we go.
QUEST: Coming up on the show, we rake in the points with a mileage run, we show you ways to maximize your miles on the ground, and I reap my rewards with an escape in Croatia.
If we're going to talk about frequent flier programs, we'd better go back to the place where it all began, Dallas-Fort Worth, Texas and headquarters of American Airlines.
Little did they know back in 1981 what they were about to unleash on the traveling public.
Let's take you back to the early '80s.
UNKNOWN AIRLINE ATTENDANT: We're beginning our descent into the Dallas-Fort Worth Airport.
UNKNOWN AIRLINE ATTENDANT: You're all set, sir.
QUEST: It was a time of Dallas-style hairdos. We were all typing on terminals and lurid green phones released. There was no Internet then. It was more than a decade before we started buying digital cameras.
UNKNOWN FEMALE: Now smile.
[American Airlines jingle.]
QUEST: But arguably, the best was yet to come.
UNKNOWN MALE: I began to think about, as a child, when I would sit at the kitchen table and lick S&H green stamps and put them in coupon books. We would then take those coupon books down to the store and exchange them for a toaster or an ironing board.
QUEST: Tom Pickett (ph). If people would collect stamps for a toaster, they'd almost certainly collect frequent flier miles. The American marketing team went to work. For months they tested economic models, looking for loopholes that could blow the scheme apart and the cost the company a fortune.
They found none. But they were still anxious. So the first air miles came with an expiring date in a year.
UNKNOWN MALE: After about four months, as I recall, the one year expiration date came off. We had determined by that point that this is a program that is working and working extraordinarily well.
QUEST: Now there are more than a 150 frequent flier schemes and most major airlines belong to alliances that account for 60 percent of global flights.
The key is to earn more points faster. One way to do that is a mileage run.
Four-thirty in the morning and the committed mileage runner gets up early to start accumulating those bonus points. Over the next 12 hours, I'm going to go between Dallas and Austin at least six times. That'll give me 30,000 bonus miles. That's worth having, even if it is this ridiculously early hour.
At least it's an easy run to the airport. Complete check-in and there is the first boarding pass in our mileage run.
Hello. Good morning.
I'm certainly not the only mileage runner on board. King of them all. FlyerTalk.com's Randy Petersen.
What a nice day.
RANDY PETERSEN, FLYERTALK.COM: It's a nice day for flying, but more importantly, it's a great day to go out and earn a whole bunch of frequent flier miles.
QUEST: Is it worth it?
PETERSEN: That's why you and me are here. It's absolutely worth it, because you know what we've done is we're paying about a $150 U.S. for a 30,000 mile bonus.
QUEST: Thirty minutes after we took off from Dallas and it's already touched down in Austin, with 5,000 miles under my belt.
I'm now officially a card -- well, tag-carrying member of the mileage runners club. There are a lot of us on these high earning flights because getting them is quite rare. Now I belong.
Now, you've already got this 30,000 bonus.
UNKNOWN MALE: I've already got the 30,000 bonus. This is the fifth trip that I've made today, getting 60,000, working on the 60,000 mile bonus.
QUEST: You're going for it twice.
UNKNOWN MALE: Going for it twice, yes.
QUEST: It's all about status.
PETERSEN: Status miles can give you upgrades and that's the Holy Grail of frequent flier programs.
The earning of miles simply can get you from one place to another, with some problems, if you will, if seats are available.
It's nice to use those kind of miles, but at the end of the day, the true road warrior only wants to sit in first class.
QUEST: But to earn those perks, it means time in the back. And these mileage hunters are a committed bunch, scouring the internet for deals and taking time off work to fly the most lucrative routes.
We're going back to Dallas. A quick trip to the departure gate and it's round two. Not so much dj
vu as deja bo (ph).
UNKNOWN MALE: More miles to catch. Here we go.
QUEST: Midday and we're midway through our mileage run, the third flight of six. But remember, only when we've completed all the flights will we be eligible for the 30,000 mile bonus.
I think these short mileage runs are easier than long ones.
PETERSEN: Yes, because they're more dangerous. We miss a check-in and, boy, we're in really big trouble.
QUEST: Famous last words. Are we sure about this gate? It's going to be tight, this one. We almost knew there was one or two connections. So we were absolutely pushing it to the limit.
I'm too old for this run.
UNKNOWN MALE: All right, thank you.
QUEST: We've been flying now for about 8.5 hours. This is flight number?
PETERSEN: The big five.
QUEST: The big five.
PETERSEN: Yes.
QUEST: One more.
PETERSEN: One more and we're 30,000 miles richer. And I know you're going to be happy.
QUEST: Ah, cheers.
Not everyone's happy about the idea of the mileage run as a quick fix for the frequent fliers. Our Dallas-Austin shuttle generated 1,800 kilograms of carbon dioxide.
UNKNOWN MALE: I do think that's totally irresponsible and I think that's exactly the type of travel that we have to tax against.
QUEST: Until then or when airlines decide mileage runs are no longer worth the loyalty they generate, mileage runners like me will keep on running.
After the break, we look at the problems for frustrating frequent fliers. Why can air miles be so easy to collect, but so difficult to redeem?
(COMMERCIAL BREAK)
QUEST: Welcome back to CNN Business Traveller, where we're in the business of collecting miles. My assignments and duties have now brought me to Almaty in Kazakhstan, which means that's many more thousand frequent flier miles earned, especially since I flew business class. And I'm putting all the miles in my American Advantage program.
I'll soon have many more free tickets, that is, if I'm allowed to keep the miles, because there's a worrying new trend. In some countries, the miles may not belong to you.
Take Germany, for example. In April, one Lufthansa "Miles and More" flier sought an official ruling on who owned her air miles. She took her company to court and lost.
Should we be worried?
UNKNOWN MALE: I don't see any reason why, in the U.K. or in other countries, people should not look into this, not necessarily being based on the German court decision, but just as a matter of fact, because they see they can realize quite a lot of savings by using frequent flier miles.
QUEST: I'm now in one of the famous piazzas in Italy. This is the sort of place you want to come to when it's time to use your miles.
But frequent fliers say when they want to fly, they can't get the seats because there are too many miles chasing too few seats and the popular destinations have already gone.
The airlines make no apology for the fact that sometimes it can be tricky to get the seat you want.
Back in the office, we conducted our own research. The aim was to fly from London to Churin as soon as possible using only air miles. It had to be British Airways, as they were the only major airline to fly direct.
The first flight found was only five days away, a Tuesday. A Friday departure was harder to find. There was one in two weeks time, but only in business class. That cost 40,000 points, twice the price of economy.
The inventor of air miles and BA's one world partner, American Airlines says much of the criticism about the unavailability of seats is unfair.
UNKNOWN MALE: The facts are we had 4.5 million awards granted last year. Seven percent of our seats are occupied by people flying on free seats. Ninety-five percent of our flights last year had free seats or people flying on free tickets.
So the facts don't really track with the frustration that you hear.
QUEST: Rick Seeney (ph) is familiar with frequent fliers' frustrations. He started a Web site that processes raw data from airlines. It's one way air travelers can stay ahead of the game.
RICK SEENEY (ph), FLYING FISH CREATOR: The other day there was a one- day sale to Brazil from several major hubs in the U.S. where they cut the price from a $1,000 to $400 only for five hours and that's kind of the stuff we specialize in.
QUEST: Once you've found a deal, Flying Fish is one way you can check that mileage rate is right. A good deal with cost you up to three cents for every mile. That's money you don't want to lose.
When frequent flier programs began, there was, of course, only one way to earn those precious air miles. You had to physically get on a plane.
Things have changed, out of all recognition today. There are many more ways you can earn frequent flier miles. In fact, 50 percent of all miles come from non-flying activities.
Take, for example, your credit card. Now, bring it to London's New Bond Street and buyables galore. Buy this Patek Phillipe watch. You'll not only get the watch, but you'll probably get enough miles so you're well on your way to your first trip.
Owen Kelly knows a thing or two about frequent flier points. Over the past 10 years, he's collected at least three million of them.
OWEN KELLY, FREQUENT FLYER: I think in the last 30 days, I've done Sydney to Singapore, Singapore to Dubai, Dubai to Jeddah, to Riyadh, back to Dubai, to Singapore, back to Sydney, to Hong Kong, to Shanghai, back to Dubai, here to London, back to Dubai tonight, back to Sydney on Saturday.
QUEST: Owen boards a plane every second day. But the bulk of his air miles don't come from flying.
KELLY: The main way is by using our credit card for just about everything. You know, I have an American Express black card. We put all of our travel on that. We put our groceries, our laundry, our petrol, all of the normal costs go on your credit card. But it did surprise me how quickly they build up.
QUEST: When it comes to choosing a credit card to earn air miles, prepare for a confusing and complicated search. There are about 900 different options on the market.
Most offer around the same number of points per dollar spent. What you're really looking for are the bonus offers, the interest rates, the annual fees, and ways to spend your miles.
One of the most popular schemes is American Express membership rewards to buy anything from hotel stays, car [unintelligible] gifts, and even transfer your miles to get flights.
The advice from the experts is to know what you want.
UNKNOWN MALE: You have to know whether flexibility is more important to you or whether you want to have -- you really want to be tied to a frequent flier program. If flexibility is what you need, you should go for a generic card, like American Express or Diner's Club, because they've got the flexibility to transfer your points to different kinds of frequent flier programs afterwards.
QUEST: The number of miles you can earn as you sleep varies from one round to the next. But keep on top of the schemes, because in many cases, one hotel brand or another will be offering trickle miles.
And always remember the golden rule: never pass up the opportunity for earning points or miles, even when it comes to renting cars. All the major companies have their own programs. They'll give you points or frequent flier miles.
They can then be used either up in the air or on the ground.
Since we reported last month on our update on the super jumbo, there's been big changes at the top of Airbus and EADS, with the resignations of Noel Forgeard and Gustav Humbert.
But as to the plane itself, we thought it was worth explaining where the problem lies. It's in the A-380's wiring system. If one cable doesn't work, they all have to be unbundled and the replacement wire rethread.
Singapore Airlines was due to take its first paying passengers in December. The airline says it won't be delayed, but no one really believes that will actually take place on schedule.
For Airbus, the December deadline is crucial.
UNKNOWN MALE: It's fundamental because, again, you have airlines today that are growing internationally. These airplanes are needed to fly between the major hubs for these early customers.
QUEST: And we'll continue tracking the A-380's progress in Business Travellers monthly countdown to the super jumbo.
We have crossed oceans and continents collecting these frequent flier miles.
Coming up after the break, discover where I've decided to spend some of these precious points.
Before that, though, a new feature on Business Traveller. We are going to answer your travel queries and get answers from the experts.
Send me your questions to Quest@cnn.com. We'll find the expert and we'll give you the answer.
(COMMERCIAL BREAK)
QUEST: That's Dubrovnik in Croatia. After all this travel, I've decided to use some of my miles for a bit of a rest. I'm using part of those I earned on the mileage run in Dallas for a one world alliance reward and I've flown from London to Dubrovnik.
This should give me a bit of rest and relaxation after all that travel.
The drawbridge entrance of Ploce Gate. It all sets the tone of this charming coastal town. Architecture that's baroque and renaissance. Dubrovnik exudes the romanticism that inspires fairytales.
How different it was 15 years ago. Then, this medieval town was a nightmare, as Dubrovnik came under siege during the breakup of Yugoslavia in 1991.
HAVEY BARELLO (ph): The city has been constantly shelled from the Zarkovica hill.
QUEST: Zarkovica.
BARELLO (ph): Zarkovica. It's really from here that all the impacts in the main streets are caused by the shelling.
QUEST: Havey Barello (ph) has been giving tours for more than 30 years. She was born in this old town and she lived just behind that cathedral.
The rector's palace, who was the rector?
BARELLO (ph): The rector was the head of state. It was the time when only noble men could vote and be elected.
QUEST: This is only men. This isn't women.
BARELLO (ph): Men, yes, from the age of 20. It's a rector place. It's a place for meditation and, say, contemplation.
QUEST: Fifteen years seems a long time ago, because Dubrovnik has been restored to what it once was and is now a high end tourist destination.
Here it's generating 11 percent of Croatia's tourism income. And in the heart of that old town, the Pucic Palace, where aristocrats and senators once stayed, 750 years old and it's still welcoming guests. Each of the 19 rooms is named after famous Croatian poets, artists and mariners.
If the crowds in Dubrovnik have become too much, the best way to see the Croatian coastline is, of course, from the Adriatic. I'm aboard Caracca (ph), a replica medieval warship. This is the way to see things.
Escaping in the old city of Dubrovnik. In the Sponza Palace, which was the traditional financial accounting house, is the perfect place for us to tally up how many miles I've actually earned in making this program. An impressive total it makes.
My first flight from London to New York came back via Chicago and that netted me over 17,000 points.
When I went to do the mileage run in Dallas, there were more miles, both in business class and as a gold member.
All in all, it racked up 33,000 points, 30,000 were bonus. And then there was that business class trip to Kazakhstan. Thousands more points on the program. Touring swelled it even more. Add in cars, hotels and credit cards, and my assignments have earned me 87,505 points.
But what's the fun in earning the miles if I don't spend them? So I converted 20,000 points earned from my mileage run on American to fly from London to Croatia.
By my reckoning, I've still got oodles of miles left and it's only July. Perhaps I'll give some of them to charity.
Just look at the results here in Dubrovnik. Do you know 70 percent of those roof tiles had to be replaced after the war?
Well, that's CNN Business Traveller for this month. I'm Richard Quest, reporting from New York, from Dallas, from Almaty, and, of course, from Dubrovnik in Croatia.
Wherever your travels may take you, I hope it's profitable and rich with miles.
I'll see you next month.
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