The Extra Mile

American adds fees for upgrades

October 29, 2004 - Beginning Dec. 1, members of American's AAdvantage program who use their miles to upgrade from discounted coach fares between the U.S. and Europe, Japan or some countries in Latin America will be charged $250 in addition to the 25,000 miles normally collected. That's for a one-way upgrade, so a roundtrip will cost 50,000 miles plus $500.

In announcing the change, American defended the new fee by citing the low prices currently charged for discounted international coach tickets. "With fares so low, the disparity between discount and premium class fares is too great to be offset by miles alone. Rather than limit upgrades awards to full-fare tickets only, the addition of a co-pay will allow members to continue to use their miles to upgrade even if they purchase discounted tickets."

Established in 1981 and now boasting more than 48 million members, the American AAdvantage program is both the first and the largest program of its kind. As an industry trend-setter, it also establishes the pace for other mileage programs.

So American's latest move might be viewed as bad news not just for AAdvantage members but for members of the programs of other airlines, which would be likely to emulate American's new policy.

But among the Big 6 airlines, only Continental allows mileage upgrades from most discounted coach fares, and Continental already charges a cash co-payment of up to $400 each way, rising to $450 in 2005. In that context, American's mileage upgrades look like a bargain, even factoring in the upcoming co-payment.

Still, for consumers who look to mileage programs for recognition and rewards, this is yet another step in the direction of undermining the programs' value with onerous fees and restrictions.

Upgrades requested on or before Nov. 30 will not incur the new co-payment, so AAdvantage members still have time to snag a fee-free upgrade.

Readers: Miles on their Minds

Question - I have an award trip reserved for Spring of next year (because that's the earliest that seats were available). With the reports that Delta could declare bankruptcy, I'm getting worried. What would happen to our tickets?

Answer - Both United and US Airways are in Chapter 11, and there has been no effect on their program members' ability to earn or redeem miles. Similarly, if Delta were to declare Chapter 11, award travel likely would only be affected if the airline stopped service to the destination booked. In that case, Delta would re-book the passenger to the closest city, or redeposit the miles for use on an alternative itinerary.

Of more concern, and much less likely in the foreseeable future, is the scenario in which Delta ceases operations altogether.

Section 145 of the 2001 Aviation and Transportation Security Act mandates that U.S. carriers honor tickets of failed airlines, on a space-available basis, for a service charge of no more than $50. The Act is scheduled to sunset on Nov. 19, but Congress is considering extending protection for stranded passengers for an additional year. While Section 145 does not specifically mention frequent flyer award tickets, most industry-watchers expect that surviving airlines would treat award travelers and revenue ticket-holders alike.

Even if the extension is not enacted by Congress, airlines will probably honor its spirit -- motivated not by altruism, but by the chance to gain the goodwill and future business of travelers whose airline has been grounded permanently.