Travel Industry's Pain, Travelers' Gain

Troubled times create mileage windfall for frequent flyers.

November 23, 2001 - On August 23, Len Harris and his wife flew from Boston's Logan Airport to Los Angeles International Airport on American Airlines flight 11. On September 11, that same flight -- and very likely the same flight crew and Boeing 767 -- slammed into one of the World Trade Center towers, the first of the terrorist strikes which have so profoundly shaken the country and brought the travel industry to the brink of insolvency.

Like millions of others, Harris, president of a vending-machine business serving the Boston area, hasn't set foot on an airplane since September 11.

Undermining Travel: Fear, Financial Concerns

In the wake of September 11, the conventional wisdom on the subject of travel is simple: Don't! The fear factor remains very much in evidence, even two months after the destruction of the World Trade Center towers and the assault on the Pentagon.

While Harris himself feels no apprehension at the prospect of returning to his old travel regimen, his wife does. "If my wife weren't afraid to fly, we would have taken advantage of the promotions. I wanted to go to the Patriots away game, but my wife wouldn't hear of it."

And where fear is not a factor, the weak economy is. Against a backdrop of plunging profits and shaky stock prices, companies large and small have cut travel spending to the bone, mandating that any "non-essential" travel be deferred and replaced by phone or video-conferencing.

Air Travel: Sluggish Now and Slow to Recover

The one-two punch of anxiety and recession has brought the airlines to their knees.

During the month of October, the U.S. airlines carried 25% - 30% fewer passengers than last year. Even more troubling than the traffic decline is the revenue hit, reflecting a disproportionate decline in high-priced business fares. Delta, for example, reported that passenger revenues had decreased as much as 40% in the wake of the terrorist attacks. And the company doesn't expect a rebound until the latter half of 2002.

The combination of dismal recent performance and pessimistic expectations for a turnaround in the short term have pushed the airlines -- and the hotels, rental-car companies and other travel-driven industries -- into aggressive marketing mode, trotting out all manner of traffic-stimulating schemes.

The Airlines' First Response: Double Miles

Chief among those tactics have been the double-mile offers deployed by most airlines.

Air Canada was the first North America carrier to launch a double-mile promotion. Among the U.S. carriers, American was the first, on October 2, to play the double-miles card, at the same time introducing a sale on award tickets and extending the status of current elite members an extra year, through February 2003. Delta matched the mileage offer and raised the ante by counting the bonus miles toward elite status. Within days, most other carriers had mileage promotions and award sales in place. And when Delta extended double miles an extra month, from November 15 to December 15, there was again a headlong rush to do the same.

The current crop of double-mile promotions shouldn't be confused with the familiar route-specific offers, which are limited to individual flights in need of marketing support during low-demand periods. The post-9/11 double miles are offered systemwide, on every flight, every route, domestic and international alike.

More Miles, Cheaper Fares, or... ?

Melody Lombardo is exactly the sort of customer airlines and hotels covet.

Lombardo, a Baltimore-based consultant who enjoys elite status in the US Airways Dividend Miles and Marriott Rewards programs, travels often and pays top dollar for tickets and room nights. And if her reaction to the travel industry's "come hither" promotions is any indication, the airlines have miscalculated the power of miles to overcome consumer resistance.

Lombardo pooh-poohs the mileage offers, asserting that the travel suppliers were "not offering any great incentives." She went on to say that if the airlines "are serious about getting customers like me back on airplanes, they'll have to appeal to what is most important, our pocketbooks."

Lombardo, who has no fear of flying, even questioned the value of miles as a motivator, citing recent customer-service lapses and redemption glitches.

For Eric Somers, an attorney living in San Francisco, "it's business as usual."

Somers travels often, both for business and for pleasure, and could only think of one thing the airlines could offer that would make him fly more often: time. More miles, lower fares? "Nice to have. But it wouldn't change anything." He did allow, however, that on a trip he had to make anyway, he would fly the airline which offered bonus miles over one that didn't.

To Contrarians Go the Rewards

Whatever verdict history ultimately hands down on the wisdom of unleashing double miles to jumpstart travel, the offers are there for the taking.

In earning miles as in investing, the greatest gains are often reaped by those who are willing to swim against the tide, eschewing conventional wisdom in favor of zigging when everyone else zags.

For many, traveling now is a bit like investing in more Cisco stock after the shares have lost 50% of their value and every fiber of your being screams "Sell, sell, sell." But for those willing to travel, the rewards can be substantial.

Ready? A summary of the airline and hotel promotions is here.