U P F R O N T

Airlines Report (Gulp) Record Losses
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The results are in. And to no one's great surprise, the 4th-quarter and full-year earnings for the largest U.S. carriers were dismal. Except, that is, for AirTran, JetBlue and Southwest.

                   * millions

This was United's 10th consecutive quarter without a profit. Total cumulative losses since their last profitable quarter in 2000: $5.5 billion.

American's loss for the year was the largest ever, for any airline. They beat out the previous record, United's 2001 loss of $2.1 billion, as well as United's 2002 loss of $3.2 billion.

Dubious distinctions, to be sure.

B-A-A-A-A-A-D D O G G I E

In the Doghouse: Delta
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In these days of record losses (see above) and airlines desperately reinventing themselves, change is predictable if not inevitable. And some of those changes are bound to be wrenching for consumers, whose collective temperature is rising.

Delta in particular has come in for drubbing from its customers, in 2 distinct areas, both SkyMiles-related.

1) "Due to a technical error..."

First, following up on last week's criticism of US Airways for their failure to communicate the "for your eyes only" restriction on a recent promotion, we've heard from a number of SkyMiles members who were similarly burned. They were so advised with the following e-mail from Delta:

"... Late last year, you registered for the Delta promotion, "92 Ways to Earn," which offered 1,000 bonus miles for using a SkyMiles partner or 5,000 bonus miles for taking a Delta-operated flight. Unfortunately, only SkyMiles members who were recipients of the direct mail piece from Delta were eligible for this nontransferable offer. And, due to a technical error, you were allowed to enroll and earn bonus miles during the promotion period, September 1 through December 1, 2002.

"On your February SkyMiles statement, you will notice that these bonus miles have been removed from your account."

This problem obviously affected more than a few SkyMiles members, since Delta drafted a form letter to address it. And that form letter acknowledges that there was a "technical error" which allowed SkyMiles members to earn a bonus which Delta failed to identify as a restricted offer.

My advice to Delta, on behalf of Linda and Parker and anyone else in their "class": those miles should be reinstated.

2) Delta Taketh Away, Again

The SkyMiles changes announced by Delta in Dec. 2002 have elicited as much negative consumer feedback as any mileage-program change I've ever seen.

That anger is crystallizing around the efforts of a small group of Medallion members who have banded together to fight the changes. The goal: to convince Delta to reconsider some of the more odious changes, much as United and US Airways have done with recently announced (and subsequently rescinded) changes to their elite programs.

The group is seeking an audience with Delta management to air its concerns. And they've already raised $3,000 to be used if necessary to publicize their grievances.

According to one of the informal group's leaders, Bruce Schobel, a New York-based actuary, 2 Million Miler on Delta and United 1K member: "We're not lunatics. We're looking for a few concessions, reasonable changes, so we can stay with Delta without feeling like suckers." A recurring theme in Schobel's remarks was his desire to save Delta from harming itself, a sentiment which should complement Delta's own. "Delta's program is no longer competitive with those of other airlines, and we believe that this will drive away customers. Basically, we support Delta (I personally have been flying at the top elite level for almost 20 years). We don't want to see our favorite airline destroy itself."

For more on the "Save SkyMiles" initiative, visit http://saveskymiles.com/. This site was established to protest an earlier round of SkyMiles changes, and is being updated to reflect the latest points of contention.

Delta would do well to listen to its own best customers.

M I L E S & P O I N T S

Alaska, Cathay Link Programs
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Alaska and Cathay Pacific will participate in each other's frequent flyer programs beginning Feb. 19.

The start date is for mileage accrual. Redemption will begin "later this spring," exact date to be announced.

Sky Pearl Adds Ctrip
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China Southern Airlines' Sky Pearl Club has a new partner: Ctrip.com, China's leading hotel reservation network.

Sky Pearl Club members will earn 3 miles for every 10 RMB ($1.20) spent on room charges, excluding additional hotel charges.

China Southern reports that Sky Pearl currently has 1.7 million members.

> More...

Earn Double Delta Miles at 1-800-FLOWERS
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Between Feb. 1 - 28, SkyMiles members will earn double miles at 1-800-FLOWERS -- 600 miles for the first $29.99 plus 200 bonus miles per additional $10 spent.

To take advantage of this offer visit http://www.1800flowers.com or call 1-800-FLOWERS (1-800-356-9377) and use promotion code DEL and your SkyMiles number at checkout.

Bid Priority Club Points at Awards Auction
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Taking a page from the Continental OnePass playbook, Priority Club has launched a bid-your-points auction site in conjunction with mega-auctioneer eBay.

So far, the auction items are limited to predictable merchandise offerings, mainly sports equipment and consumer electronics, but look for more variety in future. (That 60" Sony plasma-screen TV has been bid up to a cool 411,000 points.)

> More...

US Airways, LatinPass (Now GlobalPass) Part Ways
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Effective Feb. 1, 2003, US Airways Dividend Miles members can no longer earn or redeem miles for travel on GlobalPass (formerly LatinPass) airlines. And GlobalPass members can no longer earn or redeem miles for US Airways flights.

Dividend Miles members have until Dec. 31, 2003, to complete previously booked award flights on GlobalPass carriers; GlobalPass members face the same deadline for award travel on US Airways.

See Leo's note in "Reader Rants & Raves" for a consumer's perspective on the breakup, and in particular on the lack of advance notice given by both US Airways and GlobalPass.

VS* Offers Dell Vouchers
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[* VS is the 2-letter code for Richard Branson's airline, the "other British airline," whose name we dare not mention for fear of triggering widely used content filters. Ridiculous but true.]

Through May 15, member's of VS's flying club will be rewarded with a $200 Dell gift certificate for Premium Economy and a $400 certificate for Upper Class trips from any U.S. gateway to London.

Pre-registration is required before travel commences. For reservations call 1-877-747-0123, or save $20 by booking online.

> More...

S T E A L S & D E A L S

Deal Alert from SmarterLiving.com
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This week's hot deals from SmarterLiving.com...

Sale fares to Aruba, the Bahamas, and more from $208 R/T
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Pick your favorite sunny spot in the Caribbean, including Aruba, Bermuda, the Bahamas, and Grand Cayman Island, and save with sale fares from American, Delta, and US Airways. Travel dates and booking deadlines vary by airline.

> More...

Fly Northwest to Amsterdam for as little as $214 R/T
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Northwest is offering some of the best prices to Amsterdam we've seen this year. For the lowest fares, depart from Feb. 6 through Mar. 9, and finish your travel by Mar. 31. Higher fares are also available for spring travel, from Apr. l - 30. Book tickets online only, at least 21 days in advance, and by Mar. 10.

> More...

R E A D E R R A N T S & R A V E S

This Week's E-mail Bag
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"I am an avid reader of your weekly newsletter and particularly enjoy your editorials. I thought I'd draw your attention to the recent frequent flyer split-up of GlobalPass (formerly known as LatinPass) and USAirways.

"On the surface, this is of course not big issue as frequent flyer partnerships start and end all the time. However, it is the way that this one ended that leaves a bad odor. GlobalPass member were given no notice whatsoever of the fact that US Airways was leaving their program. The first piece of info that would suggest something was up could be found on the US Airways web-site. GlobalPass only put something on their website on or after February 1st. January 31st was the last day for GlobalPass members to earn and redeem miles on US Airways. This breaks a long established precedent in the frequent flier industry of giving member at least a few months notice of partner changes within programs."

- Leo

"We just received a letter today from First USA Bank and Southwest Airlines with "Important information regarding your Southwest VISA account." The letter begins, "Effective with your billing statement that closes in April, 2003, the number of Reward Dollars needed to earn a Rapid Rewards credit with your Rapid Rewards VISA card at the time of billing will change from $1,000 to $1,200. However, all the other benefits you currently receive will remain exactly the same."

"The letter goes on to list some benefits and provides a customer service number for Cardmember services. When I called that number and asked about this the agent and his supervisor both said the same thing, "This was joint decision between Southwest and the bank." When I asked why they had decided to raise the requirement by a whopping 20%, they repeated the "joint decision" line. The letter was signed by Carter Warren, Chief Marketing Officer for First USA Bank, NA and also by Joyce Rogge, Sr. VP of Marketing, Southwest Airlines.

"A 20% increase in the number of miles (dollars spent) to earn a credit seems a bit steep. This means that one would have to spend $3200 more to earn the same free ticket as before. This kinda sucks for the consumer. Sort of takes the "Rapid" out of Rapid Rewards. Hopefully if enough members complain they might reconsider, but I won't hold my breath waiting for that to happen."

- Larry

Until next week...