Issue #54  --  August 12, 1999

<< U P F R O N T >>

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The Crier is a BestEzine!
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BestEzines reviewed The Crier this week, and (thankfully) had only good things to report. You can read the review of The Crier and other e-mail newsletters on the BestEzines site.

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BestEzines

<< M I L E S >>

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United Scraps Mileage Expiration
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Less than one week after American Airlines made a similar change to its program, United Airlines announced that Mileage Plus members' frequent flyer miles will no longer expire, provided the members earn or redeem miles at least once every 36 months.

In addition, United will reinstate 1998 expired miles to members who register and take either two paid domestic roundtrips or one paid international roundtrip on flights operated by United, United Shuttle or United Express between August 9 and December 31, 1999. Once that requirement is satisfied, all miles in a Mileage Plus member's account through 1999 will be valid until Dec. 31, 2002 and will expire on that date only if a member has no qualifying activity between Jan. 1, 2000 and Dec. 31, 2002. As of Jan. 1, 2000, a new 36-month non-expiration period will begin each time a member has qualifying account activity by earning or redeeming miles.

Information on mileage reinstatement and registration is available 12, at http://offers.mileageplus.com/mpw049 or by calling 1-800-645-4502 (enter promotion code 49).

To keep miles active in the future, a qualifying activity is required, including any of the the following:

.. Taking a paid flight on United, United Shuttle, United Express, Star Alliance members or other airline partners (more than 20 participating airlines)
.. Making a purchase with a Mileage Plus Visa/Mastercard
.. Earning miles on long-distance calls with MCI WorldCom
.. Staying at any of the 27 Mileage Plus hotel partners
.. Renting a vehicle through any of the 8 Mileage Plus car rental partners
.. Taking a paid cruise on any of the 4 Mileage Plus cruise line partners
.. Redeeming miles for a Mileage Plus award
.. Using thousands of other partners and service providers that offer Mileage Plus miles

While United's action is a direct response to American's initiative, there are some noteworthy differences between the two. Firstly, United includes redemption as a trigger for mileage extension, whereas American only counts mileage accrual activity. United says, in effect: "We'll keep your miles valid as long as you show the slightest sign of life, account-wise." American says, "We'll extend the life of your miles as long as you continue spending." There's an extra dose of generosity in United's approach--a feel-good advantage, if not a substantial practical one.

Also generous--and also in contrast to American's move--is United's allowing Mileage Plus members to reactivate miles which expired in 1998. Yes, there's a condition which must be satisfied, but it's a reasonable one.

All in all, United's policy change is a welcome one for Mileage Plus members, and for the frequent flyer community generally.

>> More <<
United's website

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Next...?
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Now that expiring miles have been laid to rest in U.S.-based programs, frequent flyers' wish lists will focus on foreign carriers' policies.

Most non-U.S. programs continue expiring miles after 3 years, whether the member is active or not. In a global marketplace--where travelers living in Europe or Asia or elsewhere have a choice of airlines and frequent flyer programs--carriers with expiring miles may well find themselves losing customers to carriers which adhere to the more generous "U.S. model" (as we can now refer to it).

Free marketing advice to foreign program operators: Be the first in your region to adopt a policy which allows miles to remain valid as long as the member remains active. There are at least 3 compelling reasons to do so:

* You'll do well by your members.
* You'll be a step ahead of your in-country or in-region competitors.
* You'll at least be at parity with your U.S.-based competitors.

Allez! En delay! Gambatte!

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Charge it, on Amex, at Costco
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American Express and Costco this week announced that American Express cards will be accepted at Costco.

A low-margin commodity retailer like Costco accepting the upscale Amex card? That would have been unthinkable until pretty recently. Indeed, they still seem like unlikely bedfellows. But it's consistent with Amex's recent moves to broaden and deepen the base of merchants which accepts its cards, by expanding its focus from travel & entertainment to everyday purchases. Recent promotions have awarded cardholders with double Membership Rewards points for purchases of such close-to-home items as gas and super market goods.

In an ironic twist on exclusivity, American Express is not only the first but the only of the three big card companies accepted at Costco warehouse clubs in the United States. In this case, the "It" in "It's everywhere you want to be" isn't the "It" you thought it was. Got that?

Cardholders enrolled in the Membership Rewards program will be able to earn points on all their purchases at Costco.

>> New Cards for Costco Members
In addition to the above, American Express and Costco also announced plans for two new co-branded cards, one for consumers and one for small businesses, to be introduced in November, 1999. These co-branded cards will also act as Costco membership cards and can be used anywhere that American Express is welcome.

The new consumer credit card will have no annual fee and will reward cardholders with Costco rebates based on all spending placed on the card.

The new small business charge card developed for Costco members will have no annual fee with a paid Costco membership and no pre-set spending limit. It will also offer discounts on a range of products and services directly from companies like IBM, Federal Express, Mobil, Hilton and Hertz.

The consumer co-branded card will have its own incentive program associated with it, and therefore won't earn Membership Rewards points. The small-business card can be linked to Membership Rewards.

>> More <<

o Amex
o Costco

<< S T E A L S & D E A L S >>

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Lufthansa Online Auction
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Lufthansa will hold another in its series of live auctions on its website on Aug. 18 and 19, offering U.S. travelers pairs of Economy Class tickets to more than 20 Lufthansa destinations around the world.

In a previous auction in June, buyers purchased tickets at discounts ranging up to 70 percent. Two tickets from San Francisco to Munich, Germany, valued at $2198, sold for $1110. A Los Angeles couple purchased $5164 tickets to Johannesburg, South Africa, for $1360.

Lufthansa will post the auction schedule on its Web site by Thursday, Aug. 12. The first pair of Los Angeles tickets, roundtrip L.A.-Paris, will go on the block at 2:20 p.m., Thursday, Aug. 19.

To participate, auction bidders must complete an online registration form and select a user I.D., but they need not post any credit card information.

In addition to destinations in Germany, Lufthansa will offer tickets to Tel Aviv, Israel; Paris; Vienna, Austria; Istanbul, Turkey; Hong Kong and many other cities in the airline's worldwide network. The auction will also include seven-day car rentals from Sixt Rent a Car.

Lufthansa will run the auction in a traditional fashion, but the auctioneer and bidders will communicate through the Internet. Bidding will begin at $10, and the auctioneer will accept and post incoming bids in increments of $10, $20 and $50.

Allowing 20 minutes per auction, the auctioneer will announce the winning bid after the third strike of a "virtual" hammer. Lufthansa will also notify winners by phone and e-mail.

From San Francisco, the German airline offers daily nonstop Boeing 747 services to Munich and to Frankfurt, Germany, the airline's primary hub in central Europe. Serving a dozen cities in the United States and more than 300 cities in 90 countries, Lufthansa carries more passengers worldwide than any other European carrier.

One caveat if you're planning to bid: to be sure you don't get carried away with auction fever and over-pay for your tickets, check beforehand and have available during the auction published and discount fares available through other channels. There's no law of Nature that insures that auction prices are the best prices.

>> More <<
Lufthansa's site

<< T R A V E L O N L I N E >>

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Rosenbluth Buys Biztravel
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Rosenbluth International, a business travel management company with the second largest presence in the world, has acquired Biztravel.com, a website for booking and planning business travel.

Under the terms of the deal, Rosenbluth International will establish a new affiliate company called Rosenbluth Interactive with the broader charter of personal and business travel. Rosenbluth Interactive will comprise two lines of business: Biztravel.com, a full-service business travel agency, and a full-service personal travel site which will be named at a later date.

.. Biztravel.com will target self-planned business travelers and the rapidly growing SOHO (small-office/home-office) market. The business will be able to leverage Rosenbluth established relationships with more than 6,000 major airlines, hotel chains, and car rental companies.

.. The new online personal travel site will make available a wide range of discounted fares to Rosenbluth International's broad base of business travelers and their families, as well as to the general public.

Rosenbluth International holds majority ownership in the new venture, and has established a network of strategic investors from the air travel, lodging, technology, and online industries that will hold stakes in the corporation. New investors include Continental Airlines, Marriott International, Sun Microsystems, and Excite@Home. Biztravel.com investors including Accel Partners, Comcast, Hummer Winblad Venture Partners, and New Enterprise Associates will maintain ownership positions in the new Rosenbluth Interactive. The Blackstone Group L.P. served as the financial advisors to Rosenbluth International, and PaineWebber, Inc. served as financial advisors to Biztravel.com in this transaction.

Rosenbluth hopes to capitalize on the projected growth in online sales of travel services. According to Jupiter Communications, the market is expected to grow 67% annually over five years, from $911 million in 1997 to approximately $11.2 billion in 2002.

Marrying Biztravel.com's technology and business-traveler client base with Rosenbluth's customer service support and volume discount relationships should position both companies well to profit from Internet sales growth, as well as from online buyers' rising customer-service expectations.

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o Rosenbluth
o Biztravel.com

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ASTA Petitions Fed to Investigate Online Fare Sales
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"Internet Fare Deals Discriminate Against Disconnected Travelers" That's the subhead on the ASTA (American Society of Travel Agents) press release signalling the start of their newest crusade.

ASTA this week fired off a letter to Department of Transportation Secretary Rodney Slater calling for a formal investigation of airline Internet "fare wars" to determine whether they constitute unfair and deceptive competitive practices under the Federal Aviation Act by discriminating against "unwired" consumers. The current airfare war involves special low fares and other inducements only accessible via the Internet, some of which we report here in The Crier.

Citing a recent U.S. Commerce Department study that outlines the ever-widening "Digital Divide" -- the gap between wired households and households without computers -- the letter points out that cut-rate fares and special Internet booking bonuses are being offered exclusively to those elite consumers who have Internet access, while those who need the low fares the most -- the economically disadvantaged -- are unable to access them. "The American public is entitled to full and equal access to all fares, regardless of the technology to which they have access," the letter from ASTA President and CEO Joe Galloway states.

The Internet fare war "might seem good for consumers, but the fact is, as recently reported by the U.S. Department of Commerce, these 'benefits' are available only to the elite of consumers who have access to the Internet. The rest of society is excluded from access to the lowest fares and the gap between those who can get them and those who cannot is widening," said Galloway in the letter.

The Commerce Department study, published last month ("Falling Through the Net: Defining the Digital Divide," July 1999, cites the widening gap between the haves and the have-nots created by the Information Superhighway. The introduction to the study describes this issue as "one of America's leading economic and civil rights issues." The letter to the DOT goes on to state: "That is an extraordinary but accurate statement of a problem that impacts Americans throughout the country and in every walk of life."

The letter further states: "ASTA has been trying to bring this issue to the forefront in our legislative campaign deriving from the issue of air travelers rights that has gained much Congressional and media attention in recent months. The issue of discrimination through special Internet fares is directly connected with travelers' rights, because the discrimination prevents many consumers from getting the lowest fares and because, in the long run, the airlines' strategy will eliminate the access consumers now have to comparative price and service information through independent sources such as travel agencies."

This is horse puckey (sp?). ASTA's charter is to serve and protect the travel agency community, so we'll forgive them a smidgen of overstatement. But this is overreaching at best, flat-out ridiculous at worse. ASTA's real concern is that the mom-and-pop and mid-size travel agencies aren't equipped to make the transition from Main Street storefront to online shopping cart. And of course, if ASTA's constituency falls through the net, so will ASTA itself.

ASTA should be helping smaller agencies come to grips with the emerging world of electronic commerce, not questioning its inevitability The Information Superhighway is a'comin, whether ASTA likes it or not. They can either find a way to participate--no small challenge--or resign themselves to a future as roadkill.

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o ASTA's website
o The Commerce Department report

<< I N D U S T R Y N E W S >>

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Kelleher Has Cancer
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Southwest Airlines announced that Herb Kelleher, its chairman, president, and CEO, will begin radiation treatment for prostate cancer at MD Anderson Cancer Center in Houston. Kelleher will receive brief treatments each weekday for approximately eight weeks.

The cancer was found during a routine annual prostate examination, and Kelleher was then given an extensive and exhaustive series of tests and examinations, which produced a "clean bill of health," except for the prostate cancer itself.

Kelleher will be in his office every morning and early afternoon during the course of his treatment and quipped, "It would be my guess that our officer group is probably somewhat disappointed that I will be in my office more than normal during the treatment period, since ordinarily I travel several days per week."

Kelleher, 68, co-founded Southwest Airlines in 1971, was named chairman in 1978, and assumed the titles of president and CEO in 1981. Last month, Kelleher was named "Chief Executive of the Year" by Chief Executive magazine.

Within the industry, Kelleher is known as the Bad Boy of airline executives, smoking and drinking (Wild Turkey) and generally acting without regard for executive decorum... and much loved by Southwest employees as a result. His lifestyle, and now his cancer, are likely to intensify discussion in the SW boardroom of Kelleher's successor.

We wish him well.

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

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Think Global, Act Local
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[The following was received from a Crier reader in France.]

Congratulations for your 52 edition of the newsletter!

Please allow me to suggest that an overview of other FF programs and deals should be covered. e.g. a cover for the European based passenger...... Hopefully in time your news letter will reflect the global village.

 - moi

[I responded to "moi" directly, but it's a fair criticism and deserves to be addressed publicly since we have many readers in many countries outside the U.S. Regrettably, we have to plead insufficient resources. While we follow developments in non-U.S. programs, we simply don't have adequate editorial and research staff to follow and report on them exhaustively. That's not likely to change in the near term, so I can't make any promises that things will improve soon. While we are admittedly short on overseas program coverage, I do hope that there is something to be gained from our general approach to the subjects we address: a value orientation, and a customer-oriented focus.]

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Dining-for-Miles Programs
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Hi Tim:

A suggestion for a new tagline: "May You Always Get A Seat", in light of the difficulties that, A) one sometimes finds when trying to book an award reservation; and B) in light of the bumping of passengers on overbooked flights. OR - "Wishing you Unlimited Upgrades" (for obvious reasons).

I can't begin to tell you how much I enjoy reading "The Crier". And now, for your "rants and raves" section:

Regarding participation in the mileage Dining Programs: I hope that readers know that the same company manages all the major airlines' dining programs. I'd first like to see the company that manages the program, Signature, be able to keep their own programs straight. I enrolled in Delta and American's dining programs, with separate credit cards in each.

When US Airways began to offer a dining program, I cancelled my Delta participation and switched my credit cards to the US Airways program. I was receiving miles at first; but then, I noticed that postings stopped. When I called Signature, their computer now showed my Delta account as active, and both my American and US Airways accounts had been closed. All of this was done without my knowledge or consent, including the jockeying of my private credit card numbers. Moreover, since only three cards can be registered, about two months worth of purchases of mine were lost. Signature Corporation's response to me was, "That's too bad". They insisted that they couldn't even offer me comp miles, a token of apology, or anything - which is untrue - even AFTER they admitted their mistake. I lost nearly 10,000 miles.

Overall, It's rewarding to be in programs like this. Now, however, I'm careful to monitor and manage my dining programs monthly. It's worth 20 minutes of phone calls to make sure they don't mess things up again. Incidentally, I dropped a short note to each FF program to let them know about the gaping holes in a program which they endorse. Delta and American made no response. However, I did get a personal letter from a US Airways Dividend Miles rep, who apologized for the trouble. I was impressed that they took the time, but it made me feel good about my commitment to the airline.

May you always have a seat.... and may your upgrades be unlimited!

 - Steve

[Steve -- I did respond to your e-mail, but my response bounced.]

Until next week...