U P F R O N T

Airline Recovery Is Nowhere in Sight
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This week, the airlines announce their 3rd-quarter financial results. It won't be pretty.

As of midday Wednesday, Delta had weighed in with a $326 million loss for the period, prompting the following from CEO Leo Mullin: "Clearly, today's results are disappointing. Our industry is experiencing unprecedented financial challenges."

American announced a $924 million loss, but assured investors that liquidity stood at $2.8 billion. (When the subject of liquidity is raised, we should be anything but reassured.)

And United, in advance of releasing its earnings report, is using the B-word again, repeating earlier warnings that a bankruptcy filing may be in the offing.

More next week...

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

In the Doghouse: Hertz
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Effective Oct. 1, Hertz customers began paying 50 cents per day, up to $2.00 per transaction, if they choose to earn airline miles for most rentals.

According to Hertz, "The amount assessed is collected by Hertz to offset a portion of Hertz' annual cost of participation in Frequent Flyer programs."

Since the standard Hertz earning rate is 50 miles per day, the new surcharge amounts to paying a penny for every mile earned. My educated guess is that Hertz is buying those miles from their airline partners for less than 1.5 cents each. So Hertz is offsetting not just "a portion" but the bulk of its frequent flyer mile expenses.

To be sure, you'll pay extra to earn miles with Alamo, Avis, Dollar and National as well. But their so-called Frequent Flyer Tax Recoupment Surcharge amounts to 6 or 7 cents per day, a small fraction of the Hertz assessment.

For the time being, Budget and Thrifty do NOT charge extra to earn miles, although Thrifty is on the verge of doing so.

[Quick historical note. The mileage surcharges trace back to the 1997 Taxpayer Relief Act, which imposed a 7.5% Federal Excise Tax on the sale of frequent flyer miles. In stark and unflattering contrast to their hotelier counterparts, the rental-car companies began passing along the cost of the tax, but not of the miles themselves, to customers.]

The Hertz move is objectionable on 2 counts...

First, it's just more nickel-and-diming from the travel sector. That's maddening from a consumer standpoint. And more broadly, it's another self-imposed injury by an industry that seems intent on alienating customers just when it needs them most.

Second, even assuming Hertz makes a good-faith communications effort -- which they have a vested interest in NOT doing -- these surcharges must as a practical matter be buried in the contractual fine print. Which means that a portion of Hertz' renters likely will never know that they're being dinged for the miles. And others will assume that Hertz follows the industry standard, charging an extra few cents for miles.

Hertz took an unfortunate trend and made it worse, adding injury to insult.

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

Alaska Doubles Miles to Newark
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To promote the launch of new service to the East Coast, Alaska Airlines is offering Mileage Plan members double miles on flights between Seattle and Newark from Oct. 28 through Dec. 31.

Registration is not required.

> More...

Int'l Northwest Flights Earn Alaska Air Bonus
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Earn up to 10,000 Alaska Airlines Mileage Plan bonus miles when flying Northwest to Europe or Asia.

Between Oct. 1 and Dec. 31, fly round trip on Northwest Airlines from Seattle, San Francisco, or Los Angeles to Amsterdam or Tokyo and beyond to earn 10,000 bonus miles roundtrip (5,000 one-way) for business class (J/C/Z) and 5,000 bonus miles roundtrip (2,500 one-way) for economy (Y/B/M/H/Q/V/K).

> More...

AAdvantage First/Biz-Class Awards Bookable Online
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AAdvantage members can now book first- or business-class PlanAAhead awards, using 40,000 AAdvantage miles for travel within the continental U.S. and Canada, on AA.com. The 25,000-mile PlanAAhad coach award was already bookable online.

The new award-booking feature can be used for award travel on American, American Eagle or AmericanConnection flights.

> More...

America West/Hawaiian Flights Pay Bonus Miles
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FlightFund members will earn 3,000 bonus miles for roundtrip flights on America West/Hawaiian Air code-share flights originating or connecting in Phoenix. Tickets must be purchased between Oct. 11 and Dec. 31, 2002, with travel completed by Mar. 31, 2003.

Register for the promotion using the link below.

> More...

Diners Points Worth More WorldPerks Miles
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Through Nov. 30, Diners Club Rewards points can be redeemed for 25% more Northwest WorldPerks miles.

The minimum transfer is 2,000 Club Rewards points, which will net you 1,250 WorldPerks miles with the bonus.

> More...

Points.com Offers Sign-up Bonus
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Sign up for a $14.95 Points.com membership and earn 500 bonus miles from Air Canada, Alaska Air, American, or Delta, plus a $10 discount on FTD.com purchases. The offer has no end date.

There's a Midwest Express version as well, with an Oct. 30 termination date. Use promo code YX1420 when signing up at the Points.com website.

Points.com members may transfer points among participating airline, hotel, retail and telecommunication programs.

> More...

United Visa Card Awards 15,000 Miles
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If you're looking for an airline-affiliated credit card, the current enrollment offer for the United Mileage Plus Visa makes it a contender.

New cardholders receive 15,000 bonus miles after the first purchase, plus a $25 United Discount Travel Certificate, plus a one-way, 1,000-mile one-class Upgrade Certificate.

There's a $60 annual fee. APR: 14.65% variable (Prime + 9.9%).

> More...

Bid Dividend Miles for Caribbean Trips
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Dividend Miles members can bid miles to win either of 2 Caribbean travel packages, to St. Kitts or Belize.

Place bids by Dec. 15, at http://usairways.com/dm/bid-cab, by e-mailing your bid to auction@usairways.com, or by calling the Dividend Miles Service Center. Winners will be announced and notified by Dec. 20, 2002.

Bid a minimum of 80,000 miles for the 8-day/7-night trip to St. Kitts, including first-class air, or 40,000 miles for the Belize trip, in coach.

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...

Coast-to-coast winter travel from $158 R/T
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If you need to get to New York on business, or want a glimpse of the stars in Los Angeles, fly for just $158 roundtrip with ATA's new sale on cross-country fares. Travel is permitted through Feb. 12, 2003. Book tickets online only and by Sunday, Oct. 20.

> More...

Winter airfares to England starting at $228 R/T
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Fly to London with sale fares from British Airways and Virgin Atlantic from the U.S. In addition, American is offering savings to London and Manchester, England. Travel is valid through Mar. 31, 2003, but booking deadlines vary by airline. For all 3 airlines, a 7-day advance purchase is required.

> 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 can't resist taking a shot at Air Canada, given the honorable mention of the new Destina.ca program. My thought also addresses your comment about how mileage programs are alive and well.

"As an Aeroplan Elite customer with Air Canada, I had been extremely happy with their program and benefits for years, that is, until this year. I have accepted their financial reality resulting in giving me miles that vary according the fare I pay, removing my right to bring a guest into the Maple Leaf Lounge sites, and so on. What I can't accept is the act that Air Canada has reduced the number of seats available for reward travel to barely a trickle. Since the "new, improved" Aeroplan website is so slow and useless, you have to call them, and when you do, you find that their staff commiserates with you, complains that Air Canada gives them very little to work with, and agree that it is a poor situation. Thanks to the alliance partnerships, I have able to use Aeroplan reward miles with United Airlines, who treated me very well in every respect. As I have explained in writing to Air Canada and Aeroplan, I am fortunate that almost all of my 40,000 - 50,000 miles per year take me to the US, where I have a choice of carriers. Sadly, for intra-Canadian travel, no significant competition exists, which might explain Air Canada's indifference towards the customer.

"So far, they have failed to respond to my letters and concerns, and do not even make a "contact us" e-mail service available on either the Air Canada or Aeroplan websites. They have done an excellent job of marketing the Aeroplan rewards program, adding new participants, but this is of questionable value when you can't seem to redeem the rewards. There have been some plainly unfair business practices, also, which I brought to their attention, and to their credit, the Aeroplan folks resolved them satisfactorily, although it took several months and some reminder letters aimed at the office of their president to resolve them. I'll spare you the details, but will leave you with the thought that the appearance of Air Canada's Aeroplan reward program is one of a vibrant and valuable benefit, but the reality from a customer's experience is quite clearly the opposite."

- John

S W E E P S T A K E S & F R E E B I E S

Win a Trip to Australia from the N.Y. Times
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Win a 12-night trip for 2 to Australia, including roundtrip air and hotel accommodations, in the New York Times Digital "Treasure Hunt" sweepstakes. No purchase necessary.

Enter by Nov. 7. Open to U.S. residents who are at least 18 years of age or older.

> More...

[Other travel-related sweepstakes and giveaways are online here.]

Until next week...