No pat answers about miles awards when airline folds

By Jane Engle
Los Angeles Times

Publishing executive Linda Kaplan's hoarded frequent-flier miles include about 50,000 on American Airlines and 15,000 on United, both struggling financially. But she's in no hurry to redeem them.

"I'm a Pollyanna and I feel it's all going to work out," Kaplan says. "But then, I thought Cyndi Lauper was going to be big and Madonna was going to go by the wayside."

Tim Winship, publisher of FrequentFlier.com, is more pessimistic about the safety of his miles. The Los Angeles resident, who spent about 20 years working in airline award programs, is burning a bunch of American miles for trips this spring and summer to Florida and New York.

Award travel may not be at the top of your to-do list, given world tensions. But some people sitting on a pile of miles from troubled airlines are worried about what will happen if the airlines fold. Should they use the miles now or save them?

Here's what various experts said when these questions were posed:

• Will I lose my miles if my airline stops flying?

"The last thing airlines want to do is give up their frequent-flier programs," says Rolfe Shellenberger, who helped design the first one, American AAdvantage, in 1981. The programs are a cheap way to buy loyalty, he says. If an airline stops flying, he would expect at least its partner airlines to honor its members' miles. But there's no guarantee.

US Airways and Delta, which allow United's frequent fliers to redeem award travel on them as a partner airline, declined to say last month whether they would honor those miles if United stops flying.

Michael Allen, chief operating officer of Back Aviation Solutions, an aviation consulting firm in New Haven, Conn., thinks your miles are fairly safe.

Award programs save airlines a bundle on advertising and generate a wealth of information on fliers' habits, he says, so many airlines would be happy to acquire a bankrupt competitor's best customers.

Consumer activists Winship and Terry Trippler, air traveler advocate for www.cheapseats.com, are worried about some award miles. Airlines, after all, don't make money off seats earned by frequent fliers. "It's difficult to imagine any airline today that would think it's fiscally responsible to assume the liability of a frequent-flier program of a bankrupt carrier," Winship says.

• Will other airlines honor my award ticket?

There's no guarantee.

Under rules that the Transportation Department extended to February 2004, airlines must take passengers stranded by a bankrupt airline as standbys, subject to space and a $25 fee.

But the DOT "has not addressed" the issue of whether award tickets are covered by these rules, according to department spokesman Bill Mosley, who said airlines "are setting their own policies."

• How should I redeem my miles?

With fewer flights since the Sept. 11 terrorist attacks, it seems more difficult to book an award ticket but precise figures on this are hard to come by. Some people are turning to Internet sites, such as www.milepoint.com and www.points.com, which let you exchange or cash in your miles for memberships or products.

But Winship and Trippler agree that to get full value for your miles, it's best to redeem them for award travel. To better your chances for a seat, avoid popular routes and travel during non-peak times.