U P F R O N T

Journalist's Query
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For an upcoming article in the San Jose Business Journal, journalist Abby Sterling is seeking first-hand feedback on AwardGuard frequent-flyer mile insurance.

If you're an AwardGuard customer and would be willing to speak to Abby for the article, please contact her at abigailvazquez@attbi.com.

Airlines' 3rd-Quarter Results: Grim
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Except for perennially profitable Southwest and, surprisingly, Alaska Air, the airlines' 3rd-quarter financial reports all glowed red. The numbing numbers:

                     * millions

See the "Relevant Reads" section below for an analysis of the industry's problems and a critical assessment of their survival plans.

Hertz Bites, Barks
==========================

We barked at Hertz in last week's Crier for their imposition of a $0.50-per-day surcharge when renters elect to earn airline miles. Hertz barked back, as follows:

"Tim, I read your article about Hertz' frequent flyer surcharge. There's a lot you wrote that we don't agree with, but on one point I think you are wrong on the facts. If a customer calls Hertz to make a reservation, or books a reservation at Hertz.com, he or she will receive very direct, clear disclosure about the existence and the amount of the surcharge, if electing frequent flyer awards. What is in our best interest is full disclosure to the customer of all charges and the total price, so the customer can make an informed decision to rent from us. Do we have customers who decline to accept a frequent flyer award when they learn of the surcharge? Yes. However, we've never had a customer tell us they were sorry we told them about the surcharge. It was not fair to state that we will bury this surcharge in the fine print.

"Finally, less than 1/3 of our customers choose frequent flyer awards. As the cost of these miles to Hertz are another cost of doing business -- costs which we would be expected to include in the revenue we collect from customers -- would it be better to spread these costs among all customers, or allocate a portion of the costs among the minority of customers who choose to take frequent flyer miles and keep those costs out of the price other customers pay? What if we spread the cost of the NeverLost onboard navigation system across all rentals, and not just those where the customer has chosen this option? Would that be fair? If not, how is that different than the frequent flyer surcharge? Surely you're not suggesting we should just eat these costs."

Richard Broome
Vice President Corporate Affairs
The Hertz Corporation

[For yet another perspective on the surcharge issue, see Stephen's feedback in the "Rants & Raves" section below.]

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

American Raises Award Rates
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Beginning May 1, 2003, AAdvantage members will have to part with more miles when redeeming for the following awards:

1. For travel within the continental U.S. and Canada--
PlanAAhead First/Business Class award from 40,000 to 45,000 miles;
AAnytime Economy Class award from 40,000 to 50,000 miles;
AAnytime First/Business Class award from 80,000 to 90,000 miles

2. For travel between the U.S. and Hawaii*--
PlanAAhead First/Business Class award from 60,000 to 75,000 miles;
PlanAAhead Premium Class award from 80,000 to 95,000 miles;
AAnytime First/Business Class award from 120,000 to 150,000 miles;
AAnytime Premium Class award from 160,000 to 190,000 miles

* Travel originating in California remains unchanged.

No one relishes a price increase. But American, to their credit, made the bad-news announcement prominently and gave AAdvantage members more than 6 months' notice of the change.

We'll remind readers as the change date nears, so they can redeem at the current levels, before the increase takes effect.

From CO: Miles-for-Merchandise, and Vice Versa
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With travel down and the holidays approaching, Continental is bulking up the non-travel aspects of the OnePass program.

First, Continental's previously anemic ShopOnePass miles-for-merchandise mall made a quantum leap forward with the addition of SkyMall as a participating retailer. OnePass members can now earn 5 miles for every $1 spent on purchases from SkyMall, itself an extensive network of merchants.

Secondly, on the redemption side, Continental has taken a page from the MilePoint playbook and introduced Miles for Merchandise, which allows OnePass members to redeem miles for a discount on goods and services.

In addition to the ongoing miles-for-discount offers, on a promotional basis, members can redeem 100 miles for discounts of approx. 50% on selected items. Example: a Movado Folio Watch with a list price of $595 can be purchased for 100 miles plus $275.

> More...

Delta Doubles Miles for Weekend Charges
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Between Nov. 15 and Dec. 31, all weekend charges made on the Delta SkyMiles credit card from Amex will earn double miles.

> More...

SkyMiles Offers Alliance-Wide Awards
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Members of the frequent flyer programs of the SkyTeam airlines -- including Delta, Air France, Korean, etc. -- can now use a single award for travel to more than 425 destinations on any combination of SkyTeam carriers.

Previously, an itinerary comprising multiple carriers might require multiple award tickets, and cost more miles as well.

> More...

Delta Partners with AT&T Wireless
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Effective immediately, SkyMiles members who open new AT&T Wireless accounts can earn 5,000 SkyMiles by calling 1-800-217-1497 or visiting http://attwireless.com/delta. The bonus is not available in AT&T Wireless retail stores or Authorized Dealer locations.

The wireless partnership expands upon Delta's existing relationship with AT&T, which already awards SkyMiles for AT&T long distance or local service.

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...

Cross-country fares for under $200 R/T
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Southwest has renewed its systemwide fare sale with some of the best rates we've seen for fall and winter travel. Coast-to-coast fares are on sale for under $200 roundtrip, for travel between now and Apr. 4, 2003. For most fares, book tickets at least 14 days before departure and by Thursday, Oct. 24.

> More...

Fly to Eastern or Western Europe for $299 R/T
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Many airlines are currently offering sale fares to Europe, mostly to well-traveled destinations like Paris and Rome. Alitalia has announced $299 round-trip fares to these cities, as well as destinations like Budapest and Prague in Eastern Europe. Departure is valid from Boston, Chicago, Miami, and New York between Nov. 8 and Dec. 12. Book tickets by Friday, Oct. 25. No 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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"Maybe I'm just more cynical, but I'd strike a little different mark against Hertz and their new miles surcharge. Where you compare them unfavorably to hotels who aren't charging extra for miles, I'm not so sure.

"If Hertz had simply raised their rates 50 cents per day to cover this cost, who'd ever question that or even know? Maybe the hotels already raised their room rates $1 per day to cover the cost and nobody is the wiser.

"I think if you look at the big picture and consider the profit motive of all these companies, when you get to the bottom line, the customer is paying all of these costs in the end no matter how the vendor itemizes (or not) the final bill.

"I think the real complaint is that when you tack on surcharges, taxes, fees, and a huge assortment of other "extra" costs, it is impossible calculate the final total in advance, and impossible to compare the cost from different vendors. Plus we're almost always blindsided at billing time with few extra dollars that we just pay because it isn't even worth it to question the charge.

"All vendors should clearly state the final total up front and foremost. That's the number we care about most and can use to shop for the best price and use to plan our costs. The itemization should be done in the fine print where most of us can and will ignore it."

- Stephen

"Talk about fees and taxes. On a $200 weekly rental at the Green Airport in Providence, the final bill comes to $280 with taxes and airport recovery fee (strange considering I bring the car back) totaling around 25%+ along with a $26+ facility charge.

"Let's play which airport can top this!!!!!!!"

- Cyberdad

"FYI, I am a loyal American Airlines miles collector, but I decided to sign up for the new United card for the 15,000 mile bonus. When I got the card, I called and asked that my girlfriend be issued a duplicate card on the same account. I RECEIVED ANOTHER 15,000 MILE BONUS!"

- Anonymous

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

From Omni Hotels: Ideal World Online Sweepstakes
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Omni's sweepstakes asks, "What prize would make your life ideal?"

To enter, choose from 5 options -- including travel packages and a year of housekeeping services -- provide your contact info, and hit the "Submit" button. No purchase necessary. Deadline for entries: Nov. 11.

There's also a prize awarded for referrals.

> More...

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

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

Can Airlines Bring Costs Down to Earth?
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Highly recommended, this Business Week piece nicely brackets the airlines' precarious financials, reported at the top of this week's Crier.

The article cites a report showing that the large airlines' overhead is 29% higher than Southwest's, and suggests that the majors' current quest -- to significantly cut costs without fundamentally changing their business model -- is bound to fail.

> More...

Until next week...