Administration notes

1) Thanks to those of you who have contacted me.  I definitely appreciate the suggestions, given the “youth” of this blog.

I recently learned that there has been a significant delay between the time that you send your email and the time I receive it.  Several days, in fact.  I apologize for the delay and will try to determine the cause.

In the meantime, you can hunt me down in one of two ways: First, leave a comment to a post.  Or second, email me directly at frequentflyermiles101@gmail.com.

2) One of the promises I made when I started the site is that I would make a note whenever I stand to personally benefit from something, so here is the first example: I added google adsense to the blog.  I’ve set it up so that it’s unobtrusive, but I do make money if you click on an ad.  It’s only a few cents, but I don’t want to draw lines as to “what counts” and “what doesn’t count.”  Thanks for your understanding.

Thanks!

Mike

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Earn 30 miles per dollar spent at 1800flowers.com, FTD.com (Delta, United)

It’s the time of the year when the airlines and their retail partners start to cook up bonuses for shopping through their portals.  One of the best offers is always for flowers, usually through an on-line retailer.  Currently, Delta is offering 30 miles per dollar spent, which is about as good as I see for flowers offers, e.g., a $100 order through the online portal will earn you 3,000 Delta miles.

Don’t forget, you have to shop through the airline’s portal, and Delta makes it next to impossible to find the flowers offer, which is odd, since it wants you to spend as much money as possible (Don’t forget, Delta makes money by selling miles to 1800flowers.com, which awards them to you.).  Fortunately, I dug it up, so when shopping, go here and enter code DE43 for your 30 miles per dollar when you check out.

Important:

If you use the code that Delta gives you, you will only earn 20 miles per dollar spent.  You must use DE43.

Print a copy of your receipt and write down the code in case there is a problem.

United Airline’s offer is the same, but for FTD.com.  Head here and scroll down to FTD.  You’ll see the offer and there does not appear to be a check-out code necessary.

If you are buying items through the airlines’s shopping malls, it’s always a good idea to check each airline’s site.  American is only offering 15 miles per dollar for each of these merchants.

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“Pudding” miles in your account: How one man became a miles legend

A quick search of the internet would reveal any number of tricks, tips and wild stories about frequent flyer miles.  But travel hackers view David Phillips as one of their founding fathers.

An engineer by trade, Phillips didn’t need math skills when he noticed an American Airlines promo that offered miles for purchases of Healthy Choice pudding.  But he did need ingenuity, persistence and just a little bit of crazy to pull off a stunt that earned him over a million miles.

Rather than repeat the story, I’m going to direct you to the snopes link that tells his tale.  Enjoy it here.

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Airline mergers: What does it mean for miles?

Yesterday, American Airlines and US Airways announced that they had settled with the Department of Justice and would be merging.  So what does that mean for miles?

The answer: Not much.  Technically, US Airways is purchasing American, but the American Airlines brand is better known, so that is what the new airline will be called.  Any US Airways miles will likely be turned into American miles one for one, so there is no net loss.  It will be slightly harder to redeem for tickets, since total capacity will be down a bit, but the number of destinations that you have open to you will go way up.

So there shouldn’t be any concerns regarding miles.  Just head forward as you normally would.

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More about devaluation…

As discussed earlier, airlines will often raise prices of awards, thereby devaluing their programs.  One thing I forgot to mention is that one of them does it, the others often follow suit.  Why?  Because they can.  It’s the same way that my 4-year olds always want to be line leader and see everyone go after them.

In this case, it was Delta and Hyatt Hotels that picked up the trend.  Delta devalued for the second time this year, which might be a record.  Hyatt, a pretty well regarded program, also jumped into the game.

I like to joke that I never want to have more miles than I need for an emergency trip to Bali in first class, but seriously, hoarding only gets you hurt.  Spend as you get them and then earn more, saving only a smaller amount for an emergency.

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Why are airline tickets priced so crazily

Many people have seen the analogy comparing airline pricing with paint, but rarely are we given an insight into why the pricing is so crazy.  I hope to provide a little bit of that explanation.

The Economics 101 explanation would be “supply and demand.”  But S & D is too simplistic.  If it were that easy, you would price airlines like paint.  If you need paint, you go to the store and get some.  If lots of people want paint, the price goes up.  If few people want it, the price goes dow.  But the manufacturer can always make more paint.

Airline pricing is far more complex.  Let’s use a different analogy that explains, rather than demonstrates, the intricacies of pricing.

You are taking a class with a very unusual grading system.  It’s a pass/fail class, and the only way that you can pass the class is to obtain one of the 21 beads that the professor is holding.  The professor tells you that there are only two rules: You must buy a bead from him in an auction and each student may have only one bead.  You look around the room and notice that there are only 20 students.  Since each of the students can only have one bead, there’s no need to bid high.  You can let each of the other 19 students buy a bead and still have two left to buy.

But then the professor throws a twist into the system by flushing two of the beads down the toilet.  All of a sudden, the beads have become that much more valuable.  Each student needs one to pass the class, but there are fewer beads than students.  The bid prices are going to go much higher.

And the question is, so what?  The above example seems like a simple supply and demand equation.  Less supply than demand leads to higher prices.  But there are other factors to take into account.

First, there’s a matter of time.  Once that plane takes off, if the seat is empty, it’s worthless to the airline.  Thus, the airline has every incentive to sell that seat.  Advantage passenger?

Not quite.  The airline has years of data, telling them what the demand for any given time will be.  By adjusting the supply just a little bit, as the professor did above, it can make prices go much higher.  If it prices a seat too high, it can always adjust it lower.

The airline also has another advantage: it knows why you are flying.  An airline passenger who books a flight several weeks or months in advance is likely a leisure traveler.  That passenger does not have to travel since, if the price is too high, they can always do something else.  Those passengers are price-elastic, meaning that a small move in the price will have a large impact on the passenger’s decision to fly.  On the other hand, a passenger who buys a ticket only a few days out is likely a business traveler, since business travelers often have to fly on short notice.  The airline knows that that passenger has to fly, no matter what, and likely will pay any price for that ticket.  That passenger is price-inelastic.  The airline has all the power in that situation.  In the situation with the professor, imagine that there are a couple of types of students.  Some are just there for the fun of it.  They don’t necessarily need to pass the class, they’re just trying to learn.  But other students are taking the class for a requirement to graduate.  They need to pass the class and are willing to pay more for the beads.

Airlines have sophisticated revenue management systems which tell them how to price tickets.  The systems tell them everything from how those tickets sold at the same time in the previous year to how many people looked at tickets for a certain flight and chose not to go, implying that the tickets were priced too high.  The computers can run all sorts of simulations and determine what even a small change in price or supply will do to demand in an attempt to maximize their revenues.

Airlines are further segmenting travelers with ancillary revenues.  Ancillary revenues are any revenues that the airline generates that aren’t part of the ticket price.  For instance, some airlines will sell you a very cheap ticket, but force you to pay to check a bag, choose a seat or even carry on luggage.  These airlines often appeal to the most price-elastic customers who want to pay as little as possible and don’t mind passing up some amenities, such as the ability to select a seat ahead of time.

Airlines also sell tickets in various fare classes.  Fare classes offer the ability to pay more or less for a ticket on the same flight.  For instance, I may need a ticket that is fully refundable if something goes wrong and allows me to upgrade for free or a cheap co-payment.  You may not care about those amenities.  Thus, I would buy a ticket in a higher fare class.  In the example below, I have show a ticket on US Airways from Boston to Charleston, SC.  There are four different fare classes and each one offers different amenities.  The more amenities you want, the more you will pay.  In this case, the fares range from $100 to $692, a massive difference.

 

  • 1904
  • 5:00 AM BOS
  • 7:14 AM CLT
  • 1809
  • 9:21 AM CLT
  • 10:18 AM CHS
(1) 5h 18m   $100  $370  $611  $692

 

As a passenger, you will never know the “best” price for the ticket you want, but you should at least be aware of the factors that go into those prices.

 

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Mileage devaluation: When an airline increases mileage “pricing”

When the first frequent flyer program was created, airline managements simply had no idea how popular they would become.  No one saw a tie-in with credit cards, shopping, etc.  And while those enhancements have dramatically raised the profile of frequent flyer programs, The downside, however, is that there are far more miles out there than there are seats to fly them, meaning that airlines have only two choices: Give out fewer miles or raise prices.

When you receive miles from someone other than the airline (for example, when you get them from shopping), the merchant who gave you the miles actually bought them from the airline to give to you, so the mileage programs are great revenue generators.  Guess what the airlines think of the idea of giving out fewer miles?

So the other choice to handle “miles inflation” is to raise prices.  All of a sudden, that ticket that used to cost 40,000 miles costs 45,000 or even 50,000.  That’s up to a 25% price increase and takes care of a lot of the excess miles in the system.

I bring this topic up because United just made a rather nasty adjustment to its mileage charts, effective on February 1, 2014.  If you are flying on United’s own planes, increases are 10-15%, although not all categories were raised.  But it’s on the partner airlines where things get ugly.  Feel like using your United miles on one of its partners?  Good luck with that.  Price increases were up to 70% or more.

In the real world, inflation tends to come pretty steadily at 2-3% per year.  In the airline world, it only tends to be every few years, but with much sharper increases.

My advice is to spend you miles when you can, since they don’t earn interest and rarely become more valuable over time.  It’s always good to have some on hand in case an emergency arises, but hoarding millions of miles will just get you hurt in the long run.

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Shopping for miles: 17 American miles per dollar spent at Nieman Marcus

In the Shopping for Miles section, I discussed earning miles by shopping through an airline’s website.  You can get some good deals, but you rarely get more than three or four miles per dollar spent.  Often, the biggest rewards are for merchants you may never have heard of who are willing to offer great rebates just to get some business.

But occasionally, you get a gem.  Or a place that sells gems.  Or a place that sells clothes priced like gems.  In this case, I’m referring to Nieman Marcus.  Planning on doing some shopping there?  Well, now’s a good time, since you’ll get 17 American Airlines miles per dollar spent through Thursday, November 11 (Thanks to Wendy for the email.).  We haven’t yet discussed how to value a mile in dollar terms, but I generally seem them as worth 1-2 cents each.  Thus, in mileage terms, you are receiving somewhere between 17% and 34% back on a purchase.  Enjoy!  Added bonus: Through the end of January, they’ll throw in free shipping.

You can see the deal here.  Before making a purchase, I always recommend a very simple process known as clearing your cookies to ensure that the purchase tracks properly.

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Weekend Updates

A few updates this weekend:

  • I started on the glossary, which is now its own page.  If you have any suggestions for terms, particularly ones that I have used, that should be in there, please let me know.
  • I added direct links to the various alliances in the post about airline alliances.
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An easy way to earn miles: e-Miles.com

One of my favorite types of posts is ways to earn miles without actually flying.  As we saw in the “Shopping online” section, it can be easy to earn miles on the ground.  Rarely do you hit the miles jackpot with these options (It’s usually 500 miles here, 1000 there, etc..), but they add up.  Surveys and ads can be an easy way to do so.

One program that I use is called e-Miles.  Sign up at this link and then fill out the short form.  On the last page, choose your interest in their various categories.  Hint: the more “High Interest” categories you have, the more mileage opportunities they will offer you.  And that’s it!  Disclosure: I may get something from e-miles if you use that link.  Thank you in advance.

Note: They do not send ads to your inbox, so you won’t be getting spammed.  Instead, you go to e-miles.com and log in.  Once you log in, you’ll see a list of opportunities.  Some will look like this:

 

offer preview Disney: Great Fall Savings at Walt Disney World Resort! 5No thanks, remove

 

You’ll click on the “5” and then hit “Continue” on the next page.  You can ignore any ads that pop up, answer 3-4 yes/no questions on the following page and you’re done, five points richer.  The whole process should take you about 15 seconds.

Other ads will look like this:

offer preview Everything you need for your Gatlinburg vacation is right here in the Free Vacation Guide and Gatlinburg Emails. You’ll be thankful to have this information to help plan your vacation! 5  +  5No thanks, remove

Note the plus sign.  That means you get five points for clicking on the link plus another five points for taking an additional action.  Some actions can earn you hundreds or even thousands of points, so it could be worth a few seconds.  In this case, the reward is much lower, but all they want you to do is submit your e-mail address in the ad for those five points.  That will add you to their mailing list, but you can avoid spam by having a back-up email.  I have two addresses: my primary one and one to receive these types of promos.  That way, you never have to see the emails if you don’t want to.

What can you earn?

Rewards are very easy to earn on this site.  In terms of airlines, 500 e-Miles points will get you 500 frequent flyer miles on United, US Airways, Southwest, Frontier or Alaska Air.  But you can also get gift cards, such as a $10 Amazon or Starbucks gift card for 600 points.

There are no real downsides to this program.  It is free and redemptions are free.  Generally, I can earn 500 miles every week or so.  Doesn’t sound like a lot, but that’s 25,000 miles per year!  Enjoy.

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