Gettin’ Carried Away

Yesterday, I started my day as I always do, checking my email, Facebook, Twitter and Bloglines accounts. Every porthole was blowing up with news of the seemingly fantastic $599 All-You-Can-Jet pass being offered by JetBlue. Essentially, you purchase this pass, and you’ll receive unlimited travel rights anywhere JetBlue flies in the U.S. from September 8 to October 8. There are terms and conditions, of course, and one of them is that you must sign up to be part of their TrueBlue Rewards Program

The idea behind frequent flyer programs (FFPs) is simple: reward customers for using an airline and promote future customer loyalty. However, it’s actually quite complicated once you read the fine print. Although you do receive benefits as a frequent flyer, every airline has some restrictions, including blackout dates, limited seating availability and possible assessment fees/taxes. Many airlines even state that a reward may not be available at any given time. Especially during these tough times, airlines are not going to give away something for nothing.

Here is how airlines benefit from FFPs:

You may not be using your miles to their full potential.

The actual monetary value is typically $.02 [two cents] per frequent flyer mile, according to the reported airline industry average. So, if you want to redeem the generally required 25,000 miles for a free ticket, the number of miles multiplied by $.02 [two cents] per mile is $500. So before you get all excited about getting a free flight, if you want to fly somewhere for only $300, you might just want to save your miles and purchase the lower cost ticket.

You may end up paying some fees.

When airlines corroborate with hotels and car rental companies, they are essentially selling them the miles that you earn. Say you want to earn AAdvantage miles for American Airlines by staying at the Hyatt. The hotel first needs to purchase the miles from the airline (paying an additional 7.5% tax) before giving them to you. This means that part of the cost, usually the tax, is passed onto you in the form of miscellaneous fees.

A fee may be also charged for mileage redemption. For example, some airlines release seats for frequent flyers closer to the travel date, especially on flights that they don’t think will sell out to regular paying customers. However, you then might be slapped with a late booking fee.

You can actually buy miles.

Delta Airlines sells Gift Miles. They are sold in increments of 2,000 miles at $0.028 per mile, plus a 7.5% tax, costing less than $65. A given rewards member is allowed to receive 60,000 Gift Miles per calendar year. I guess if you’re a few thousand miles shy of earning a free flight, this could be a good birthday gift. You can also just buy the miles yourself. However, it’s really just a marketing tool that earns the airline money.

They capitalize on people belonging to more than one FFP.

People sometimes become member of several FFPs for the sign-up benefits. However, what they don’t realize is that miles do expire. Let’s say you signed up for the FFPs for Southwest, Delta and American. You’ve been flying mostly on Southwest and Delta after awhile, neglecting American. If you don’t fly American at least once in an 18-month period, your miles will expire, and you will need to pay a fee to get them back. You automatically have to pay a $30 fee, plus $50 for every 5,000 miles.

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So are Frequent Flyers Programs really worth it? I think it depends on the airline. I personally think the TrueBlue program offered by JetBlue is a joke. When you sign up for their TrueBlue Rewards Program, which is required to buy the $599 All-You-Can-Jet pass, you will automatically receive 35 points free. However, the points you rack up while you enjoy unlimited travel during that month don’t count towards the program. The program operates on a point system, not a mile tracker:

• You can earn two, four or six points per trip, with two points being a short flight (i.e. JFK to Buffalo), four points being a medium flight (i.e. JFK to New Orleans) and six points being a long flight (i.e. JFK to Oakland).
• You need to earn 100 points for a free flight.
• You only have 12 months to earn the free flight, or the points you acquire will expire. JetBlue does not give any indication that you can get these points back either.

So if you don’t fly a good amount of short, medium and long trips using JetBlue, chances are you’re not going to see the benefits of the rewards program. Have any of you joined a Frequent Flyers Program? What do you recommend?