Virgin America, Virgin Atlantic Tie-Up Offers Frequent Flyers Poor Value

While progress has been slow and sporadic, Virgin America has been taking steps to address the key weakness of its mileage program, Elevate.

When it comes to airline loyalty programs, bigger is better. And Elevate was among the smallest.

Where a fully built-out program like American's AAdvantage boasts thousands of program partners that award miles for everything from mortgage loans to online shopping to Netflix subscriptions, Elevate members were limited to earning miles with just a handful of other companies.

That's been changing.

Most recently, Virgin America added a small group of boutique hotels, Joie de Vivre, to the program. That brings to three the number of options Elevate members have for earning points for hotel stays, including Hilton with its extensive portfolio.

And in April, Virgin America linked Elevate to Velocity, the loyalty program of V Australia and Virgin Blue, giving Elevate members the opportunity to earn points for flights to Australia and other Asia-Pacific destinations.

More important for Elevate members, the ability to redeem points for award flights on V Australia and Virgin Blue will be in place later this year.

The latest move to expand Elevate's reach seemed inevitable, and at least in theory the most significant enhancement so far. But there's a troubling disconnect in the new partnership's implementation that significantly undermines its value to program members.

Two Virgins, United Reluctantly

Earlier this week, Richard Branson, founder and president of the Virgin Group, announced that members of the Elevate program can now earn points for flights on Virgin Atlantic, and members of the Virgin Atlantic Flying Club can earn miles for Virgin America flights. Reciprocal redemption won't be available until the second quarter of 2011.

So far, so good. Virgin Atlantic is a fine airline, and the ability to earn and redeem points on its flights would appear to be a decided positive for the Elevate program. But when they look into the details of the tie-up, Elevate members are likely to be underwhelmed by the earning rates.

When flying on Virgin Atlantic, Elevate members will earn from 10 percent of the actual flown miles for promotional economy to 60 percent for business class. So, for example, a round-trip flight from New York to London using a promotional economy fare would net 692 Elevate points for the 6,916-mile trip.

Because the Elevate program uses points as its currency, rather than miles, and award prices are based on the market price of paid tickets, it's difficult to directly compare these earning rates with those of a typical program that awards one mile for every mile actually flown and prices awards at 25,000 miles for a domestic flight.

But here's a quick calculation for comparison purposes.

Elevate points are generally worth somewhat less than 2 cents apiece, according to my calculations. So that London flight would generate Elevate points worth around $13 toward the purchase of a Virgin America ticket. At that rate, it would take 27 Virgin Atlantic flights to earn enough Virgin America points for a domestic ticket with a market price of $350.

Compare that to the earning and reward scenario of a traditional legacy carrier. To earn the 25,000 miles required for a domestic award ticket, a program member would have to complete only four New York-London flights.

The value gap between earning Elevate points on Virgin Atlantic and earning miles on a legacy carrier is positively jaw-dropping.

My advice to Sir Richard and his marketing minions: Go back to the drawing boards—you got this one completely wrong. Style is one thing, substance another. Consumers know the difference.

A Free Night After Three Stays at Starwood's Newest Hotel Brands

With free stays on offer from many of the major hotel chains, I've been calling this the Summer of Free Nights:

• Best Western - One free night after two stays between June 20 and August 15.
• Carlson - One free night after two stays between June 1 and August 31.
• Hilton - One free night after either four qualifying stays or 10 nights through June 30.
• Marriott - One free night after three stays through August 31.
• Omni - One free night in conjunction with a paid weekend night through September 6.
• Starwood - One free weekend night after every three stays through July 31.

The latest promotion for stays at Starwood's newest brands, Aloft and Element hotels, extends the free-for-all through September.

Offer Details

Between August 9 and September 30, Starwood Preferred Guest members will earn a free night after every three qualifying stays at Aloft or Element hotels.

There's no limit to the number of free nights that can be earned, which must be taken at Aloft or Element hotels by December 19, 2010.

Registration is required, by September 30.

Deal or No Deal

One night after three stays is a decent deal but hardly a spectacular one. (The upcoming Marriott Megabonus promotion will reportedly feature a free night after two stays. More on that next week.)

By my count, there are currently 45 Aloft hotels in operation, and seven Element properties, for a total of 52 hotels available on both the earning and redemption sides of the promotion. That limited network could make it a challenge to qualify for the free night, as well as to use it.

And establishing a December 19 deadline to use the free nights is decidedly consumer-unfriendly.

On the other hand, there's no limit to the number of free nights that may be earned. And there are no day-of-the-week limits on when they free nights may be taken.

Reader Reality Check

Three stays within less than two months at hotels with just a handful of locations seems like a daunting hurdle. Anyone up for it?

Hilton Will Comp Internet Access for Big Spenders

From the official Hilton news release:

MCLEAN, Va.—Hilton Worldwide announced today it will offer complimentary high-speed internet access to all Gold and Diamond Hilton HHonors members beginning September 1, 2010. Elite-tier members will receive this benefit during stays at any of the more than 3,600 hotels within the company's global portfolio of 10 hotel brands, which include Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Hilton, Doubletree, Embassy Suites Hotels, Hilton Garden Inn, Hampton Hotels, Homewood Suites by Hilton, Home2 Suites by Hilton, and Hilton Grand Vacations.

What the announcement neglects to mention is that Internet access is already free at many of Hilton's lower-priced brands. Free not just for elite HHonors members—free for all.

So, with HHonors Gold status earned after 16 stays or 36 nights during a year, and Diamond status requiring 28 stays or 60 nights, the fee waiver only applies to the most frequent travelers staying at the most expensive hotels.

Hilton is hardly alone in embracing this approach.

Marriott Rewards recently added free Internet access to the list of benefits enjoyed by its Gold- and Platinum-level elite members, following similar moves by Starwood and Hyatt.

In those cases as well, the perk is reserved for big spenders staying at high-priced properties.

What's wrong with this picture is not the awarding of special benefits to companies' best customers. That's fair and sensible. What rankles is the underlying pricing, with Hilton, Conrad, and Waldorf=Astoria hotels charging extra for a service that's offered for free at Homewood Suites, Garden Inn, and Hampton Inn.

The perverse side effect of this model is that the value proposition of pricey brands becomes "Pay more, get less." Not exactly the stuff of compelling ad campaigns. And fixing the problem for elites simply reminds non-elites that there's something unfair and perverse about the room rates charged by luxe hotels.

There are other approaches.

Omni and Wyndham, for example, make free Internet access available to all members of their frequent-stay programs, not just elites.

And Best Western offers free Internet access for all customers, not just elite members of its loyalty program. That is almost certainly the future of the Internet access fee.

Eventually, free Internet access will be the rule rather than the exception.

Reader Reality Check

Do hotel Internet fees matter?

Have you ever chosen to stay at a hotel because it offered free Internet access?

Earn Up to 60,000 American AAdvantage Miles for Hyatt Stays

The headline is a guaranteed attention-getter: "Earn Up to 60,000 American Airlines AAdvantage Miles With Hyatt."

That's mucho miles—enough for a round-trip first-class award ticket within the U.S. or to Canada, Mexico, or the Caribbean.

So, what must you do to earn those miles?

Offer Details

The key to Hyatt's promotion is the earning rate: 3,000 American miles per stay. That's a hefty six times the 500 miles per stay normally awarded.

Even so, to earn that big number of miles, 60,000, you'll have to complete a big number of Hyatt stays. Twenty, to be specific. And you'll have to do it before October 15.

Registration is required.

Deal or No Deal

Twenty hotel stays in just a few months is a high hurdle, even for the most hyperactive of business travelers. And Hyatt's relatively small portfolio—around 424 hotels, compared to Hilton's network of more than 3,500 properties—makes it that much harder. I doubt many will earn the full 60,000 miles.

Still, earning 3,000 miles per stay is a worthwhile bonus. And American miles have proven to be pretty reliably redeemable, so the bonus delivers solid value.

Reader Reality Check

How many miles can you realistically hope to earn with this promotion?

From Starwood: 25,000 Miles for Stays in Paradise

To me, there's always been something incongruous about rich loyalty bonuses for luxe vacation trips.

I understand the business logic, of course. Hotels have to fill rooms in Tahiti just as surely as they do rooms in downtown Chicago. But earning extra miles or points for a sun-and-fun trip seems like getting free ice cream when you order chocolate cake—almost too much of a good thing.

Perhaps I'm just a Puritan at heart.

Those at any rate were the feelings raised by the new Starwood bonus offer for stays in the quintessential leisure locale, Hawaii.

Offer Details

Members of Starwood's Preferred Guest program who stay five or more nights at one of Starwood's 11 Hawaii resorts by December 23 will earn 25,000 bonus miles in Hawaiian Airlines' HawaiianMiles program.

Qualifying stays must be booked by August 15, either on Starwood's website or by calling 1-866-716-8140 and requesting rate plan HA25K.

Deal or No Deal

While 25,000 is a whole lotta miles, they are miles in a small program that isn't likely to be the best fit with the needs of travelers who don't live in Hawaii.

On the other hand, those HawaiianMiles miles can be redeemed for a domestic award ticket on Delta. So you can view the relationship with Hawaiian's program as a temporary marriage of convenience.

As always when using a specified rate code in conjunction with a promotion, double-check to see if there are better room rates available without the bonus. It may be worthwhile paying slightly more to earn those miles, but be sure not to overpay.

American Matches United's 30% Discount on Short-Haul Awards

For more than a year now, United has been deploying round after round of award sales, eliciting nary a peep from competing carriers. Apparently other airlines saw little benefit in fighting United for the title of Premier Award Discounter.

But United's latest award promotion—a 30 percent discount on coach award trips of 700 miles or less—apparently caught the corporate eye of arch-rival American, with predictable results.

Offer Details

Members of American's AAdvantage program can save 30 percent on coach MileSAAver award trips of 700 or fewer miles each way, within the U.S. and Canada, booked by August 31 and completed by December 15.

With the discount, a round-trip award ticket will cost 17,500 miles instead of the 25,000 miles normally required. And the price for a one-way award drops from 12,500 to 8,750 miles.

There's a long list of discount-eligible flights on American's website. Among them:

• Dallas to/from Little Rock, Santa Fe, St. Louis, Denver
• Los Angeles to/from San Francisco, San Diego, Santa Barbara, San Jose
• Miami to/from New Orleans, Atlanta, Charleston
• New York to/from Montreal, Toronto, Washington, D.C., Boston

Deal or No Deal

While American's award sale is obviously a response to United's, there is one significant difference. Where United Mileage Plus members can travel at the reduced rates through January 7, 2011, American's sale is only for travel through December 15, 2010.

But this isn't really a case of one offer's trumping another, or not. American's sale is for AAdvantage members; United's is for members of its program.

Since the promotions are alike except for the travel period, I'll simply repeat what I said about United's offer:

If there's a short flight already in your plans, taking advantage of the discount is a no-brainer. You might even want to squeeze in an unplanned short trip, just to get some extra value from your miles.

And:

This might also be an opportunity for members with modest account balances to use their miles for an award that would otherwise exceed their mileage budget.

Reader Reality Check

Discounting award tickets implies that award seats are available. What has your experience been when redeeming miles with American?

Q&A: Can I Transfer My Iberia Frequent Flyer Miles to American?

Question

I always like reading your remarks about mileage programs.

Could you in the future explain how to move mile points from foreign international carriers to North American carriers?

For example: I have mileage points with Iberia and wanted them to be transferred to American. Even although they belong to the oneworld alliance and actually have announced a special alliance with British Airways and Iberia, I was by told by American, I could not transfer the Iberia points.

So what to do, because I do not fly Iberia much?

Answer

American and Iberia do indeed both belong to the oneworld global airline alliance, a network of cooperating carriers that also includes British Airways, Cathay Pacific, Finnair, Japan Airlines, LAN, Malev, Mexicana, Qantas, and Royal Jordanian.

And those two airlines, plus British Airways, have indeed just been granted anti-trust immunity to operate their transatlantic services as though they were a single carrier, cooperating on scheduling, pricing, and so on.

While such alliance relationships are routinely referred to as virtual mergers, that borders on overstatement. There are limits to their conjunction—the allied airlines are more like kissing cousins than they are like married couples.

American and Iberia maintain separate loyalty programs, as do all the other oneworld airlines. True, you can earn American miles when flying on Iberia, or Iberia miles when flying on American—that's called frequent flyer program reciprocity, and it's a defining feature of alliance tie-ups. But once the miles have been earned in a particular program, they generally cannot be transferred to another program.

In short, there's nothing you can do to move your Iberia miles into American's program. And that's the rule, not the exception.

What to Do?

If you're reasonably close to reaching an award threshold in the Iberia program, it might be worth earning just enough additional miles to meet the award requirement and cash out with a free ticket. Because of Iberia's alliance connections, you can earn those extra miles when flying on many other airlines, including American. And you'll have the same airlines to choose from when it comes time to redeem the miles.

Having cut your ties to the Iberia program, and assuming you've decided American's program best meets your ongoing needs, you can then focus on earning miles in American's AAdvantage program. With more than 1,000 companies awarding AAdvantage miles—including Iberia, British Airways, and the other oneworld carriers—that shouldn't be too hard to do.

This article originally appeared on SmarterTravel.com.

After Tweaks, Will Starwood Still the Best Travel Rewards Card?

The Starwood Preferred Guest credit card, issued by American Express, can fairly be called the darling of the travel rewards world.

The card was a perennial winner of the Freddie awards. It was recently chosen as the Best Travel Rewards Card for Domestic Use in the Smarter Travel Editors' Choice Awards. And I've regularly recommended the card, both in my Up Front blogs and in one-on-one conversations with fellow travelers.

Among the card's signature benefits:

• Points can be converted into miles in more than 30 airline programs, usually on a 1:1 basis.
• There's a 5,000-point bonus when transferring 20,000 points. So transferring 20,000 Starwood points to American, for example, nets 25,000 AAdvantage miles.
• Points can also be redeemed for stays at more than 940 hotels.
• The annual fee is a very reasonable $45, waived the first year.

Changes Ahead

It's always dangerous making changes to a product with a proven track record and a loyal following. But American Express has chosen to do just that, adding four tweaks that will take effect on October 14.

First, the card's annual fee will increase from the current $45 to $65. It will still be waived for the first year, however.

Second, cardholders will no longer receive the annual 50 percent discount certificate (the so-called SPG50).

Third, cardholders will receive five nights per year credited toward earning elite status, making Gold status available after 20 nights (instead of 25) and Platinum after 45 nights (instead of 50).

And fourth, cardholders will receive a third night free after two paid nights at participating Sheraton hotels. (Among the restrictions: Bookings are non-refundable, and only available Thursday through Sunday.)

Still the Best?

For the great majority of travelers, the loss of the discount certificate is a non-event, and the new benefits are irrelevant for most and of only modest value to a few.

What remains is the fee increase. In fact, the other changes were likely made to deflect attention from the price hike.

So, with the card benefits remaining, on balance, pretty much unchanged, and the cost to enjoy those benefits rising by 44 percent, is the card still a buy?

In a word, yes. The card easily delivers $65 a year in value.

The current Starwood sign-up offer generates as many as 25,000 points—10,000 after the card is used for the first time, another 15,000 points if the cardholder charges at least $15,000 during the first six months.

The enrollment bonus alone, transferred to an airline program or redeemed for a hotel stay, more than offsets the higher annual fee. The transfer flexibility and bonuses add further value to the card. And the more you travel, the greater the card's potential payoff.

Bottom line: American Express has stopped short of killing the proverbial goose that's been laying golden eggs. But they haven't done it any favors, either. In future, they should just leave that goose alone.

Is United's the World's Most Rewarding Rewards Program?

When airlines advertise their loyalty programs, the marketing message typically focuses on a program's earning side.

But United has just launched an aggressive new ad campaign that flips that approach. Rather than touting the ease with which Mileage Plus members can accumulate miles, United's new ads promise that the miles will be easy to actually use.

Among the ads' copy lines:

• "The mileage program that wants you to use your miles"
• "Miles that hate staying home on weekends"
• "Miles that get you where you want to go... even at the last minute"

Of course, it's easy enough to boast good intentions—talk is cheap.

But United backs up those purported intentions with a solid roster of program features designed to give Mileage Plus members expanded options for mileage redemption. Among them:

• Hotel and car awards
• Mileage Plus Merchandise Rewards
• Miles & Money awards
• One-way awards
• Periodic award sales
• No last minute booking fee

None of the above is unique to United. But taken together, they represent as impressive an array of redemption-friendly award options and program rules as can be found in any airline program.

Choice, Value

Choice is one thing, value another.

In a recent survey of alternative award options, I found the value of United miles redeemed for merchandise to be well under 1 cent per mile. When redeemed for free hotel nights, the miles were sometimes worth a penny apiece, but usually less.

For reference, the average value of a mile redeemed for a 25,000-mile restricted coach award is around 1.2 cents. Since that's by far the most popular award, it's a value that consumers use, consciously or not, as a benchmark when assessing other award options.

United's ads also push the availability of unrestricted awards: "Miles with the clout to book any open United seat. Guaranteed. With a Standard Award, if there's a seat for sale, it's yours for miles."

But Standard awards are twice as expensive as restricted awards, so the per-mile value plummets to 0.6 cents or so.

If you acquired those miles by using a credit card, earning one mile per dollar charged to the card, getting 0.6 cents per mile amounts to a 0.6 percent rebate—a notably weak value proposition when there are cash rebate cards that return 1 percent or more.

In short, while non-flight awards and unrestricted awards are options in theory, in practice they must also pass a value test.

The Promise: Delivered or Not?

We have the ad campaign, and we have United's evidence in support of the ads' claims.

What we don't have is an answer to the question: Are Mileage Plus members having an easier time redeeming their miles for the awards they want, as the ads suggest?

I don't know. And the data that United and other airlines make public are insufficient to resolve the issue. So the best I can do is put the question to our readers.

Of course, an informal poll won't provide a definitive answer—we are unlikely to get enough responses to attain a high level of statistical certainty. But the more input we get, the better the results will reflect the real-world experience of Mileage Plus members.

So please, weigh in with your judgment as to the usability of United miles.

Reader Reality Check

Are you satisfied, or not, with the choice, availability, and value of Mileage Plus awards?