The news indicates that United Airlines may file for bankruptcy. What will happen to frequent flyer miles? We are wondering if we should use those miles and make reservations one of it's partners ASAP. I would appreciate your input.
I wouldn't worry yet. When TWA went into bankruptcy, their ff program stayed intact and, I believe, transferred straight over to AA when they were bought. US Air tried to "ruin" their program when it went into bankruptcy. There was such an outcry that they backed off. United is so large that they will exit bankruptcy in some form. Since the ff programs are so critical to maintaining your flying base, I can't see United cutting the program in any significant way.
PS I fly almost weekly but on Delta so I know at least a little on the topic
My wife and I are both United elite-level frequent fliers. (Between the two of us we have about 750,000 United miles in our banks.) We've both recently received letters from United saying not to worry about our miles; as long as United is in business our miles will be protected. I agree with Marc. Even if United does file for bankruptcy they'll be back; a smaller version, perhaps, but back nonetheless.
Interestingly enough, a similar situation with Continental several years ago caused me to cash in all my miles to go someplace I'd never heard of before; some island called Grand Cayman. ;o) We've gone to the Caribbean every year since!
Somebody told me recently that a shockingly small percentage of frequent flyer miles are issued as a result of flying on the airline--supposedly something like 10-20%. The rest result from credit cards, hotels, car rentals, phone plans and all the rest.
I don't know how accurate that number is, but it's pretty clear that what began as a simple marketing affinity scheme has evolved into a separate and important business unto itself at each airline. We could argue about whether this is good or bad for the airlines (I think it's bad), but the fact is that miles in people's accounts are no longer a side issue. For that reason, I imagine some accommodation will be made no matter what.
It's also important to remember that bankruptcy doesn't necessarily mean you're out of business. And, no matter what happens to United as a company and a brand, somebody is going to have to fly their routes. They may disappear, but they're too big for their route system to disappear. That fact usually translates into a merger or buyout, or a series of same (as it did for TWA). And yes, TWA miles were automatically moved to AA. All we had to do was go online and link the two accounts in the computer.
If only the airlines would learn that when you sell your product for less than your cost, you can't make it up on volume!
Generally speaking, while it doesn't seem to be a crisis, I think it would be prudent to bleed down mileage accounts in USAir and United as the opportunity arises. We've been keeping the bulk of our miles in Delta and American Express (where we can move them to a number of different mileage accounts as needed). I do feel for those in United's captive markets like Denver who don't have a lot of options when it comes to choosing airlines.
I wouldn't worry too much yet either... use up some of your miles if you're concerned. I just flew on USAir for Thanksgiving and they went bankrupt several months ago... service was fine and the flights were full. Tthe day-to-day operation of the airline doesn't cease, though they may scale back the number of flights.
Now posting as MichelleP.
I'd take the "better to be safe than sorry" approach myself and use up the miles if you have a need to. If they go out of business what good are the miles? Anybody have any miles left from Pan Am? My Eastern Airlines miles were transferred to Continental because they were partners. But if they weren't all my Eastern (about 450,000) miles would've been trash. I accumulated those when they were offering triple miles, remember those?
I have the inside track on whats going down with United, since my cousin and partner both work there. I think that United will try to transfer or honor your mileage miles as an educated guess if the unspeakable happens. The only ones that are feeling the changes due to the chance of United filing for bankruptcy right now are the employees. The pilots took a 14% decrease in pay, the flight attendants a 4% and the ground crew 8%. Now its up to the mechanics when they vote next week, and if they can't agree on the conditions, United will surely file. If the mechanics union can actually agree on a pay cut, then the final decision is left up to our goverment and whether or not they will loan United the money it needs to stay afloat. With this being an employee owned company the only ones not onboard at this time are the mechanics....Keep your fingers crossed....
I would book a partner airline rather than keep too many miles with United. We have over a million miles(fly a lot) in several milage programs and know its not easy to get the flights you want,when you want, even if you do have the miles. Airlines have cut back the number of flights and are using much smaller aircraft so getting (the flight you want)may be more difficult than ever.(not to mention the seat you want)Many airlines are going to more regional jets and they are increasing the length of flights they are used on.(they were only used on short flights before, but are now being used on longer flights that used to get a 737 or something along that line).When flying oversea's or on long flights we choose aircraft carefully as some planes are more comfortable than others. (it pays to do your research and see what aircraft are being used)
Best of luck to you.
If United does not get the concessions from the mechanics and must go into bankruptcy, I for one, hope the government doesn't bail them out. I don't pay taxes to finance poorly run companies. In my opinion that's the nature of the free market society. Those that have a product the consumer will buy and those who manage the business in a way that earns a profit are the ones that will survive. And that's the way it's suppose to work. If others can make a profit at this business then United better learn how it can also or get out of the way.
I like to think Delta is smarter; for one thing it has only Pilots and mechanics unionized. Also, they keep cutting costs; unfortunately in areas that affect my enjoyment of flying (now why did I say I liked Delta<G>).
United started this whole problem by giving exorbinant pay raises during the 90s that everyone else (except the non-unionized small outfits like Southwest) had to match. I use to like United when I lived out west. Now, I avoid them.
Reality Check......until 3 years ago United was and had been the largest airline in the free world for many years. Now American is larger but only because they can find more ways to split the penny and buy pieces of failed carriers at a cheap prices.(they also have the most effective group of people that loby for them in Washinton DC)The wage scales at United have caused many of the problems, but being employee owned has done little or nothing to improve the carrier. I read comments from the head of the new Union trying to get control of the mechanics at United and he said all airline mechanics should have a base salary of $ 100,000 per year.(yes maybe in a dream world.....not...)
Greed (by the employee) is the problem here. Not all of the emplyee's at United have this problem....but the airline will fail just like all the other defunct carriers. I remember years ago pickets for Eastern Airlines in New York demanding more!!!! They didn't care if it cost them there jobs......they just demanded more pay (for less work). I guess with companies like Enron , MCI, and Arthur Andersen in the spot light.... why would I expect the owners(employees) of United to look at the big picture and try to work to save the company and there jobs as well.
I for one, hope United can recover, but they must get rid of the people demanding excessive pay and work hard to restore consumer confidence.
Yes, greed is a terrible thing, and it might be what does United in due to the mechanics. One such person commented to my friend that works as a flight attendant for United, that it was the mechinic's union that brought Eastern to their knees and they hoped to do it again!! Oh, how proud a moment that must have been to take away jobs from employees who actually WORK for a living and have families to support??? My cousin always knew that he wanted to work in the airline industry even as a young boy, and he was more than willing to take a pay cut with United to save the airline AND his job. Too bad that others can still ruin their livelihood.....
Mechanics were are big part of Eastern's problem, but they weren't the whole story, and that's for sure. Mechanics are a huge part of United's problem and I must confess I don't understand it considering that the airline is 55% employee-owned.
But it's also true that all of the majors (including Delta) are going to have to bring their pay scales more in line with reality.
There are some absolutely ironic--no, crazy--things going on at the majors right now that fall under the category of "unintended consquences," a lot of them having to do with contracts that effectively prevent some of them from flying airplanes that are the "right size" for the newly-defined market demands since 9/11.
They're going to have to straighten up or the airlines run on the Southwest model are going to eat their lunch across the board.
Saw in the paper this morning the Feds decided not to send this dog any of our money. Good for them. It's free enterprise economics at work.
As for the pilots and flight attendants who took pay cuts to try to save the company and will now find themselves out of work because the mechanics union will not reduce their demand: I'm sorry for you.
But recognize too that labor is like any other consumer good and must follow the laws of supply and demand. When the supply is high and the demand is low the price must come down. Too bad the mechanics don't see it that way!
David, I think Enron, World Com and crew are more about corporate greed than employee greed. It sticks in my craw when I see executives with multi billion dollar bailouts while the working joe loses his life savings as well as his job. Of course when companies are in trouble it also sticks in my craw that people aren't willing to sacrifice to save it. That's how New York lost so many of its wonderful newpapers including the Herald Tribune.
jetBlue is a really nice operation. And their employees are happy campers. What a concept!
I too feel for those who are losing jobs, seniority, etc.
But as far as investing heavily in your company and losing your savings as a result, financial planners have been advising against this for years, for the very reason we're seeing now: If there are layoffs, what financial condition is your company likely to be in?
Unfortunately, some companies have "legislated" against prudent diversification by demanding that retirement accounts be heavily invested in company stock, or by giving heavy incentives (matching, etc.) for those that do. This is wrong, it flies in the face of good financial planning, and it should be prohibited as part of pension reform.
Equally unfortunately, I don't believe for a minute that the administration or the new Congress are interested in such reforms. People will simply have to learn the rules and apply them, something they have not been very good at to date.
If United goes into bankruptcy or not it only underlines a more severe problem that has held our country at hostage for years. In my opinion the issue is that of a level playing field for businesses that offer the same product. The govt can and does play favorites when making the rules for some carriers and not enforcing them with others. The whole deregulation of the airline industry is now considered a failure(by many people), when a few years ago it was the model of success. The truth of the matter is that now the average flyer and investor would have been better off if deregulation had not happened. The great break up of AT&T(the phone company) is another classic example of a good idea gone bad.While many shareholders got shares in many different companies.....today that stock is worth little and many of the companies are in serious financial problems and have canned thousands of jobs. (not to mention what we now pay for basic phone services).
I guess, in conclusion what I am saying is that the system(airlines)have problems and and I have little hope that the govt has the ability to restore or regulate the industry to a healthy recovery. I cannot see how having 3 or 4 giant airlines in this country will serve the consumer better. Southwest and Jet Blue are fine as regional carriers, but they cannot service the entire country. Its interesting that Southwest themselves realize that they are rapidly reaching a saturation point where they will start to have wages issues with there employees when (in 2-3 years when they get too big and service many more areas.)...Wish I had some answers, but the skys for airlines took very rough for years to come.