Wednesday, December 31, 2008

Reviewing Our Frequent Flyer Reward Programs, Travel Patterns, and Goals for 2009

As much as we complain about the decline in the value of frequent flyer miles, we have to admit they’ve worked for us. Over the last five years, just about half of our airline tickets have been obtained with frequent flyer miles. A few have been from credit card spending on “fake miles” credit cards (such as Capital One, Amex FreedomPass, or Merrill+). A few more were obtained from points in hotel programs (especially Hilton HHonors, back when you could redeem points directly for airline tickets, rather than just transferring to/from an airline program). Other tickets have been obtained directly with miles in an airline’s program (mostly United or Alaska, even if we used those miles with other airlines, such as Alaska’s partnership with American). Nonetheless, more of those miles were probably obtained from credit card sign-up bonuses and spending than by flying.

In addition, we’ve obtained about half our hotel stays over the past few years for free by using points for rooms (again, mostly Hilton points obtained from credit card spending).

We’ve been whittling down the balances in our frequent flyer accounts. Currently, we each have about 30,000 miles with Alaska; Ken has roughly 60,000 with United, 25,000 with Delta, and 30,000 with USAir (we wiped out Francesca’s United miles on our last international trip); we have a bit more than 160,000 Hilton points; plus there are some miles scattered around other airline programs.

So despite our skepticism, we still have to say that the game works. Consider getting those airline credit cards to obtain the initial bonus miles. Work the system for points with other credit cards or other points programs such as hotels. Make every purchase count – assuming you pay your card(s) in full every month, use a credit card for every purchase and either get cash back or miles/points of some sort for every dollar you spend. Work the angles for sign-up bonuses, contests, surveys, and the like – for example, every one of our combined 28,000 bmi miles have been obtained that way.

Our miles/points goals for 2009 are pretty modest: 1) bump up the Delta miles significantly, to get to the next award/upgrade level, 2) use up those USAir miles that we think of as just “sitting around,” 3) concentrate on using cash-back credit cards as much as possible, yet, 4) no matter what, continue to take advantage of every opportunity for free miles, even if we’re skeptical of their value.

As for related goals, we vow to only use 0% foreign-exchange-fee credit cards overseas (Capital One and Schwab are our current favorites); to never pay an ATM fee again (possible with several banks, especially Bank of Internet and Schwab); hopefully never fly less than Premium Economy again; and finally, for foreign travel, try to fly a “good” domestic carrier (JetBlue, Virgin America) to a U.S. gateway city, and then fly a real airline (an international carrier) overseas.

As for specific travel plans, we’ve moved to a space in our lives where we are “non-planning” more vacations, and being more spontaneous. We have our list of desired destinations, and the general timeframes when we can travel. Then, we’re going to wait for airfare deals, specials, and other offers much closer to our actual travels. For example, just in the past month we saw several incredible airfare deals to New Zealand, Scandinavia, France, and Asia. If we had been “ready” to take advantage of those offers, we could have jumped on a good deal. In general, we’ll have a few destinations in mind where we’ll be ready to pull the trigger in a 30-day window. This also makes sense with the myriad schedule changes the airlines are making nowadays. A recent trip that we planned several months in advance had more than half-a-dozen flight changes (we stopped counting) before our departure.

We’ll be traveling from Jan 1-10, and do not plan any posting or moderating comments during that time. We thank all our site visitors during 2008, who came from 88 countries this year (see map below). See you all next year.

Saturday, December 27, 2008

Exposed – Credit Card “Rating” Websites

We’ve previously discussed websites that supposedly “rate” credit cards, especially reward credit cards. These sites purport to review cards, and pretend to tell you about the best card offers for cash rebates, frequent flyer miles, or other rewards. We’ve almost always felt that these were self-serving affiliate marketing sites first, and unbiased review sites a far-distant second.

For those unfamiliar with affiliate marketing, it means that every time you click on a link or ad to ABC credit card on the XYZ card review site, XYZ gets a commission for a successful transaction. (Many blogs also participate in affiliate marketing programs, yet most blogs still seem to be fairly unbiased. We do not participate in any affiliate program on this blog. Thus, we have no incentive to recommend one card – or other product – over another.) That said, in many cases affiliate marketing is a legitimate revenue source for many blogs and websites. But it has never seemed appropriate to us with the “card-rating” websites.

The reason for this post is that it now appears (according to CreditMattersBlog) that Chase, Citibank, HSBC (and possibly American Express) have pulled some or all of their card products from the affiliate marketing channels. Guess what? All of a sudden nearly all of the so-called “unbiased” card-rating sites no longer display any United Airlines credit cards (Chase), American Airlines cards (Citi), HSBC cards, and many others.

If you find a rating site that no longer shows these and similar cards, you can be assured they do NOT have YOUR best interests at heart in ANY of their recommendations. Our least-favorite, self-serving “review” site no longer even lists Chase or HSBC on their credit-card-issuer’s page – you’d think that those companies no longer issue cards. The good news is that this can be a “canary-in-the-coal-mine” test for card review sites. If a card review site still lists a full range of Chase, Citi, and HSBC cards, it may pass the unbiased test. Unfortunately, in our recent tests, NONE have passed.

We are really saddened that several sites which we had previously considered relatively unbiased have suddenly stopped listing certain cards. For example, the Chase Freedom Visa, which we have recommended several times, has disappeared from most card-rating websites. Its 3% cash rebate is still one of the absolute best returns we’ve seen, but since the affiliate-dependent sites no longer get a commission for recommending it, the card has disappeared from their reviews.

What you have, then, is another “Buyer Beware” moment. If you want unbiased credit card reviews, you have to do your homework. As of now, we have NOT FOUND A SINGLE SITE which hasn’t changed its “recommendations” since Citi, Chase, and HSBC pulled out of the affiliate channels. Therefore, there isn’t a single comparison site for reward credit cards that we can recommend. When (or if) we find a comprehensive, truly unbiased card review site, we’ll rush to post that information.

[UPDATE: 12/31/2008. The buzz over on CreditMattersBlog seems to indicate that more card issuers are pulling out of the affiliate market. According to CMB, those include most Advanta credit cards, all Bank of America cards, and Discover business cards. Already, several of those so-called unbiased credit-card “rating” websites have pulled those cards from their sites. Which obviously confirms our opinion that they do NOT have any real interest in presenting objective reviews.]

Friday, December 26, 2008

Solutions for Problems that Don’t Exist?

The French government has unveiled a new logo and brand message (see below). As marketing/branding consultants, we actually like the image. But is it really necessary? France has been the world’s top tourist destination for the last 15 years.

The Pittsburgh airport authority will spend $600,000 over the next two years promoting a new Delta Pittsburgh-to-Paris flight. This is in addition to up to $9 million in revenue guarantees to Delta if the flight’s load factors don’t meet certain estimates. If real demand for the service isn’t there, no amount of money will help when the revenue guarantees run out.

We’re all for being as environmentally friendly as possible, but the news that Discover is now producing some credit cards with biodegradable plastic just seems odd. We applaud Discover for this move, but was there really a demand for this? Landfills will be just as full and just as massive, no matter what type of credit-card debris is dumped into them. Aren’t there other environmental initiatives that Discover might have taken that produce more benefits to the world?

The TSA announced expansion of its “popular” Family Lanes at security checkpoints to every airport in the nation, saying this will “allow families, individuals unfamiliar with air travel procedures and travelers with special needs to go through security at their own pace.” This is about as useful as saying “if you don’t drive very well, stay in the slow lane on the freeway,” or “if you’re a beginner skier, stay off the black runs.” Every Texan skier in the universe thinks they’re a black-diamond skier. Do we think travelers are any different?

Tuesday, December 23, 2008

Airport Websites

Unlike some travel writers, we don’t think of ourselves as airplane/airport/airline geeks. We are more interested in the ways that the air experience impacts our travels. So it was interesting when we saw a recent article on Yahoo travel about The World’s Top 10 Airport Web Sites. Not airports, but airport websites. Which got us to thinking that, yes, we do sometimes consult airport websites, but usually during the travel research stage.

The article points out some good pieces of information that are available on some airport websites, such as flight delays, current parking-lot conditions, and gate information.

So what’s important in an airport website? We have only used a few of the airport websites listed in the article, but have visited several other sites that we find helpful, and others that we find useless. Our suggestions for what we want to see from a good airport website include:

When Planning Your Travels
What airlines fly from the airport?
Are there airline route maps for each airline serving the airport?
What non-stop routes (especially internationally) are available from the airport?

After Ticketing but Before Traveling
Where are the gates in relation to the ticket counters?
Are there multiple security lines (so we can find a less-crowded one)?
Where are connecting gates?
What shopping and other services are available?
What are the restaurant and dining choices?
Where are the airline’s lounges (if your ticket allows access)?
Are there links to airport hotels, in case we have a long delay?
Information about ground transportation.
Parking lot information and parking costs.
Maps. We want lots of maps of terminals, gates, parking, etc.

Day of Travel
Delays, gates, updates, and other flight information.
Weather at the airport.
Parking lot updates – what’s full, what’s open.

General Website Features
Ease of navigation of the website.
Clearly defined sections, areas, tabs.
Easy-on-the-eye fonts, colors, graphics.
Fast loading (we don’t always have high-speed internet on the road).

The original article’s Top 10 includes five U.S. airports and five international ones.

Cincinnati/Northern Kentucky International Airport
Chicago O'Hare International Airport
Dallas/Fort Worth International Airport
Denver International Airport
San Francisco International Airport
Copenhagen Airports
Frankfurt Airport City
London Heathrow International Airport
Singapore Changi Airport
Tokyo Narita International Airport

What airport sites would you add? What other information would you like to find on an airport website?

Monday, December 15, 2008

Why Use an Airline Credit Card?

We actually can’t think of any good reason. Frequent flyer tickets are becoming harder to obtain, and the miles needed are being increased, thus devaluing your reward per mile.

Airline frequent-flyer-mile credit cards generally cost in the neighborhood of $75 or more per year in annual fees, and then you end up with miles usually worth 2 cents each, or less. The old logic was that you received good value if you could use 25,000 miles for a domestic ticket that you’d probably pay about $500 for (less real value, though, because of that annual fee).

But as miles became devalued, the argument then became that you would get better use of miles for upgrades from economy to business or first class. With premium-class tickets sometimes 3 or 4 times the price of economy, that made some sense, even though you had to purchase the economy ticket itself first.

But now, several airlines are imposing fees of up to $300 to upgrade domestically, and up to $1,000 to do so internationally. The biggest abusers so far appear to be American, Continental, and United. Plan on the other majors following the herd.

This seems to be another squeeze-the-customer moment that the airlines have imposed without much thought to its consequences. If this, as we suggest, means that people will simply stop using airline credit cards, the banks that pay the airlines for those miles will begin to see customers migrate to other cards, and the airlines stand to lose one of their few reliable income streams.

In today’s environment, we can’t recommend an airline credit card anymore. There are several cash-back credit cards that offer 2% or better for purchases, and which have no annual fees. We remain convinced that over the long run, most consumers will be better off with the Chase Freedom Visa (3% cash back in several categories), the new Schwab Visa (2% cash back on everything), or the American Express Blue Cash (up to 5% after reaching a spending threshold).

Put that cash reward in a piggy bank, and buy yourself the airline ticket you want – any seat, any time, no extra fees for using cash, and probably inexpensive if you watch the airfare sales.

Airfare Watchdog has a good chart of the latest frequent-flyer fees.

Wednesday, December 10, 2008

The Best Merger Plan Ever

The Italian government is bailing out Alitalia, while the U.S. government seems poised to throw billions of dollars to the Big 3 automakers. The December 9 Wall St. Journal reports that Italy’s Fiat is seeking an alliance/consolidation to stay in business, and the Ft. Worth Star-Telegram just ran a story about the CEO of American Airlines suggesting that the U.S. air travel industry should get in line with hands out to the government.

We have a better idea. Combine General Motors, Fiat, Alitalia, and United into the world’s biggest (and first) Fly-and-Drive company.

The top executives at the U.S. airlines and in Detroit are so well known for understanding customer service, and are so humble and financially under-rewarded. Italian quality and efficiency is famous the world over. What better fit could there be? Wait! How about a new GAUF (GM, Alitalia, United, Fiat) credit card – pronounced “gaffe” – issued by financial partner Washington Mutual!

We can already see the advertising:

  • Buy a Fiat and get free airfare on United for a year (although there will be fees for baggage, drinks, snacks, seat cushions, in-flight magazines, and use of the lavatory)!
  • Fly Alitalia and instead of frequent flyer miles get points that can be redeemed for auto-parts purchases!
  • The new GAUF credit card offers rebates that can be applied toward CEO bonuses!

Thursday, December 04, 2008

Great-Looking New Schwab No-Foreign-Exchange-Fee Visa

We’ve mentioned in the past that the Schwab checking account is one of our favorite travel tools. It offers an ATM card that rebates all ATM fees, worldwide.

Now, it looks like Schwab has introduced a brand new Signature Visa card that should make a great foreign-travel credit card. In the simplest terms, the Schwab Bank Invest First Visa Credit Card (whew, that’s a mouthful) claims to offer 2% cash back on all purchases, and 0% foreign exchange fees.

The cash rebate goes directly into a Schwab One brokerage account (no fees, no minimums to open), the same as you needed to link to for the checking account.

This Visa is very new, so we don’t have too many details yet. All we can say is, “Watch out Capital One” – their 0% forex fees just got some competition. And the Schwab 2% cash rebate with the new card is better than Capital One’s points/miles/cash-back schemes.

We’ll be applying for the card and will report our results after we’ve had a chance to use and evaluate it.

Monday, December 01, 2008

Not Flying? - Fees Anyway!

We’ve never been ones to post “see-what-this-other-blogger-wrote” pieces, but this – ahem – “News Story” from The Onion is priceless. But shouldn’t they have saved it for April 1?