Sunday, March 17, 2013

Earning and Using Frequent Flyer Miles - Part 3

This is part 3 of a series on Frequent flyer miles, part 1 was an introduction and part 2 explained how to find more information from other sources.

Airline Alliances

Almost all major airlines in the united states that have international flights are part of an alliance of airlines that include other airlines from all over the world.  There 3 main airline alliances are: Star Alliance, OneWorld Alliance and Sky Team Alliance

  • Star Alliance - This is the largest alliance with 27 members.  The most important members for most readers are United Airlines, Turkish Airlines and US Airlines (at least until it merges with American Airlines) because they all fly to Israel somewhat regularly.
  • Sky Team Alliance - The second largest with 19 member airlines.  The most important are probably Delta, KLM and Air France.
  • One World Alliance - The smallest with only 13 member airlines.  The most important are probably American and British Airlines

What is an Alliance?

An alliance allows individual airlines to expand their reach without having to expand their fleets. Airlines partner together and share some aspects of their business. 

  • The major advantage for passengers is that frequent flyer miles from one airline can usually be used to fly on partner airlines of the same alliance.  Let's take an example:
    • United Airlines and Turkish Airlines are both part of the Star Alliance.  This means that I can use United Mileage Plus miles to fly on United Airlines flights or Turkish Airlines flights or any other member of the Star Alliance.
  • The second great benefit is that one can miles earned from one partner can be credited to your account from the other partner.  Once again, here is an example.  If I fly on Turkish Air and I provide my United Airlines Mileage Plus number, I will earn United miles for my Turkish Air flight even though I didn't take a United flight. 

Here is a picture from my United Airlines account: You can see that I earned United Mileage plus miles for my Turkish Air flight

The most important point to take away is that you only need to have a frequent flyer account with one member of an alliance and combine all of your miles into one account.  In fact, using multiple accounts can be detrimental as I will explain.

For instance, in our scenario let's say I had a United account and a Turkish Airlines Miles and Smiles account.  If go on a United flight direct to Israel and a Turkish Airlines flight to Israel with a stop in Istambul, I would get 11,320 miles in my United account and 11,410 miles in my Turkish Airlines account.  If, however, I gave my United number for the same Turkish Airlines flight, I would earn all 22,730 miles in my United account and I am now much closer to earning my next flight through miles.  I can then use my United miles to fly on any Star Alliance partner with those miles (Booking will be explained in a later post).

Does it matter which Airline I choose within an Alliance?

We have now established that it is important to have at least one airline in each alliance that is your miles currency for that alliance.  Does it matter which airline I choose?  Big-time, and here's why.

Even though each airline is partners with the others in the alliance, they do not treat their miles equally.  Each airline has a different calculation of how many miles it "costs" to go to the destination of your choice.  

I will take flying to Israel as an example again.  (All of the following information can be found from Flying Economy with United miles usually costs 80,000 miles for a roundtrip ticket, while using Turkish Air miles usually costs 105,000 miles for the exact same flight.  If you goal is a free flight to Israel, you will get there 20% faster by collecting United miles than by collecting Turkish air miles.

In addition, many programs charge fuel surcharges for redeeming frequent flyer miles that can cost a few hundred extra dollars.  For example, within the One World Alliance, British Airways charges a major fuel surcharge for flying international on their Frequent flyer program, but doesn't charge a fuel surcharge for using their miles to fly within the US on American Airlines flights.  Their miles are not too valuable flying internationally, but can be quite valuable flying domestically.  American Airlines does not have a fuel surcharge for flying internationally, unless it is on a British Airlines flight.  Therefore, if you are collecting One World Alliance points and are interested in international flights, you are better off with American Airlines miles and if you are interested in domestic flights, you are better off with British Airways points.

For an example of how confusing surcharges can be and for much more detailed information, look at this dansdeals forums post.