Does anyone remember what a petard is? I think most folks only know them from the line in Shakespeare — they picture some kind of quaint device, a Flintstones-like crane … so you could be “hoisted on your own petard” in a clever, comical way.
Actually, a petard is a kind of primitive land mine.
The airlines have built an enormous petard beneath themselves; alas, they will not be the only ones hoisted when it explodes. 14 trillion miles of “free” flying outstanding … man, that’s a bunch of flying. OK, if only 1 percent are actually turned into flights, then it’s only 140 billion miles of “free” jet travel.
So goes the “frequent flyer” scheme, whereby rich people accrue a bunch of air miles on trips paid for by their employers or by using their various plasticash cards, and then use those miles to take long jet trips away from the worry about global heating and drowning polar bears.
Interesting thing is, I’ve never heard of the IRS pursuing anyone for failure to declare those trips and goodies as income. In other words, the IRS is so busy terrorizing waitresses who don’t declare enough in tips on their 1040EZ that they don’t have time to look up and notice the planes full of people converting tax-deductible or employer-paid work travel into “free” trips for themselves and their families, all without paying any taxes on the value of the trips.
So the woman quoted in the story deducts the costs of her flights from her taxes or has them paid by an employer, and then runs down to get married in Belize on her “free” airline miles — so we’ve not only made destroying the climate via jet travel a tax deductible activity, but we’re ignoring the amount of additional flying it creates and letting people use those extra flights without paying any taxes on them.
(And it’s not just business folks. I know the professors at the large research university nearest me consider frequent flyer miles an inalienable property right, and they like to turn the university-paid flights abroad for research and “study abroad” trips into Hawaiian holidays for the family.)
Doesn’t seem like it would be too difficult to require that the airlines send a little computerized note to the IRS whenever frequent flyer miles are redeemed, with the full fare price of the trip being treated as income to the recipient.
Frequent flyer miles: just another way the airlines have of helping destabilize the climate.
The New York-based traveler has amassed more than 1 million frequent flyer miles with American Airlines, and still others with additional carriers. She is one of a growing band of customers who plan to redeem those miles for free flights.
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Airlines have awarded more than 19 trillion frequent flyer miles over the past 25 years — roughly equivalent to circling the globe 760 million times — and more than 14 trillion of those miles are unredeemed. The rate of awards is increasing annually, according to frequent flyer site WebFlyer.
While many of those miles may never be swapped for trips or merchandise and they expire more quickly than before, that overhang of unredeemed miles represents a risk for airlines.
AMR Corp. (NYSE:AMR – news), parent of American Airlines, which operates the world’s largest frequent-flyer program, carried a $1.6 billion liability on its books at the end of 2006, about $100 million more than a year earlier and up from $976 million in 2000.
Free travel awards represented 7.5 percent of American’s passengers in 2006, compared to 7.2 percent in 2005, according to company filings.
Delta Air Lines Inc. (NYSE:DAL – news) expected to award about 8 million free trips at the end of 2006, a million more than in 2005. The No. 3 U.S. carrier increased its liability at the end of last year to $887 million from $607 million a year earlier.
Bankrupt Northwest Airlines Corp. (Other OTC:NWACQ – news) increased its frequent flyer liability to $269 million at the end of 2006, up from $248 million in 2005 and $215 million in 2004.
With planes fuller than ever, granting free trips could displace paying passengers, while unsettled U.S. consumers may be ready to cash in those miles to save money as the economy shows signs of slowing.
“The airlines just can’t handle that level of reward redemption,” said Rick Ferguson, editorial director at loyalty-program consulting firm Colloquy. “The liability’s a big problem.”
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“It does make a difference in the way that I fly,” said Porter, who used a chunk of miles to plan her December 2005 wedding in Belize. “I definitely think twice about booking a flight that’s not on American.”
