- The Washington Times - Monday, October 11, 2004

Some US Airways frequent fliers are using up their “dividend miles” as quickly as possible, while others are holding on to them in the hope that the Arlington airline will avoid liquidation.

A Washington lawyer, who did not want her name used, said she had used about 80,000 miles since the company declared bankruptcy on Sept. 12.

She took one trip herself and gave another 50,000 miles to her sister and her two children so they could visit her from Tennessee. After she said goodbye to them at Ronald Reagan Washington National Airport, she said she used the miles out of “concern they would become worthless.”

Brian Finn, a college student from McLean, said he and his brother used US Airways dividend miles to visit a friend in Buenos Aires.

US Airways’ financial problems were “an important part of why we went,” said Mr. Finn, a Harvard University economics major. “It was foreseeable that those miles wouldn’t be there.”

US Airways officials said after the carrier filed for bankruptcy on Sept. 12 — the second time in two years — that liquidation as soon as February is a possibility unless they can bring down their costs.

Liquidation would mean the Arlington airline’s customers wouldlose all the frequent-flier miles that they have earned.

Although airlines have honored frequent-flier miles of liquidated competitors in the past, the current climate means that the likelihood of that happening is minimal, said Terry Trippler, an expert on air fares and regulations.

“With that 100,000 miles and $5, you could probably get a cup of coffee and a doughnut,” he said. “I just don’t see anybody picking it up. I don’t think anyone can afford it.”

Several frequent fliers were uncertain about what they would do with their unused miles.

“I have to wait to see what happens,” said Barbara Kashar, a Sandwich, Mass., resident returning home on a US Airways flight at Reagan Airport after a family wedding in Washington.

“I have to find a place to go,” she said. “I’ll probably try to go overseas again.”

Matt Graham, a Hobe Sound, Fla., engineer returning home after visiting friends, said he has saved 55,000 US Airways dividend miles.

“I do have enough that I could take a flight, and I’m sort of thinking about it,” he said.

Tom Bascom, a Manchester, N.H., information-technology business owner and regular US Airways customer, said some customers are reacting irrationally by trying to “save” dividend miles that might be eliminated in a liquidation.

“People are doing ridiculous things to save their mileage, like getting paper tickets and booking trips that they will later change,” Mr. Bascom said.

They are “saving” their miles in the sense that they get their tickets while they still can use their frequent-flier miles.

If they change their flights later, they will “incur fees that cost real dollars,” Mr. Bascom said. “In some cases, the fees easily cost more than a well-planned paid ticket would. It’s wasted money.”

US Airways officials say any concern by frequent fliers is unwarranted.

“The program is completely unaffected by our [bankruptcy] filing,” said Amy Kudwa, US Airways spokeswoman.

She also said few customers are taking trips only to “burn off” their frequent-flier miles.

“We haven’t seen a significant spike,” Miss Kudwa said. “We’re advising customers to continue using their miles exactly as they would otherwise.”

A group of US Airways frequent fliers communicate with others through a Web site at www.flyertalk.com. The group calls itself Frequent Flyers Organized and Committed to US Airways Success.

One of the group’s members, Jim Johnston, a Princeton, W.Va., software-company owner, said reaction of the airline’s frequent fliers to the latest bankruptcy has been mixed.

“Some are doom and gloomers, some are ‘we-hope-they-get-it-together’ supporters,” he said. “Some I know are hedging their bets and spreading business over other airlines just in case US [Airways] liquidates and no one picks up the [dividend miles] program and status.”

Despite their loyalty to the airline, the frequent fliers are concerned that it might not survive as the federal bankruptcy court in Alexandria decides how its creditors will be paid.

“At this point, it’s anyone’s guess, but I do not think it is in anyone’s best interest to liquidate,” said Art Pushkin, a Long Island, N.Y., computer industry regional sales manager and owner of 570,000 US Airways miles.

The airline has greater value to its creditors while it is operating than it would have if it is sold off in pieces to pay debts, Mr. Pushkin said.

“As long as US [Airways] has flights available going where I need to go, they continue to be my first choice,” he said.

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