Let the dinosaurs die

If I've learned anything in the last four years...
If I've learned anything in the last four years...

I’m pretty firmly against the slew of bailouts being proposed or in process. It’s not that I’m insensitive to the impact of the fall of certain industries or the unemployment that follows. It’s that I don’t believe that the money, which is at some point finite, will make a difference in badly broken businesses. So why throw good money after bad? Let the bad businesses fail and use the proposed bailout money to help the displaced workers by using it to create jobs.
I had an experience today with a company in a troubled industry that reminded me how badly things can be broken…I’m an American Airlines AAdvantage Gold member. I hit that threshold for the first time in 2007, from traipsing about the country raising money for Our Little Business and then going back and forth to Seattle during the integration phase. Once I had reasonable resources to not quibble over $50 difference in pricing one way or another, the membership had its desired impact for American. I stopped shopping versus other airlines because the Gold privileges were worth it, particularly when the company was paying for the tickets and I knew I already used enough tricks to get far cheaper tickets than the average traveler.
By my standards, I flew a good bit this year too — a couple Seattle trips; a few conferences and a vacation. In all cases, I considered no one but American. Still, I came up 700 miles short of 25,000, which is the threshold to stay Gold like Ponyboy.
The vacation was with April, who rarely flies and has a total of 3,400 miles in her account. I knew AA had a program for sharing miles, so I figured I’d take her miles and be comfortably over the top. She doesn’t fly enough to earn sufficient miles to do anything useful with them. In fact, I signed her up specifically so I could get these miles later.
Here’s the choices I found available to me:

  • Take April’s 3,000 miles for a transfer cost (including, of course, several tiers of fees) for $80.
  • Buy the same miles for $82.50, leaving April her miles.
  • Take only 1,000 miles from April, which would STILL cost $80.
  • Buy $1,000 miles for $59.56, again including several mysterious subcharges.

Now 25,000 miles gets you a coach ticket. And let’s say the average ticket I’d use is, at most, $600. So each mile is worth roughly $.024. So the most I should be paying for $1,000 miles is around $24.
Now I know the argument here is that there’s a transaction cost. I guarantee you that cost, charged through an outside vendor, isn’t $36. It’s done online, with no human hands involved. If it does cost AA anywhere near $36, that’s another, even worse, problem.
So, my response should have been to forget the whole thing. Which would put me back on the open market for plane tickets and less likely to fly AA. For $36 in silly fees, they should and could have lost the monopoly on my travel. The only reason they didn’t, is that I live in Dallas, their primary hub and I know that they’re likely to be the best-priced direct provider for most trips.
BUT, if I lived anywhere else, I would have dropped them like a hot potato, making their vaunted rewards program a waste. I’m sure that happens for a lot of people, a lot of times. And is just one other way the dinosaur is devouring the very ecosystem that once sustained it.

Mike Orren is the Chief Product Officer of The Dallas Morning News; President of Belo Business Intelligence; husband to Crystal Orren; and a Mungarian at Munger Place Church in Dallas, TX. All opinions herein are mine alone.

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