FREQUENT FLIERS' $6 BILLION RIP-OFF
(FORTUNE Magazine) – When it comes to choosing between their company's bottom line and notching up more frequent flier miles for themselves, many employees choose to look out for No. 1. The cost to U.S. corporations, according to two professors at the University of Georgia's business school who surveyed 506 corporate travel managers: more than $6 billion a year. Professors Richard Fox and Frederick Stephenson found that calculating employees book on airlines where they are enrolled in mileage plans even though a competing carrier offers a lower fare. Others take circuitous routes. According to the travel managers, excessive travel costs also involve hotel reservations because many chains are hooked up with mileage programs. Small wonder that airlines have awarded so many frequent flier miles (see chart). Peter Moen, a vice president of Carlson Travel Network, a corporate travel management agency whose clients include Amoco, AT&T, and United Technologies, says that companies are finding innovative ways to respond. Among them: -- Pay cash rewards to employees who use their frequent flier credits for business trips. General Electric's nuclear energy unit hands out $250 to workers in exchange for tickets worth $350 or more. -- Give employees a choice from gift catalogues in exchange for their credits. Whirlpool offers a Maritz catalogue, offering clothes, furniture, and appliances. Frequent flier credits worth $1,000 would earn the employee $500 worth of free merchandise. CHART: NOT AVAILABLE CREDIT: FORTUNE CHART/SOURCE: FREQUENT FLYER SERVICES CAPTION: WHOSE MILES? |
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