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07/06/2010 05:30 AM

Airline Rewards On The Decline, Experts Say

By: Shazia Khan

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According to industry experts, airlines are clamping down on points and rewards this summer as the number of available seats dry up. NY1's Shazia Khan filed the following Money Matters report.

It's never been easier to earn airline miles or points, whether by using your credit cards or even taking surveys. However, flying the friendly skies has been anything but for those leisure travelers hoping to cash in their rewards programs for a free or discounted airline ticket.

"More and more people are chasing after these free tickets and there's just not enough of them because the airlines are cutting back on their service. There are about 17 percent fewer seats now available than there were a year and a half ago. So it's much more difficult to redeem these tickets," says BudgetTravel.com Senior Editor Sean O'Neill.

Earlier this year, Idea Works, a consulting firm, assessed reward seat availability for June through October travel. The domestic, no frills Southwest airlines had roughly 99 percent availability; Continental 71 percent; United 69 percent; American 58 percent; Delta 13 percent; and US airways 11 percent.

With the impending Continental/United merger, reward seats are expected to be even more scarce. If you beat the odds to snag a seat last minute, industry experts say many airlines will hit you with more fees than ever before.

"Last December, Continental added a fee for redeeming your frequent flyer miles in the last three weeks before your trip. American Airlines already has a fee for that. Several airlines are making fees if you haven't had activity in your account for a little while," explains O'Neill.

So while you won't have much luck trying to secure a rewards seat for summer travel, experts say use your miles to upgrade, though success will vary given the travel crunch. If you fear your points or miles may expire before you are able to make a reservation there are other options.

"A number of the frequent flyer reward programs will allow you to trade miles for other things. Usually travel related expenses, maybe hotels or maybe dining expenses for example. Some will let you cash them in for magazines or other things. In the worst case scenario you can always donate them to charities so somebody else who needs those miles can use them," says Credit.com Personal Finance Advisor Gerri Detweiler.