NY Times (and me!) on changes in frequent flyer programs

The NY Times ran a piece in today’s print edition (25 Aug 2009) and also online titled “Airlines Are Sweetening Frequent-Flier Programs.”  The article focuses on a few recent changes that have come out amongst the various major programs in the United States.  They touch on one-way awards from American Airlines, United cutting some fees and Delta adding a new tier and roll-over for extra miles earned.  It takes until well into the article – about 60% of the way through – until they get to someone taking a hard look at the reality of the changes from the perspective of the frequent traveler rather than from the industry’s point of view.

That “every man” point of view happens to have been provided by me.  And I think that the reporter did a pretty good job of representing my feelings on the topic:

“The legacy airlines especially are doing as much as they can to generate loyalty, and these days that means crazy bonuses — double miles for this, triple miles for that, miles are being given out like candy on Halloween,” Mr. Miller said.

“It’s great now,” he added, but he worries that the airlines’ largess could have a downside. “The question is, what happens when everyone tries to take advantage of all these benefits that are being handed out now? I’ve got elite status, but am I going to be able to get upgrades or will everybody else have status, too?”

That is the crux of every change that the airlines make.  The vast majority of them sound great on the surface, but once you dig a bit deeper that often turns out to not be the case.  Delta’s new Diamond tier is great – it is essentially what Platinum used to be five years ago – but the qualification level is now 67% higher.  American’s one way rewards are fun but I have a habit of generally coming home at the end of a trip (even if my routing is less than direct).  And the AA change removed stopovers at international gateways, actually increasing the price of many rewards (particularly the type of trips I like to take).  And while I don’t know what United has up their sleeve with regard to the reduced fees, they have plenty of other things they do to artificially limit options for their customers.

The main factor that I feel the article missed is that loyalty in the travel industry is a rather fickle thing. A diehard customer will walk in a heartbeat if they feel inappropriately slighted by such a change or if another carrier shows up with a shinier trinket to dangle in front of them and a reasonable route map and schedule to match.  Sure, corporate contracts drive a fair amount of loyalty, but there are plenty of folks out there who, like me, are just looking for the best option available to them.  That might be Continental for me today, but that doesn’t mean that it will be in 2010.  With each of these changes the programs risk alienating people just as much as they can attract new loyalists. 

The key is to make sure that the changes attract more revenue than they lose, and that’s always a challenge for the airlines, even when the revenue is the minimal ~$3000 I gave to get top tier status this year.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.