Are we looking at a shift towards revenue-based loyalty programs?


With each change to loyalty program benefits it seems that the goal of the programs seems to be cutting benefits or shifting who gets the benefits. And these shifts are nearly all focused on revenue, not just miles flown. Looking at the recent changes to the JetBlue TrueBlue program and the virgin America Elevate program – both added elite levels recently (Read about JetBlue, Virgin America)- it seems that the pace of this change might be accelerating. The TrueBlue and Elevate programs have been revenue-based for a while now; that they have continued down that path with their elite programs shouldn’t be much of a surprise. But is their move to add elite programs changing the shape of the industry? In my recent story posted on the APEX Editor’s Blog I argue that the move is hastening the demise of benefits based on miles flown.

TrueBlue Mosaic, their new elite program, is based on feedback from the company’s customers according to the Director of Loyalty, Dave Canty:

Mosaic is a natural evolution; we have always planned for TrueBlue to add meaningful benefits that customers appreciate.… We engage with our customers listen to their feedback, and that helps inform our future plans. TrueBlue is indicative of that approach, we designed it with a lot of customers engaged in the process…a cross section of once a year flyers to 100+ a year flyers, it is important that we listen to all, not just the top.

And the changes aren’t ending with the introduction of Mosaic. Canty sees a future with more benefits and an evolution of the program:

We will continue to evolve the program, and look for opportunities that make it even better for our customers, I’m not interested in being Legacy-Like, we will make changes or enhancements that are true our brand and deliver for our customers. I see plenty of blue sky ahead.

Reading between the lines, it is pretty clear that the carrier is happy with their revenue-based program and that they see a bright future for the approach. And they are going to be continuing down that path for the foreseeable future.

While neither the TrueBlue Mosaic nor the Elevate Elite programs are likely going to see a massive influx of elites from other airlines based on their new tiers, it is quite easy to see how the move gives cover to some legacy carriers to further change their programs. Earlier this year United Airlines significantly increased the earning rates on many first and business class fares. Yes, the earning is still distance-based, but the impact of revenue is more significant now than ever before. Similarly, on the benefits side of the equation United is favoring fare over status level within the elite tiers for certain upgrades. Delta is in on the game, too, cutting earning rates on unpublished fares recently. And many of their benefits associated with upgrades on long-haul flights have required high fares for a while now.

Oh, and Gary is suggesting that Delta might be moving rather quickly down this path; I think it is related to the unpublished fares thing. I suppose we’ll see.

Does this mean the end of distance-based programs is near? Hardly. It will be several years before the transition is complete. But it is coming. You can see it on the horizon. It will mean a change to the way we play this game. Probably a change for the worse for me personally, but not so much that I’m willing to throw in the towel quite yet. I still have a few good years left, I think.

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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.

4 Comments

    1. Both, really. They are somewhat tied.

      The programs used to run on a theory of an average value of a point on both the earn and redeem side, hoping things worked out OK in the long term. Today they have WAY more data and much more refined systems which allow them to know the actual values rather than guess and hope it averages out OK in the end. With that level of accuracy there’s no reason for them to play the game that way any more.

  1. I hope we all have more than just a few good years left, but the tea leaves don’t seem to be in favor of the status quo.

    It’s hard to see much value in FF programs if we’re stuck with some sort of revenue system, at least for the expensive premium and longhaul int’l redemptions popular now. I guess I’d still collect miles but it would dramatically change the whole game.

    At that point, as far as rewards credit cards for example, maybe it would be better to focus on a cash back card or TYP/MR/UR type card?

    I guess jetblue and Virgin America frequent flyers must be happy enough with their programs, maybe it’s not all bad. OTOH, the legacy carriers don’t offer a product that’s quite as snazzy as those two – I’m sure that helps overall customer satisfaction, too.

  2. I think we will see more legacy carriers go the distance-based route for redemptions (al a Avios) before they get rid of distance-based earnings. I have nothing to back that up other than my gut, but I think the bosses and bean counters will see it as an easy way to reign in on some of the really costly aspirational awards that savvy points guys have come to love.

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