Newsstand - Finally arrived - USA Today article on perks for high-revenue fliers

Airlines pump up perks for high-revenue fliers
By Chris Woodyard, USA TODAY

Hey big spender, the nation's biggest airlines want to spend a little more time with you.

Yeah, you — the traveler who drops $50,000 a year on plane tickets and thinks nothing of paying $2,643 for a no-hassle, refundable coach-class ticket between New York and Los Angeles.

http://www.usatoday.com/money/biztravel/2003-02-11-elite_x.htm

Boy do I see the moderators eyes light up as they fight one another to see who gets to move this one

This article really belongs in the "In the News: News That Affects Frequent Flyers" forum.

I should note that I do think the topic of "Are elite benefits for high mileage/low revenue flyers coming to an end?" to be an appropriate topic for MilesBuzz. That discussion could include a link to the above articule, I think. However, posts that primarily point to new media pieces belong over in the aforementioned forum. I'm moving it there now.

Thanks,
Gary
aka gleff
MilesBuzz and Delta moderator

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Still, taking away benefits can be a risky strategy for carriers already fighting to keep corporate travelers from switching to low-fare airlines. Consider US Airways, which announced, then abandoned, a policy change similar to Delta's last year. </font>

Truth is that there is so much competition amongst airlines that I wouldn't say too many will match Delta.

A United customer who spends $6000 per year and is 1K is clearly less valuable than one who spends $60K per year. OTOH, the $6K customer is much more valuable than 98% of United's other customers.

Since the marginal cost of an airline seat is close to zero, the airlines need the $6K customer and the $60K customer.

So I do not see miles-based loyalty programs collapsing. I see more revenue-based carrots (it's about time for these anyway) though.



[This message has been edited by richard (edited 02-12-2003).]

Two things here: (1) there isn't really anything new in the article. Maybe UA's "black card," but that's about it.

(2) While high fare paying pax may be getting black pieces of plastic to carry around, they're also getting worse inflight service and amenities.

I'll trade the black plastic for some caviar if I'm paying $6000 to get from NYC to LON.

d

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by richard:
Truth is that there is so much competition amongst airlines that I wouldn't say too many will match Delta.

A United customer who spends $6000 per year and is 1K is clearly less valuable than one who spends $60K per year. OTOH, the $6K customer is much more valuable than 98% of United's other customers.

Since the marginal cost of an airline seat is close to zero, the airlines need the $6K customer and the $60K customer.

So I do not see miles-based loyalty programs collapsing. I see more revenue-based carrots (it's about time for these anyway) though.

[This message has been edited by richard (edited 02-12-2003).]</font>

The other point to note is that tehre are far more frequent flyers who spend, say, 4K than those who spend 50K per year. Airlines can not survive on 50K a year passengers alone.

I would like to know how many of you, or your companies, will pay more just to get additional qualifucation??

Not a penny more.

I thought it was a real big "so what" article...and how many more times is USA Today going to trot out that "this is not the loyalty we want to reward" quote...

Reporters...time to dig up something newer and juicier!

While I understand the desire on the part of the airlines to retain high rev passengers, here is the folly of this kind of reasoning.

When I as an occasional flier, once or a twice a year, mostly international, I always went for the cheapest ticket. As a result, I flew a variey of airlines. If I were a high rev flier, spending $2500 for a transcon ticket, my loyalty would be to the task that's making me spend that kind of money or to the client who pays the bill. As long as my employer or client is pay8ng the bill, I am still obligated to purchase the cheapest fare. If I were independently wealthy and routinely spent that kind of money from my pocket, an extra perk like access to a World Club here or Presidents Club there, would hardly sway me. If I were spending that kind of money, I would get upgraded on just about any airline. The loyalty and the perks it brings are valuable to mid level elites like me, who is platinum, made up mostly of M, H, Q, V and K fares, with an occasional B or Y thrown in. And it is people like me, wo are likely to tell my mom "look ma, no first class ticket and I still travelled first class", or tell my friends how well Northwest treats me for being loyal. Is some one who flies 150,000 miles a year be more valuable than someone who flies 750001, definietely so. But that would mean having more levels and making loyalty programme more complex and difficult to administerleading to a lot more clutter and complaints. IMO midlevel eleites likemsyelf will continue to be valuable to the airlines. When that changes, I would revert back to cheapest fare rule and stop taking trips just to maintain my status and that of my wife and children.