84fiero

Maybe because they are both economists as well?

https://its.law.nyu.edu/facultyprofi...personID=25229

http://www.law.uchicago.edu/node/489/cv

Going back to the article, I wonder if they even realize that in using Spirit as an example of booking away from one's longtime airline and its loyalty program, that Spirit also has a loyalty program? Granted, a very poor one, but still!

GUWonder

Not familiar with Prize winning Ronald Coase?

Lots of esteemed law schools have specialists in law and economics who are students of economics and of the law and practice in both areas. They are sought out frequently when it comes to antitrust cases, like the civil one which had targeted a relative's company.

Thunderroad

You offer a good analysis, but I think the key consideration is what you offer at the very end, which I've bolded. We're looking a very reduced competition here, which could well reduce the prices airlines might otherwise pay for the degraded FF programs.

Of course, things get considerably more complicated when we delve into the details of many folks accruing miles more through credit cards than flights, of DL being a pretty efficient airline (which attracts customers the old fashioned way, based on performance) and UA a problematic one (thus its losing formerly loyal customers), of the various audiences using FF miles and status for different, sometimes (but by no means always) overlapping purposes (premium international flights vs. domestic economy vs. upgrades), etc. But the bottom line could be what the authors argue: with accruing miles and status via actually flying becoming tougher (and more or a hassle), some customers will simply revert to price and convenience as the bases for their flying choices.

lazard

read the article...just a bunch of horse crap.

Kagehitokiri

has any "analysis" ever discussed the ability to earn miles in a foreign program when flying on domestic airline that is in same alliance ?

seems like most people are not even aware of alliances. its always been a regular question on FT, in terms of redeeming awards.

GUWonder

The earning side game has been played too. Familiar with former BD and current A3? Familiar with using BA's program in the US to get lounge access for domestic flights and earn at least one short-haul free flight for ever 4-5 short haul flights as a BA elite on AA? It's a game being played by FTers in the US; however, due to upgrade situation and call handling concerns, having "native" status with the operating carrier frequently makes a big difference and keeps people from steering their flight credits to non-native programs.

RustyC

Spirit's FF program has been surprisingly effective for me. It won't make the flight experience any better and playing the credit-card game is a must, as is having the flexibility to travel in the off-peak third of the year or so, and planning ahead. If you can fill the calendar in the off-peak times then the mile rate can be very favorable. From ATL, for example, SJO or CTG off-peak are 10K RT, CUN is 5K (!!) RT (but sometimes hard to book), as is DEN, and SJD was also 10K. It takes a lot of flexibility to get that and there's still the bag fee-ing frenzy, but the miles required can compare favorably as long as you have the credit card and can travel off-peak.

The card also gets 2 miles per dollar (for $59 annual fee), so $2,500 in actual or manufactured spending can get the 5K. One-way awards also are no problem.

So, for now at least, it has been useful in getting me to places that'd be overpriced relative to distance on the legacy programs. It's not a complete solution but has turned out better than I thought. It's also similar to what DL's program is becoming in that neither will incentivize flying on paid tickets much anymore.

ExtonUS

I understand many people are dissapointed that FF programs are becoming (for most) less rewarding (and I assume that AA will follow the rest), but overall what loyalty program is more rewarding that a FF program?

10-15 years ago on United and US I would fly ~100k miles for ~$10k. In exchange for that I got a bit more than two business class flights to Europe a year. Of course I loved that! The cost of those rewards is much less than the published fare, but I can't imagine a roundtrip business class flight to Europe has a true cost of less than $500 in fuel. Someone here surely can estimate that better than others.

So I recieved a 10% rebate on my purchases PLUS all the upgrades, priority boarding, and special handling that comes with being a top tier frequent flyer. That is a better deal than anything else I have found....

Credit cards - hard to top 2% rebate for your 'loyalty' in using the card
Hotels - Within SPG, Marriott, and Hilton I haven't found upgrading or special treatment anywhere near as useful as what airlines give and the cash value of awards is much lower in my experience.
What else is out there? Panera might toss me a free drink sometimes so that 'loyalty' is about a 1% rebate at best. Best buy rewards zone gives me about 2% back. The local pizza chain might give me a free slice after I buy 10 but considering all the profit is in the drinks that is still less than a 10% rebate.

Are we really shocked that airlines want to offer less than a 10% rebate on our flying spend? It was pretty awesome while it lasted but I really can't be shocked that they now want to directly tie an expensive reward (i.e. business and first class rewards) to a specific revenue (flight $ or credit card partner $).

That 'rebate' might be less than in the past, but most of the 'honey' is still there. Mid tier or higher status on an airline still offers more benefits than any other loyalty program I have come across. Is it as rewarding as it used to be? No.
Do I miss the fresh cookies in UA first? Yes.
Do I miss the US Chairman's preferred desk? Yes.
Do I see something better out there? Not really.

orca15

I just read the article and think it was a very rational analysis, except for the main idea:

The concept here is that by making the program less beneficial, you will not be encouraged to make irrational decisions.

But where is the hidden cost they mention? Choosing to fly DL because I am a DM, even if the price is higher, is hardly a hidden cost. It's a completely rational decision - I'd rather pay more to sit up front most of the time, along with all the other benefits. Reducing those benefits reduces the incentive to pay more...but that's completely zero sum in the rational world - get less, pay less. No service to customers there, just a reduction in choices.

MSPeconomist

Of course. Many academics have secondary "courtesy" titles (and a smaller number have genuine joint appointments) but when someone's primary affiliation is a law school, it's odd to refer to them only as an economist.

GUWonder

Not odd in this context.

Plenty of people affiliated with law schools are not practicing lawyers. Even some law school professors are not practicing lawyers.

When it comes to the junction of law and economics, the teaching of such classes at law schools or as part of pre-law curriculum are often enough done by practicing/academic economists who aren't currently licensed to practice law (if they were ever even licensed to practice law).

When a person with multiple backgrounds is making a presentation on a matter that is primarily or exclusively driven from one side of their background, then the identity of relevance would be as it would be in this matter: economist .... regardless of current employment status/employer affiliation.

protagonist

I'm not in agreement with the article. At least for me (and I imagine any savvy consumer) it does not apply, though it may be true for others which might explain why the offers exist.
I (and I imagine most on this forum) go for the best deal possible that meets my interests.

For instance, I concentrated on AA for a long time because of the generous rewards and ease of receiving promo miles. Since they dropped AF as a partner and took up with BA, their surcharges for European travel have exploded and their desirable flight offerings have dropped. As a consequence, I got my first United card this year and am flying United to Europe instead of AA.

Credit card loyalty is similar. The only reason I can imagine the credit card companies provide such generous rewards with relatively easy spending requirements and no initial fees is that the average American holds something like $13K in credit card debt at usurious rates. It's pretty sneaky marketing, really... reminds me of what the tobacco companies used to do to get people addicted. So they suck people in with the promise of a free flight for example, and keep a huge number of them hopelessly in debt for years. They certainly would not provide such offers if those folks didn't vastly outnumber those of us who pay off our cards in full monthly and churn.

The unique relationship between Americans and credit card debt may also explain why such generous offers are not available in other countries.

I fly to S America and Europe every year. I don't think I have purchased a ticket in a decade, with the exception of ones that I have purchased in the local currency in Venezuela for as little as 7% their normal rate. So I very rarely earn miles by flying. The dollars vs miles thing will hardly affect me, as I imagine is true of many on this site.

84fiero

Cool, that's interesting to hear from someone who's getting benefit from their program! Goes to show that there can be value from just about anything in the right circumstances. I wouldn't ever say "never" to flying Spirit, though they're not located near enough to me for it to be a consideration.

I doubt they'd consider their PhDs in economics as "courtesy titles" but who knows

Ambraciot

The academics behind this article raise an interesting point, incentives can distort otherwise rational behavior. It's truly quite odd that we go out of our way to fly our preferred airlines just to fly in premium cabins and collect intangible reward currency for free or extremely discounted leisure travel. Almost as odd as someone sitting behind a desk and dealing with unsatisfying tasks day after day to collect some other intangible currency, when their rational nature would have them doing something they enjoy more.

Therefore it's hard to ignore Bloomberg's underlying argument, if you pay your workers less it will make them work less and help them find a better balance in their lives. It's a pure win-win; employers spend less money on salaries and wages and employees get to rediscover themselves as rational discount chasing consumers.

Kagehitokiri

GUWonder, my point was these analyses are never by flyertalk types or experts. (nor even industry perspective.) and whenever those types or bloggers are in media, its always very low level. (that media wants.)

media and academia these days..