The airlines' marketing departments may say that frequent flier programs are designed to reward the loyalty of their customers, but the airline's financial results (which for those airlines which are publicly held American corporations is their highest fiduciary responsibility to their stockholders) are more closely aligned to the incremental revenue and profits they get from a customer's business than the customer's loyalty per se.

Consider for example, which of these two fliers should an airline "court" by structuring their FFP to give better benefits (but keeping in mind that the two different fliers may value different benefits differentially). Flier A is 100% loyal to the airline, never flies any other airline unless there is a gun pointed at his head, and spends $10,000 this year flying. Flier B is terribly disloyal, flies whichever airline is the most convenient for his schedule that week, sends a mere 25% of his business to said airline, but nevertheless spends $25,000 a year with them. (For purposes of this discussion, assume both Flyer A and Flyer B spend half their money on discount coach tickets and half on full-fare coach tickets.)

Who's more loyal? (Easy answer.) Who contributed more to the airline's bottom line this year. (Fairly easy answer.) Who's a more valuable customer for the airline to keep for the long-term? (Somewhat harder answer, I think.)

I think it was in a previous thread that somebody threw up their hands and said that it was clear there were two camps of posters, one for the airlines, one for the fliers. I don't think it's that simple. I may come off in this posting sounding like I'm in the camp for the airlines, but I'm of course in the camp of those looking out for their own best interests. But in the pursuit of my own best interests, it is to my advantage to better understand the motivations of the airlines. Not because I have to consider them an enemy (and therefore study them the better to defeat them in battle), but because if I better understand their motivations, I can better figure out how to advance my own interests in a way that least conflicts against their interests and therefore meets the least resistance from them.

Maybe that's getting too philosophical.

[This message has been edited by pshuang (edited 12-03-1999).]