Originally Posted by arcticbull

The way I see the modern air travel marketplace is as follows:

(1) The Very wealthy.
These people don't care about value proposition, but about the product. They will pay whatever it takes to get the best product out there. Forget United. These people fly in the Singapore suites and in Emirates first, and through the LH FCT. Loyalty program: irrelevant.

(2) Corporate customers.
No matter what they tell you (and they will :P) loyalty programs shouldn't mean much here. These people's loyalty is really decided by their corporate contracts and not their preferences. But they fly, and fly a lot. They should be given upgrades and preferential treatment. But handing out points hand over fist to this group won't yield any incremental benefits to the airline.

(3) Self-payed leisure travelers who care about the product.
The way I see it, FFPs should cater to these people most of all. Unlike their fellow travelers in group #2, these people have a choice in airlines. They should be given occasional upgrades, and more importantly, lots of points. This group is willing to pay a premium (20-30% in my case) to fly on their airline of choice in exchange for points, upgrades and treatment.

(4) Kettles
These people will buy the lowest fare, period. Most of the time they don't know or care about the rules of the game. Loyalty program: irrelevant.

(5) Points People
These people pay as little as humanly possible. Points earned on the cheapest fares and routes, plus credit card spend, and of course sign-up bonuses. These points are then redeemed on high-value international J/F awards or last-minute Y. These people play the game.

I think 70% of Flyertalk falls into categories (2) and (3), and 30% into (5).