Using my trusty Google toolbar, I offer the following rough translation:
Aviation, a fragile industry
The Express train of the 04/07/2002
The take-off of the free miles
by Eric Chol
Like their counterparts American, the European companies fidélisent from now on their customers in their offering tickets. A generosity which does not go without posing some problems...
© J-P. Guilloteau/L' Express train
Herve D. and Bernard C a true control of the programs of development of consumer loyalty.
Last 3 June, Herve D. and Bernard C fly away of Roissy for Boston, with United Airlines. From there, they rent a car to join Montreal, their final destination. Why this stage in Boston? Because the two friends are members of United Mileage Plus, programme of development of consumer loyalty of United Airlines. To gain a few miles, they do not hesitate to make a hook by the United States. In consideration of which they raise their chart Premier Executive proudly, a statute which enables them to double their profits or to benefit from shows "VIP" in the airports. Result: Herve D. to date lays out of 316 925 miles on his account, a pretty gold mine which gives him already right to some free tickets! And which should still grow rich this year: after Costa Rica in February, Thailand in March and Boston in June, this French 39 year old envisaged to be offered holidays to Hawaii (July), in Syria (September) and undoubtedly in Florida (Christmas). A timetable of millionaire in goguette, except that Herve, teacher of profession, pays the tickets of its pocket, travels in class éco and controls with wonder its kitty of points.
For each paying flight,
a certain number of "miles", which, accumulated, makes it possible to obtain free tickets
Since their birth, in the United States, there are twenty and one years, the programs of development of consumer loyalty became an industry, very advantageous for the passengers and the airline companies. The principle is simple. With each paying flight, the customer receives a right to a certain number of "miles". Who, accumulated, will allow him to obtain free tickets. Nothing astonishing thus to see proliferating the programs (91 listed in the world), as well as the number of members (89 million, including 74 in the United States).
Introduced more recently in Europe, they meet an identical success. Air France, for example, which celebrates this year More the 10 years of Frequency, received 1 million additional adhesions in 2001, which increases to 5 million the number of members of its program, primarily of the businessmen.
Among them, Gil L is a Canadian installed in France, working for a large Anglo-Saxon oil company. For this reason, it traverses the equivalent of 14 times it tower of the Earth each year and has 8 discount cards. Red chart at Frequency More, Super Elite at Star Alliance or Super Gold at British Airways, it accumulates the miles per hundreds of thousands. So much so that in 1998 Air Canada A even invited to a dinner of official reception enclosing its board of directors, to honour its most faithful passenger: all confused programs, Gil garners between 500 000 and 600 000 miles per annum, and spends about it on average only between 120 000 and 150 000 maximum in exchange of free tickets. Consequence: its saving does not cease growing.
The phenomenon is common at the large travellers. According to statistics' drawn up by the American company Frequent Flyer Services, the number of points distributed in 2001 by the whole of the airline companies - 1 600 billion - is 5 times more significant than that spent in the same year. On arrival, the total balance explodes: 7 800 billion! And this tendency is extremely likely to be accentuated, since it is from now on possible to gain miles while remaining on the ground, thanks to the partnerships passed by the airline companies. "It is for example possible with each time you use your credit card", explains the American Randy Petersen, owner of Frequent Flyer. In light, beside frequent flyers a new category of customers develops, frequent them buyers. The phenomenon is still marginal in the Hexagon, where, according to Air France, more than 90% of the gained miles each year are it while flying, but, in the United States, nearly 50% are acquired while remaining on the ground.
"the companies became more restrictive out of matters of free seats"
The operation is juicy for the companies, which sell their miles to their partners. They thus immediately empochent incomes which are not to them very expensive, since, according to Randy Petersen, the three quarters of the members of programs of fidelity do not manage to sufficient amounts to obtain a free ticket.
Remain that the airline companies must be careful vis-a-vis this inflation which can constitute a small bomb with delayed-action. Thus, they provisionnent in their accounts the cost estimated of a seat each time that a member of their program exceeds the number of necessary points to gain a free ticket. American Airlines, for example, pioneer of the programs of development of consumer loyalty, spent last year 1,1 billion dollar in provision, to face the potential tickets (of which the number is estimated at 9 million) that its customers could claim to him. Air France, which offered in 2001 a half-million free tickets in exchange of miles, proceeds in the same way. "the only existing risk, specifies Pierre Albanao, person in charge for the program development of consumer loyalty and of relational marketing at Air France, would be that this financial provision progresses too quickly and that in parallel all the members who are entitled to free tickets claim them at the same time."
But Air France takes care: if the provision in question grows indeed quickly (approximately 20% per annum), the company keeps the control of the distribution of the free seats on its planes. In 2001, the tickets distributed in exchange of miles accounted for only 3% of the paying flights (against 7,4% at American Airlines).
To the minimum to reduce the costs generated by these tickets, Air France limits the free places on the most required flights. "the majority of the companies became more restrictive as regards free seats", confirms Doug Harned, consulting at McKinsey, in Boston. In short, with more miles accumulated and less places on the flights requested, one would need vingt-trois years to empty, at the current rate/rhythm of flow of the points, all the charts of subscribers!
In the United States, the miles became a ground for dispute in the divorces
Conscious of this imbalance, the companies develop special promotions. This summer, Air France renews the operation two ticket-premiums for the price of one in Harmony, which had allured 1 500 holders of accounts last winter. In the United States, US Airways straightforwardly proposes a voyage one hour in space from here at 2004 or 2005 in exchange of 10 million miles. Pretty blow of pub, but a little risky for the members of the program: at the edge of the bankruptcy, US Airways could disappear before takeoff from the first flight orbital…
It is true that, in the United States, the miles unchain passions. Regarded as integral part of the inheritance, they even became a ground for dispute in the divorces. Who will keep the miles? As for the American tax department, it lorgne regularly on the wallets furnished well with miles…
The same madness watches for Europe today: to the businessmen accustomed to this gratification a new race of travellers appears, incarnée by Herve D.: the "mileage junkies" (accros of the miles), impassioned by the programs which they take for plays. "I spend at least an hour per day on Internet to be discussed with travellers to unearth the best plans", testifies Herve D. For these accustomed airports, Air France plans the idea to create the club of the millionaires of miles. Club not so élitiste that that, since one counts between 1 000 and 2 000 members of Frequency More having already reached 1 million miles in cumulated. The current champion of the program posts to him a balance higher than 1,5 million miles, that is to say nearly 75 Paris-Nice return tickets!