kokonutz

It's an interesting debate and I think there are fair points on both sides despite the snark.

It's true that over-consolidation of the US-based carriers coincided with massive devaluations. But it's also true that over-saturation of credit card and points and miles bloggers huckstering taking advantage of airlines by 'travel hacking' coincided with massive devaluations.

Perhaps one day someone will interview the airline execs who made these decisions from the safety of their retirements and they will come clean about what drove it: consolidation, having people bragging about abusing their marketing programs and encouraging other to do so, or both, or something else entirely. Would make an interesting read.

Until then all we can do is speculate.

GUWonder

Being coincidental is not the same thing as being causative; nor is it the same thing as being the program devaluation decision-maker.

Whatever “drove” the devaluations, the airline management figures were the ones that decided what to do with the programs and to devalue them. Bloggers and the program customer “gamers” didn’t decide to devalue the programs and do so; the bloggers and “gamers” didn’t write and rewrite the terms and conditions of the contracts of adhesion that are the airline loyalty programs. These massive devaluations and official program changes were done by airline management figures, not by bloggers and “gamers”.

kokonutz

Obviously.

As I say, the question is what motivated them to do so.

It seems clear to me that certain airline execs came to view elites as over-entitled and poor ARPU to boot. Where did they learn that from? It is entirely plausible that hundreds of bloggers bragging about mileage runs, CC churning and CPM all over their social media feeds fed into that perception. Before the bloggers, miles and points enthusiasts were a subculture that stayed mostly below the radar. Bloggers got rich taking it mainstream, thereby increasing the potential liability to the companies along with a sense of embarrassment over being 'hacked' by 'travel hackers.' Travesty of the commons and all that.

It is also plausible that in the formerly more competitive US market these same executives could not get away with this race to the bottom no matter how over-entitled those elites became. Market disrupters would keep the big guys honest with more generous programs.

To me, it's most likely the confluence of those things. And some other factors.

eponymous_coward

FT got bought by Internet Brands and helpfully serves many, many ad impressions for airline credit cards. That's not exactly below the radar. I think the Venn diagram of "blog audience of FFP gamers" and "FT audience of FFP gamers" has a lot of overlap. The idea that "well, FT was fine but those nasty evil bloggers killed it"... I'm not sure I buy it. I think it all goes in the same lump of "well, these are customers that we don't really care if we fire".

But if you were to remove any distinction between FT and blogs and just say "the social media community of FFP gamers", I'd probably agree, it's some combination of both. Also, the US market (where 100% EQM/RDM on cheap fares existed) was different from, well, everywhere else (where fares on European/Asian airlines often did discriminate by coach fare class long, long before US carriers went to revenue-based programs).

It's not an unreasonable thing to think about if you think of the miles FFPs shell out for flying as a cost of doing business for the airline: "Well, Lufthansa or Singapore Air doesn't give their customers a lot of return on a cheap fare, why exactly do we have to? Oh, and look, we have Big Data™ now! We can figure out who are our best customers!"

Of course, airlines look at credit card FFP miles as revenue, not cost... which explains that end of the deal.

kokonutz

I've said it a hundred times over the past couple decades: if I were to start a FFP from scratch NO WAY would I go with a miles-based structure. It never ever made one lick of sense to me. But to airline execs raised in the days of regulated prices it made perfect sense because in those days distance = price, or at least the two were fairly well correlated. And even post-regulation that model still could generally be loosely applied. But by the time I was doing 100k miles a year in the late 90s that model was gone and I could fly from DC to Singapore for less than I could fly to Des Moines, Iowa.

So it may well simply be that today's airline execs were, like me, raised in the post distance=price era and so divorced their companies from that model. But having their social media feeds filled with cheapskates bragging about how they were hacking the airlines certainly was rubbing salt.

Anyway, again, all still just speculation...

eponymous_coward

Note that VX and B6 went with points (and eventually WN decided to go there too). Something where you are effectively getting a modest rebate on travel is nowhere near as sexy as Krug and caviar in lie-flat showers but having a system where it's easy to get SOMETHING without having to visit Walmart with $10k in gift cards every week has benefits too. "Oooh, I got a free $100 one way ticket to Vegas!" Small incentives for occasional fliers is pretty smart (and DL is actually on to something with that aspect of SkyMiles).

Nicoolio

I believe the reason airlines went with miles was two-fold -- first being that they didn't want to create a taxable event for customers and using dollars would put the programs front and center with the IRS. Miles are harder to value.The second is at the time, I don't think the airlines could easily track revenue. Mileage was easier as it meant base miles for each segment were set once and could be easily tracked.

kokonutz

Yes, taxes and technology are likely factors too.



Fair point.

To me the good old days were good because I could buy coach and fly domestic F or int'l C by upgrading at time of booking. That was important because F or int'l C were 3 to 10 times the cost of coach.

But the good current days are good because I can buy domestic F or int'l C for 120%-200% of the cost of coach so don't need the upgrades (I am sitting on tons of AA and UA upgrade certs I will never use).

So it's a bit of a wash, honestly. Not going to sell a lot of credit cards with THAT analysis, though.

GUWonder

Reported segments flown tied back to reported flight ticket coupons, as financial settlement mechanisms existed for the airlines even before Carter approved airline deregulation spurred FFPs into what they became. But process limitations, including those related to technology and costs, indeed made tracking customers business simpler on some lines than other lines. But miles rather than money was for a market where point-to-point service wasn’t as much of a competitive concern for the deregulated airlines as competition against other one/multi-stop connecting service providers.

The airlines had excess capacity, and retail consumer-oriented FFPs allowing for customer use of that excess capacity on the basis of prior business was like giving funny money as a rebate instead of giving real cash back as a rebate. The tax consequences upon customers didn’t seem to be a major factor at the start as the airlines have been giving USD-denominated rebate commissions back to “loyal customers” for even longer than there have been retail customer FFPs; and other loyalty programs giving USD-denominated rebates limited to a funny money market place has been going on for as long as we’ve had an IRS.

lwildernorva

There actually was a brief attempt at a "buy x, get one free" approach. In the early '80s, just as airlines were searching for incentives in the newly deregulated marketplace, Piedmont Airlines, which served my home airport and a number of cities across the Southeast where I needed to fly in those days (and before they became a regional airline in the modern sense of the word), started a promotion that required flying four or five flights within a certain period of time (might have been six months or a year) to get a voucher for one free roundtrip flight. That approach didn't last long because literally within the span of several months, the FF mile model became the standard, and Piedmont joined in. But since they had already started the other promotion, they ended up allowing "double dipping" for those already registered for the promo while also awarding FF miles under their new program--mine eventually became part of the Dividend Miles program when Piedmont joined USAir in the late '80s. I used my free flight for a last minute trip to Florida to join my extended family for spring break when a major trial I had scheduled resolved, leaving me free to take the trip I had thought I couldn't make. No restrictions on the voucher either--I was able to get a roundtrip ticket within hours of departure, undoubtedly saving me hundreds of dollars.

hockeystl

Brace yourself for BA to turn into SlickDeals this week. Bunch of bloggers hunting for clicks posting shopping deals with absolutely no ties to the travel industry.

Raffles

At 10% commission (at least in Europe), luggage is THE most profitable Amazon category you know :-)

sbm12

Happens all the time, unfortunately. Beauty products are a big payer.

Also, for better or worse, the bulk of the consumers of the typical "deals" content related to travel also want info about deals elsewhere in their lives. It is hard to create a solid business model where your average customer's goal is to spend as absolutely little as possible, regardless of how they get to that price point.

At least there's no effort to pretend that the target market is business travelers anymore.

Astrophsx

This is a new one for BoardingArea, selling people on the idea of creating a blog in order to push referral link:

http://runningwithmiles.boardingarea...022.1504220936

Raffles

You know what? Only last week I was wondering why no-one on BA does this.

There are LOTS of non-travel blogs where the owner of an average blog pretends it is massively successful and starts a sideline in telling others how to start a blog. The income is very chunky due to the massive commissions paid by hosting companies. Behind credit cards it is probably the best income stream you can get.

There is one home blogger in the US who publishes her income statements to encourage other bloggers to start up. Forgot the URL. BUT if you can decode her statements, you see that most of her money (mid six figures) is not from the homeware blog but from commissions from Bluehost etc getting others to start a blog.