A better way
 

What if all frequent flyer programs and frequent guest programs were to adopt a system similar to TWA Aviators? That is, members were rewarded with elite status based on what they spend rather than how many miles (or segments) they accumulate and how many nights they stay. After all, aren't these programs designed by their companies to attract business? Here is an example of the sort of thing I mean:

Suppose you frequently take short trips at a very low fare that equates to $100 per segment. You do these with a airline that will give you elite status for flying 30 segments. Thus, you obtain elite status with that airline by spending $3000.

On the other hand, suppose you only do 5 trips a year at 4 segments each, but as a business traveler, you cannot plan far enough ahead and spend an average of $250 per segment. This amounts to $5000 and you do not qualify for elite status since you only had 20 segments.

Which of these two travelers is more valuable to the airline? Certainly the business traveler spending $5000 has generated more profit for the airline.

Suppose that all of the airline and hotel programs were to provide elite level tiers based on dollars spent rather than frequency.
For example:

$5000 qualifies for elite level 1
$10000 qualifies for elite level 2
$20000 qualifies for elite level 3

I came up with these number using 20, 40, and 80 segments times the $250 per segment cost.

A similar schedule for hotel programs might be:

$1500 qualifies for elite level 1
$5000 qualifies for elite level 2
$7500 qualifies for elite level 3

I came up with these figures using $100 a night as the base cost and Mariott's Marquis scale for number of nights (15,50,75).

Would not such a system be fairer to the business traveler? Who do the program want to attract anyway? I am not suggesting eliminating traditional qualification levels, but merely adding another way to qualify.

the more business ($, SFr, DM, etc) a company brings to an airline, hotel, car-rental, etc. company the better price they will achieve (rebates/discounts) - that's already the case today.

and as a recompensationfor what the fflier endures (and that's measured by time/distance/and class) he gets some miles for future upgrades or trips in his free time.

I think this is fair and reasonable for all involved parties: those who pay get a better price, those who suffer get some comfort, and the airlines are more likely to have full flights.

The discounted eco-traveller contributes too to the comfort of business-class- and first-class-travellers. Only because of so many people who can afford today to fly (in eco) are the airlines able to provide such a big choice of offers to the business-people (more choices/options like flight times, direct flights, connections, etc.).

I have problems with any incentive program that is not in the best interest of the party paying for my ticket (my employer). I truly enjoy business travel and its reward, but I feel obligated to make a diligent effort to do it as economical as possible.

Corporate Travel Managers have been upset at TWA since they came out with this program. It runs counter to most organizations travel policy.*


*The magazine Business Travel News www.btnonline.com has covered this heavily in the last year.



[This message has been edited by Craig6z (edited 07-10-1999).]

I too am forced to economize for the sake of my employer, but I (and my employer) still end up paying a great deal of money for my travel. All I am trying to point out is that if you do end up spending the kind of money that I listed, don't you deserve elite status, even if you fall below the required segments, miles, or nights?

As I travel throughout the country and have to choose the most economical flight, regardless of carrier, to meet my employers requirements for reimbursment, I often miss qualification for elite status simply because I did not fly a single carrier enough.

On the other hand, as many of my trips are at the last minute, the fares I pay are exorbinate. So I often generate the levels of revenue for the programs I have listed, and yet do not receive any kind of elite status.

I am not suggesting that companies or individuals spend more simply to attain elite status, merely that if you do generate this kind of revenue for an airline or hotel, you should be rewarded for it.

I'd much rather stay with the status quo. Many promotions these days are targeted towards business class/full fare etc. Dollar based schemes are more prone towards wasteful spending, and I am sure that corporations would not welcome them.

If you are spending large amounts of money but not getting elite status, ask your travel agent to get you one.

[This message has been edited by pgupta011 (edited 07-10-1999).]

...or book all of your last minute trips on TWA to get their revenue deal.

Please don't misunderstand, you deserve credit for trying to spend the least amount of money. The problem I have with TWA's program is it creates an environment where the less diligent employee can get "enhanced" benefits for manipulating a company's travel policy.

http://talk.flyertalk.com/forum/smile.gif

It may be true that employees are manipulating the system to get additional fare cost miles through the TWA system, but FF programs in general have to be one of the biggest sources of inefficiency in corporations with employees who travel anyway. Admit it, haven't we all taken a connecting flight instead of a non-stop at times because we can't get there directly on the airline we want to accumulate our miles on? And that lost time is time when you are not operating at peak efficiency for your company. I would venture to say that this is a far greater loss of corporate value that the minor additional cost that someone might try to get out of a TWA higher cost fare to get more FF miles.

Djlawman

Kaner,

I fly lots of inexpensive short segments (over 80 per year) and east/west flights that require 4 segments.

My experience is that the 30 segments in your example with, for example, Alaska will get you 15,000 miles and just barely MVP (their 1st level elite).

On the other hand, 5 United trips from Seattle to New York, Atlanta, D.C., Boston, and Orlando, gets only 20 segments, but amasses 25,000 status miles which would also qualify for Premier (UAL's 1st level elite status).

So the big difference is that flying 30 commuter flights takes a whole lot more effort. (May God shorten purgatory stays for frequent commuters, they have already been there.)

Usually exorbitant last minute fares are about as bad on one airline as on another, just like plan-ahead-fares are just about as good on one airline as another. As an employer, I am not going to quibble over a slight difference in fares ($100 or less) and will encourage my employees to select the airline of their choice. Happy employees are long-term employees.

If, however, the difference is HUGE say $450 for a last minute ticket to ORD on Southwest and $1,400 for the same ticket on United, then they will fly Southwest. They know I will find a way to make it up to them with by sharing my upgrades from time to time. http://talk.flyertalk.com/forum/smile.gif

I work for a very small company (7 employees) and every dollar counts.

Our clients pay our travel costs. Many times I've been complimented on my diligence in getting an airfare below $250.

The trend appears to be towards offering bonuses for higher fare. I believe CO and AA are offering double miles for full fares. THAT is a smart way to do it.

------------------
"I will not be pushed, filed, stamped, indexed, briefed, debriefed or numbered. My life is my own."

I strongly support revenue based (rather than mileage based) perks in FF programs.

Consider this: you're in sales, and you bring in a single 1 million dollar sale, but another salesperson makes 20 10,000 sales. Who should get more commission?

Now consider this: you're an airline, and you have a passenger who buys a single $2,000 SFO-NYC ticket, and another who buy three $400 SFO-NYC tickets. Whom should you extend more perks to?

Re: revenue based perks make costs more difficult to control: is it really the airlines' reponsibility to design perk programs that help control costs?

dgolds- the analogy breaks down because of the wide variation in prices for the same airplane seat. And as the saying goes - if it aint broke dont fix it.

BTW I travel a lot on business, try to get the best possible ticket prices but often am forced to get last minute tickets.

Re: is it the airlines responsibility, it may not be entirely the airlines responsibility but it is certainly in their interest to do so. Otherwise they face a backlash, and more threat from upstarts.

[This message has been edited by pgupta011 (edited 07-11-1999).]

the one that brings me (beverage business: costumers = Restaurants) 20 smaller costumers gets the higher commission, yes my costs are higher, but my prices/margins also and I prefer the wider distribution (availability of my my products) and the smaller risks (of becoming dependent of that one costumer, of loosing somewhen 1 Mio turnover at once).

dgolds,

Consider this: I am an employer who has one employee who makes a $1,000,000 sale and one who makes 20 $10,000 sales. But the second employee can be relied upon to make his/her 20 $10,000 sales each and every month and the first employee may or may not make one or two $1,000,000 sales per year.

Of course, we will celebrate the $1,000,000 heartily when it happens. But, at the end of the day, which employee makes it possible for me to make the most realistic projections for my business.

Now if the first employee makes one $1,000,000 sale every month, then s/he is the Golden Sales God/ess and this whole discussion is moot because Mr/Madam Golden Sales God/ess already has all the stars in his/her crown and is sitting in the front of the plane. http://talk.flyertalk.com/forum/smile.gif

http://talk.flyertalk.com/forum/smile.gif

Most airlines give significantly more mileage for higher fares. A predominantly discount ticket flyer earning high elite status is likely flying considerably more trips to get there. And what about people who control travel for other family members. I buy tickets for my wife and kids, all of whom frequently join me on trips. While they might not earn higher tier elite levels, by getting my business, the airline also gets, by extension, this additional business, which goes with my patronage. In reality, most carriers are pretty generous with basic elite status. Case in point, the famous TWA, with its revenue based program, just sent me an Aviators Elite card based on my enrollment in a Thrifty car rental database, and I haven't rented from Thrifty in quite a while. So much for spending my money on TWA to obtain that status the regular way.

Loyalty. These are loyalty programs. The airlines want you to call them whenever you fly. No matter what fare you pay. If your customer is loyal, you'll get them when they fly on a cheap ticket, but also when they fly on an expensive one. Base it on revenue and an airline will find itself with empty seat and reduced revenue. Airlines are aware of this but are trying to be a bit more fair to Full Fare revenue passenges by offering bonuses. But the airlines have to fill those seats and can't survive on just high revenue passengers.

I would hate it! I reached Premier Executive this year on ~$3,000 of tickets, and may well hit 1K based on ~$5,000 (several overseas using cheap-o or e-fares). If United based elite status on ticket revenue, this might barely qualify for Premier!

That said, I understand (and would grudgingly support) the airlines' rationale if they went in this direction. American already does, counting discount fares at 50% for elite status.

In fact, why not go all the way and base frequent flyer awards on the revenue, instead of the miles? But if it ain't broke, don't fix it!

One important thing to remember about TWA's program is you can still earn elite status either way, which I don't think is such a bad thing!

From an antitrust and competitive standpoint, diversity and competition is what it is all about!! Let them fight it out to see which type of reward system the FF market likes better. Let them build the better mousetrap. More power to 'em.

Unfortunately, this supposes that the market would be judging based upon "all other things being equal." Of course, as we know, TWA is not equal to other airlines--doesn't have as big or as good a route and hub structure and doesn't have the financial resources. But this is clearly an attempt to see if it can lure enough business fare customers to build up its financial position as well by luring the high profit clientele.

However, if TWA is going to build up its attractiveness to business flyers, it really ought to give you first class seats in those MD-80s and first class meals.

------------------
That's my two cents worth.

Djlawman

I had a feeling that post would elicit some howls!

Punki: The full fare traveller falls into the category of the salesperson who makes the million dollar sale every month. (S)he is consistently generating more revenue for the airlines.

Rudi: The model for airline programs is different, because the cost of sale is no different for the full fare traveller than the lower fare traveller. And the risk of a full fare traveller switching programs is no higher than a lower fare traveller.

PremEx: Loyalty in terms of number of flights or amount of money spent? It's all how you look at it.

pgupta011 and johna: From my point of view, the current model is broke. I have to buy full fare tickets regularly, yet I am treated the same as someone who spends much less with the airlines but logs more miles. TWA is the only program that's got it right.

Beckles: Good points!

dgolds - I don't know which airline you fly, but United offers bonuses for first/business class seats, and many promotions for full fare tickets, and some priority on upgrades for full fare tickets. Plus if you are charging to your credit card you can get more miles on your credit card charges. So your contention that you are treated the same is not true. But then if the TWA model works for you, use it.

[This message has been edited by pgupta011 (edited 07-11-1999).]

Then what's the issue? The frequent full-fare traveller who actually does fall into the category of the salesperson who is making the $1,000,000 sale every month, is already at the top and is getting all the benefits.

The occasional full-fare traveller, on the other hand, simply isn't as valuable a customer as the traveller who is on the planes several times a week. (You know, even frequent travellers who make every effort to get the best fare possible occasionaly buy full-fare tickets. When they do, they are certainly going to purchase from the airline where they have the most status, get the best upgrades and most points.)

But if you feel that strongly, like pgupta110 says, you can always fly TWA. And like DJlawman says if it works, more power to TWA and congratulations to you for your perceptiveness.

I, like Punki, fly lots of short segs each year, many of them on "rivet rattlers" and commuter jets with NO First Class. I made Platinum in 1998 on CO with over 90 segments, of which I paid a grand total of just over $11,000. A number, which I am sure CO is NOT impressed with (but my employer is). However, like the "Premier Executive" said, "It's loyalty." Most of the time when I fly on an aircraft with FC seating, I get an upgrade, which I personally think is a reward for being loyal. And, I do plan ahead enough to probably pay much less than the person sitting next to me, but "I" believe my loyalty entitles me to do this. In 1999, I have flown some 66 segs toward the new "90" segment Platinum qualification on CO. And, NO, I do not "pad" the segment count with unneeded segments, I really do not have time for that, nor the intestinal fortitude to treat my employer that way. Sure, there is room for both "loyalty" and "revenue", but what is not visible in Punki's example of the 20 $10,000 sales vs. the single $1 million sale is that the $1 million sale probably required more than 20 segments to achieve because of the intricacies involved. Whereas, the 20 $10,000 sales did not require as much expense. I do not know what kind of business all y'all (except the beverage man) are in, but I can assure everyone that more money is spent achieving the $1 million sale than 20, $10,000 sales. Now, how much loyalty is there in 20, $10,000 sales? A WHOLE BUNCH!!!

I've been managing sales forces for 15 years; give me people that consistently produce the 20-$10K orders anyday over the Million Dollar sale. As Punki said, if Mr/Ms Million $$ can do it consistently, that's another story. But the analogy is not germain to this issue.

Maybe I'm a little naive, but it seems to me that all the airlines are presently trying to appeal to all the people, all the time, as best they know how to! The "niche marketing" they employ is reflected in different ways, by differeent airlines, with differing degrees of success. Meanwhile many leisure travelers will NEVER buy a ticket unless they think it is heavily discounted!

arturo themk Punki storie es german to hole essue. thes es marketing an sails 101. marketing provid solushun an sails sel et an bild loyelty. then sails git ordrs an repete ordrs wiffout spindeng mucho dinero kaus of loyelty. prematur-ex rite on wiff hes postie.

The hotel programs already offer points per dollar, why not airlines?

Is it fair for someone to pay $300 from NY to LA and someone else pay $500 for NY to Chicago and get so many fewer miles? Distance of travel has little to do with loyalty.

Personally, I like Southwest's model of segments flown.

Good points, especially agree with PremEx, doc and arturo.

I don't want to beat a dead horse, but I just don't agree that a passenger who spends more with an airline is less valuable than a passenger who spends less.

I am not arguing that loyalty to an airline is a bad thing and should not be rewarded. (I am very loyal to my airlines of choice!) I just think the reward should be based on money spent as opposed to number of segments or distance of flights. Like Hawkeye said, the hotel programs do it and no one complains about that. How come?

My way of thinking is definitely affected by the fact that I buy a lot of full fare tickets http://talk.flyertalk.com/forum/smile.gif

Hawkeye: Good point.

Punki: Real world example: suppose someone travelled once every other month full fare SFO-EWR on UA for approximately 30,000 miles/year. The cost is approximately $12,000. At the end of the year, the traveller gets Premier on United, which means that it is possible (but difficult) to upgrade.

Compare this to the traveller who flies monthly SFO-EWR on $500 discount tickets. They spend $6000 and earn 60,000 miles. At the end of the year, they make Premier Executive, which makes it easier to upgrade.

Both travellers are equally loyal to UA, but the one who has spent less money and cost UA more (because of taking up twice as many seats on their planes) is rewarded more. I can't see rewarding traveller #2 with the higher status.

pgupta011: What benefits is UA currently offering on full fare tickets? Last I looked, they were inferior in this regard to many other airlines, including CO, HP, US, TWA.

Hmm, interesting discussions all. I will see what other narsty subjects I can come up with. (BTW I too have gained TWA elite by renting from Thrifty, I was merely using them as an example).

This year there was a 10K United bonus mile promotion for having two full fare tickets by May31. Currently there is a double mile bonus for full fare tickets - this is published on the United Web site. My favorite pasttime when I have nothing better to do at airports is to call up the United promotion numbers and see what promotions they have.

What is this great deal with Thrifty and TWA? Can anyone get in on it? Is there a code and/or number to call? I have cards for everyone but Thrifty- I'd be happy to get one if necessary!

I really don't know the deal between Thrifty and TWA. I rented from them a number of times last year and signed up for their frequent renter program. This year, although I have not rented from them, they sent me a TWA Aviators Elite card with two International upgrades available (I think they are for full-fare coach to business). I did not do anything to request it.

pgupta011: I wasn't aware of the 10K bonus; wish I had known about it earlier. BTW many other airlines are running the full fare double miles bonus (or something similar).

Thanks for posting this information.

dgolds:
A person who flies once per month (or once per week) does not cost the airline. Remember, it is all about yield management and the airline needs to fill a minimum amount of seats to make that flight profitable.

I always try to book the best fare as my company expects me to do so. PremEx said it best: Loyalty. I then tell people how good UA treats me which means free word-of-mouth advertising for UA. How much is that worth?

OK, after standing on the sidelines for a bit, I feel a need to respond.

I fall in the category of the frequent traveler who pays the discount fare. I travel SJC to IAH every week round-trip. I do the legal back-to-back maneuver by booking one-way ticket SJC to IAH and then booking my roundtrips from IAH back to SJC thereby getting the Sat night stay.

I'm on a project for a specific long-term period, so I generally book 3 weeks in advance. Plans change sometimes and I'm willing to pay the $75 change fee...and when they do, I usually have a fare difference which can be expensive ($1000 or more).

I fly CO and AA, usually CO because of a direct flight. Have elite status on both (Gold/Plat. respectively). I think CO does a good job of rewarding the full-fare traveler by allowing instant upgrade if it's a Y ticket. That person will be ahead of me to upgrade if he's purchased full-fare (and rightfully so). I've also had "instant upgrades" from AA when paying Y class fare. Pay Y class but I am seated in first-class depending on availability. (As most of you know, Plat. Exec. on AA is based on class, which I disagree with.)

So when I pay Y class, I am rewarded with a better chance to upgrade. When I pay discounted fares, I call like every other elite traveler. I think this is fair.

The reason why FF programs are around are to promote loyalty (and therefore, more business). I think if more airlines went the way of TWA, there'd be a lot less loyalty to a specific airline. Many people who would be excluded from status would fly whatever airline based on price/convenience instead of sticking with one carrier.

Sorry this was so long...just my opinion.

Coming into the fray rather late but thought I would offer this perspective. AA's top tier Executive Platinum program caused a bit of consternation among AA ff's when it was first announced. The deal was (and is) you accumulate 100K EP points to gain the status which is based on mileage and class of ticket purchased. F class = 1.5 points/miles, C class = 1.25, Y/B = 1.0 and discount economy 0.5 - a minimum of 500 points are awarded per segment.

At first, I thought the scheme rather unfair when compared to UA's top tier where you just have to accumulate 100K miles to reach their top tier. My viewpoint changed somewhat when I looked at it from the mathematical perspective. If you fly approx 67000 miles in first class you would qualify. If you fly 80000 miles in business class you would qualify. Now, in comparison to United, you would not get 1K qualification, just Premier Executive, which is pretty much the same as AA's Platinum. I was convinced further when I qualified in the first year EP was introduced on approx 93,000 miles, based on a mixture of discount, full econ, business and first class tickets. No way I would have got 1K on United!

Granted, not everyone is lucky enough to travel on full fare or premium cabin tickets. However, in the examples given above at the very least in AA's program you get mid tier status, even if you fly on the cheapest tickets available.

I think AA's approach is a fair one - it rewards the very frequent flyer (who may be generating less revenue on a transaction basis, but does it consistently) and it rewards the premium ticket buyer who does'nt necessarily travel with the same frequency but generates a larger amount of revenue.

While I don't mind the premium multiplier for flying first class with AA's Exec. Plat., I do disagree with the 0.50 multiplier for discounted fares.

I do fly Y once in a while, but I never will fly paid first class as my company will not pay for it (except for international flights which for me are far and few between).

So I guess the argument is for me...why should I get less miles for planning ahead of time to purchase my ticket? Maybe AA thinks I am less valuable of a customer, but I guess that's why I've switched to CO as my airline of choice. After I've reached Platinum status, it's too difficult for me to reach Plat. Exec. when I have to earn double the miles to reach the same plateau as someone who pays Y fare all the time.

If the idea of an FF program is to promote loyalty to an airline, then I don't think this 0.50 multiplier is the way to do it.

--Ryan

The Thrifty/TWA promotion involved the sending of Aviator Elite cards to Thrifty customers in the "Blue Chip" program, which is like National's "Emerald Club" and Hertz' "Number 1". It's basically a database which provides members with stored rental info for preprinted contracts. If you really want TWA Elite, just call them. The way they give it away, you can probably get your dog a card.