It sounds as if the airlines are already getting your $300+ because you are buying tickets for your trips. If the program does not encourage you to travel more often than you otherwise would, or cause you to buy more profitable fares, how does an airline gain?

No, not really. For example, I live in Northern California. My wife decided last minute we would take our daughter to DisneyLand for her birthday. I looked up the flights and they were about $200 each roundtrip on southwest( $600+ taxes and fees). I decided to just bite the bullet and drive down instead, costing me about $120 in gas and 12hours roundtrip. There have been other times when Southwest goes on sale for like $59 one way and we have flown. Same with Las Vegas etc... Those 7500 point short haul flights seem like a good deal if they had award availability. Too bad my flights are more than 500 miles long.

With the latest round of changes and basically trying to do away with flying-for-miles (i.e. making RDMs totally revenue-based), the U.S. legacy carriers are really hurting their position with INFREQUENT flyers once the general public catches on and starts to figure things out. Many of my posts have been about how the airlines are blowing it with this group. The recent changes by DL, US and now AA are as much about reducing costs and making the programs much less rewarding as they are about rewarding customers who pay the most more. IT'S NOT A ZERO-SUM GAME. We're getting this because of the mergers and being down to three large airlines, plus the whole cartel-like "capacity discipline" baehavior to try to drive up fares..

It'll take the public a little while to figure it out because they're not aware of the old system changing. You've got tons of tie-ins...my natural gas company, for example, awards one DL mile per dollar spent. You can play a slow-accumulation game even without flying much. But the changes to flying-for-miles removes a key piece, and without that for many infrequent flyers it isn't worth it.

Airlines now are like the Las Vegas casino that turns its nose up at low-rollers and decides to cater to high rollers. IT'S BEEN TRIED and it doesn't work...if it did, everyone would do it. But they still have to fill the plane in the back.

If the LCCs and ULCCs were smart about it they'd re-evaluate their programs immediately and look at certain policies that should be changed (like over-aggressive expiration) with an eye toward advertising that they're now BETTER AND MORE-REWARDING FFPs for most travelers than the big guys.

This would be quite a reversal from the decades-old situation where the FFP was an effective competitive weapon FOR the legacies against LCCs. OTOH, some key people running LCCs were anti-FFP ones at the legacies earlier in their careers, so maybe that's coloring the views.

We'll get slowly building awareness via consumer reporters and others on local news telling people that thinsgs have changed, that the miles they get from flying on low fares may be much less than they're used to, and that they'll probably "pay" for that free ticket through credit cards via annual fees unless they can put up an unusually high spend.

It'll take awhile for the message to sink in, but the tie-ins will become less effective and fewer companies will do them once awareness builds.

This is a classic case of doing something for short-term gain while times are "good" that'll bite 'em over the long term or when times turn bad, such as with a recession or a black-swan event.

I am not certain that it will bite them, since overcapacity has been eliminated via the mergers, and it will be more difficult for a start-up airline like Southwest to ever occur again since new airports and runways will not be built in the future.

It all started when American Airlines needed a marketing tool to differentiate itself. It invented the frequent flier program and it worked. For a while. Until the competitors did the same thing.

Then there was massive overcapacity and it did not really cost anything to let people fly for free. In fact, the revenue from selling the miles to the credit card companies came in quite handy. Then the mergers happened and overcapacity was eliminated. So the airlines can sell all the seats now for cash, eliminating any desire to give them away for free.

As an unfortunate coincidence, I think many credit card companies make lower margins now than they once did as a result of consumer protection regulations, competition, and lower interest rates, so they are less inclined to buy and distribute large quantities of miles. Don't like our mileage credit card offer, here is your 1% cash back card instead. When the alternative was a 2% cash back card, the mileage card offer needed to be pretty good.

I think this area of life has run its course and will not come back. We will continue to see devaluations, little award availability, and the trend of making people feel they got something when in reality they got very little - such as making a person pay $300 in reward fees and taxes like British Airways and Virgin Atlantic do when a person is using miles to get a reward seat that might have cost $700 in cash.

Same principles apply to hotel rooms. Just look at Hilton.

Ummm... sounds like some of you are over entitled customers who think you loyalty counts for something.

Which happened the very next day!

Please get your frequent flier program history correct. First of all, the first frequent flier programs predated AA by at least a couple years. It's just that AA is the oldest one to have survived through to today. (Most people don't care about Texas International's FFP because no one's flown them for decades! )

Second, UA was about to announce theirs, and AA learned of this and so AA rushed their announcement to a day before UA. So the competition was there immediately. Now, AA and UA were not as dominant as they are today, of course (this was before many rounds of mergers and acquisitions and airline deaths).

That is one of the reasons I chose Hilton for a credit card. I don't travel much (didn't really get much paid time off before, and now I can usually take a week off at a time/do not travel for work). So the categories of groceries and drugstores (while available) helped accumulate points. And at the time, I would have been able to redeem for some big trips, just through spend. Then the devaluation happened. Make it too available and it hurts all.

Because giving away free stuff at a time of high demand for the stuff you are selling is sort of the opposite of how you actually run a business profitably.

Summer is a peak time for airline travel. So are Thanksgiving and Christmas. There's no incentive to make award travel easier during those times; every seat you give away is probably one you could sell.

So effective that WN is, what, the fourth largest airline in the USA? B6 and WN managed to become publicly traded companies?

If FFPs were that effective for competition, LCCs would have been strangled in the crib long ago. What they've been is a crutch for airlines to get through recessions when banks front money for miles, but that's not a competitive weapon as much as life support.

Christmas is only a peak time for personal travel. It's actually a slow time for business travel. And for this reason, it's a lot easier to find award seats in business/first class at Christmastime than in coach (at least domestically). But of course, most families (or even most individuals) don't consider paying double (or more?) of the miles just to get a seat up front, when all they wanted was to travel cheaply for their Christmas trip. So I've found (on the routes that I've looked at) that those business class awards can persist for a while, on Christmastime routes that pretty much never had coach awards available. That does seem 'effective' for the airline.

Similarly, many domestic airlines have an "anytime" award for "just" double to triple the miles available on most any of their own flights until it's sold out, but again most families (and most individuals) ignore that because it goes against their idea of "value" (and/or because they haven't accumulated enough miles to "afford" those). The airlines play with the award cost of "anytime" awards to make sure they don't substitute much for paid travel, so that does seem "effective" for them.

Right, but OP is talking about marketing to and targeting families who aren't frequent travelers, but who will want to take up a bunch of seats all at the same time, not FTers who know how to work the system and who may be doing solo travel internationally. Of course there's a lot of F/C seats that aren't occupied by business travelers during Christmas/summer, but dropping half a million miles or more on travel to take out a longhaul F cabin isn't very typical for a family... and the airline would rather fill seats with paid customers in coach at those peak coach travel times. So marketing to those families who typically are looking to travel in Y for free doesn't really work; it's counterproductive (not to mention the fact that small F cabins rapidly become full if you give away the whole cabin to a family who decided to churn some cards- are you really suggesting that airlines should market to MS/card churners/FTers who know the ins and outs of things and can exploit them to maximum potential?)

Also, I suspect that as time goes by, airlines will be better at upselling J/F during peak travel periods. Sort of hard to upsell a seat you gave away for miles. Also hard to op-up someone into J/F because of a full Y cabin if you gave all the seats away to an entire family traveling to see Grandma on their miles they got via manufactured spend...

The airlines I'm referring (major domestic legacies) seem to have no problem filling the front cabin at the last minute with elite members who get upgraded per the normal elite upgrade rules. In most cases, they'd rather not annoy their most frequent flyers (those elite members) by selling upgrades to "kettles" before upgrading (at least the higher level) elite members. But they don't think that making award seats up front (which get relatively few takers anyway) weeks or months or earlier upsets those same frequent fliers.

It's different with longhaul travel where the "simple" domestic upgrade rules don't apply (and you can only upgrade with miles, possibly plus copay, or systemwide upgrades). There there's usually no horde of elite statusholders ready to fill up the front cabin, and so paid upgrade offers are more likely.

And it's yet different at those foreign airlines who'd rather leave most of the front cabin empty than making it available to anyone (miles redeemers, upgraders, etc) who doesn't pay full price ! Should we ask a separate question of whether those mileage programs are effective?

You might have been right twenty, ten or five years ago. Now? Not so much.

http://viewfromthewing.boardingarea....5/12/17/42581/

Keep in mind that UA is notorious for "tens of dollars" upgrades, and AA uses stickers for everyone under EXP on routes > 500 miles.

Also... the one thing the legacies have held prices on through the years? The 25,000 mile domestic round trip in Y. Europe, Asia, etc., all got jacked up. Premium classes, jacked up. Coach domestic... no. Obviously the legacies think that value means something special.