The mileage programs are ineffective
 

They only target a part of the market regarding the actual frequent flyers. What about the whole market that doesn't fly that often but is (can be) still a loyal customer?

My mom doesn't care/know about all the point programs, yet if the airline would target her, they would benefit out of this. ;)

I don't get what you mean.

You still can be loyal to an airline by just flying that airline and earn miles (if possible.

How often does your mom fly?

Nonfrequent travelers are loyal to cost. Airlines reach out to them with cheap fares.

People who don't fly often can still earn miles through credit cards.

The mileage programs are ineffective
 

Airlines don't actually care that much about loyalty, they care about profit. Obviously the two can be related, but not always.

If airlines were to target your mom, you claim they would benefit from it. I would ask what they can do to target the infrequent customer, aside from miles from flights and allowing them to earn more miles through credit cards. And depending on what you think they should do to target loyalty from your mom, how would they profit? Would the program's cost be more than the relatively small amount they make off of an occasional flyer?

Generally they don't make much off of a flight here and there. The occasional fliers they care about are those that pay for full fare premium cabins.

Yes, FF programs target frequent flyers, hence the name. An airline doesn't really care if a 2x/year flier is loyal to them. Taking an extra 10% of travel off a weekly, last-minute planning, road warrior is vastly more profitable than 100% of granny's 2x/yr, planned 8 months ahead, flights.

Your mom's loyalty has no value to the stock price. And given that the programs are the single most valuable component of most airlines, I challenge your assertion that they are ineffective.

They're effective for the airline even with infrequent flyers. Many infrequent flyers let their mile expire, so it costs the airline nothing, yet they got some promotion out of it. Buy if the infrequent flyers learn how to keep their miles from expiring by using partners, then the airline makes money selling miles to partners.

This doesn't hold for every country, in some countries creditcard programs rare or not available. When your homelandairline has a bad frequent flier program, then it's hard to collect sufficient miles.

For the whole game to work, it needs to be just attractive enough to influence behaviour, whether flying patterns or credit card usage, while being just hard enough to use miles that many people can't or won't use them correctly but aren't driven to completely give up.

If it was easy for "moms who don't care", then benefits would have to be cut even further back for those who actually fly more than once or twice a year or use the credit cards.

The problem with mom is that she can't sole source her flight and pay an airline a premium price to obtain more frequent flyer miles at her company's expense. She just ain't kickbackworthy. Some say, however, that the airlines aren't corrupt by playing various versions of the old kickback game under the guise of having a revenue based frequent flyer program and giving preferential treatment to "special" flyers. As I recall, when the subject of kickbacks and corruption came up United CEO Jeff Smisek even went so far as to declare "I am not a crook" and got on TV with some speech about his dog, Checkers. :p

Witrh the changes with Delta and United, the programs look much MORE like a kickback arrangement for gaming the system with travel and picking them than they already did. Companies also will be suspicious that some employees might wait to book (i.e. company has to pay a higher fare) to boost the PQDs/MQDs, RDMs or upgrade chances.

But really the DL and UA changes were also motivated as a revenue play, i.e. we don't have as much competition anymore so we don't have to be as generous. Many of their biz travelers are hub captives, anyway. Those who travel infrequently (or even frequently) on low fares are figuring out that the rewards in RDMs aren't very much now.

The real puzzle is why the ULCCs haven't figured this out and don't have better programs. For the longest time the FF program was a competitive weapon used by the legacies against LCCs and ULCCs, but today the ULCCs could legitimately claim to be more rewarding and turn the tables. But Spirit only gives 50% flown at lowest level unless you're a cardholder, and the deep-discounted off-peak awards also are only for cardholders (this on an airline where many of the customers would be turned down if they applied). Mileage expiration is also way too aggressive.

With Frontier a mile flown is a mile earned, but awards are only slightly below the mile cost of legacies and expiration is also too aggressive.

It's also important to remember that FTers are atypical and that the average U.S. traveler either doesn't have a passport or uses it only for cruises or places like Cancun, and if you serve places like Orlando and Las Vegas (or have some way to get to Honolulu for a big-deal trip), that'll be enough for many non-FT people.

I don't understand why airlines don't target families and their annual summer/winter vacations. I fly 1-2 year but were are a family of 3. If we spend 30-50k a year on gas, groceries, eating out, back to school with new laptops etc, that all gets translated to points. Even at the lowest 1x .01 value, that's $300 going to the airlines instead of amazon or best buy at the end of the year. Of course, if you dangle premium seats for a little more I might save them for a big trip.

Do you realize how hard it is to get 3 or more premium seats as "saver" awards on the same airline? The way most seat redemption algorithms at airline FFPs work, they're not often practical for families (they typically release one or maybe two seats at a time). So if the airlines marketed more to families, without there being award availability for families added, they'd have way more complaints.

The more people there are in a family, the more practical driving vacations are the less practical flying vacations are, even if you have miles.

Yes I know awards are geared towards single flyers, mainly business flyers with expense accounts or tax write offs. If they flooded the planes with more awards I'm sure people would be more eager to spend their points/miles with an airline instead of the mall or direct cash out. I'm not familiar with loads but i'm sure if they wanted full planes especially in premium cabins, more award seats would help that.

For example, If a non-work travel family has 200k in points i'm sure they would to use that to supplement their summer vacation to Hawaii or Disneyworld. I doubt families can sustain awards year after year so there is no fear of cannibalizing paid fares.

Except that making too much of that available cannibalizes the paid fares of someone else. Airlines have figured out how to manage capacity to keep lanes full, because at the capacities they have, there seems to always be someone else who wants or needs to fly, if you didn't. In a world where most seats can be sold, why should you expect a lot of award availability?

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! :p)

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 :eek:! 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.