Wouldn't recreating FFPs based on dollars spent instead of segments, EQMs and mileage be the best way for AA and other airlines to quanitfy and segment best customers (EXP, Plat, Gold) and come up with rewards. Isn't that how Nieman Marcus In-Circle works - the more $$$ you spend the more you get back. Would still leave room for bonus programs to promote new routes - i.e. - fly to Mexico through the end of year and earn Double $$$ from what's actually spent.

What are the +s and -s?

AA moderator note:

Given this is a general question about mileage programs, the thread will be relocated to MilesBuzz.

I thought $$$-spent is the idea behind United's Global Services program.

I think the main problem is that the mindset that mileage loyalty programs try to instill through marketing is that you are getting something for nothing through your loyalty. Just fly us regularly and we'll send you to paradise for FREE!

I can't see the success of advertising "Spend $4000 with us and earn a free ticket to Hawai'i!" because it puts the $ figure of travel and the realistic cost of acheiving an award in the limelight.

A lot of airlines already have public or semi-secret programs in place to reward and recognize their high-revenue flyers.

One could argue that the credit card hotel points/miles earning cards acheive to some extent what you suggest by equating earnings to $ spent, but they are banked points/miles rather than elite qualifying.

Oh, and it'd really kill my mileage runs.

peace,
~Ben~

Some programs are based on $ - to a greater or lesser extent.

Virgin Blue velocity is directly tied, earn 6 points per $ and award costs are related to the price of paid tickets.

Lufthansa Miles and More has a wide range in earning between discounted economy (as low as 12.5%) through to first (300%). Their top status, HON Circle, can only be earned on closely related airlines and requires so many miles (600k in 2 consecutive calendar years) that for practical purposes means a lot of paid first and business flying.

Air NZ Airpoints is loosely tied to spend with fixed airpoints dollars earning rates that vary by route (rates roughly consistent with fares so eg NZ to US earns more than similar distance NZ to asia) and steeply by fare (deep discount economy earns nothing, discount economy 50% or less, through to first 300% or even 400%).

Singapore Airlines PPS program is special status based only on paid first and business class on SQ flights.

United GS program is special status based on $ spent on United fares.


As you can see, some of these are not strictly based on $ but rather highly correlated.

Independence's program (DH) was based solely on dollars spent, though they did give some bonus points a few times. It didn't really last long enough to see what type of impact it would have on the other programs out there.

As posted in previous threads on this topic, the proposed approach would make sense if the purpose of FF programs were to reward past behavior. It's not, and never has been. It's to influence future behavior. The folks who spend the most are, statistically, less subject to this type of influence than bargain seekers. Therefore, rewarding them in proportion to their higher spending would be throwing money down the drain.

This is a perennial source of annoyance to FTers who fly in paid F/J, but they have to recognize that FTers are not typical. Our obsession with miles/points does not indicate how most of the world thinks.

Differences among programs in different regions of the world, with European programs typically rewarding higher paid fare classes more than U.S. airlines do (as one of several possible examples) reflect differences in reasons for airline choice and therefore the type of behavior that can be influenced by a loyalty program.

In one respect AA moved in the opposite direction with the EXP segment qualification change/addition.

Are you trying to make people in the MR forum cry? FF programs are loyalty programs meant to influence people's buying decisions. They already give increased benefits to people who buy full fare tickets (increase EQM%), so in reality this is already in place. If you only gave mileage based on fare purchased then few people would have any incentive to stay with the airline. Only those who flew full fares would bother with the programs.

Talk like this is heresy

First of all, isn't Neiman Marcus a store??? Well, stores sell a variety of products (most of which they do not produce), over a tremendous range of prices (ruling out the possibility of awards based on number of visits during which you spend SOMETHING), and so rewards based on spending are about their ONLY option. So they didn't choose it because it was the option they liked the best, they chose because it was about the only option avialable. (The only logical alternatives still related to $ spent, but computer in different ways, using thresholds or no thresholds, aggregate or per visit, etc.)

On the other hand, industries which create their own products (airlines sell seats on flights, hotels sell rooms for nights, movie theaters sell admission tickets to a performance) have a variety of ways of rewarding to choose from, including simple ones like per transaction (that's how most movie theater chains do it, that's how some hotel chains do bonuses at least calling it "per stay", and that's close to how Southwest does its FFP because it hands out its "credits" based on flights, not miles) to more complex ones like miles.

You want a downside: It'd be taxable! The only reason that efforts to tax miles have failed is because no one can come up with a FIXED valuation for miles. Miles vary in value drastically both in how much it costs to earn them (cheap when done filling out surveys or applying for annual-fee-waived credit cards, expensive when earned flying on paid international first class tickets), so the IRS has generally given up on being able to come up with any basis on which to assess a taxable value. But it miles were nothing more than a "cashback" (which is all any points/$ essentially equates to), they'd have a very defined value and if they stayed as popular as now (which I have my doubts) you'd see renewed efforts to tax them, this time successful ones.

Furthermore, it'd make the math "too simple". A lot of people right now don't "do the math" (or do it incorrectly) and thus go out of their way to earn miles while spending way more than they should have (had they actually thought about how much those miles are worth). A lot of airlines make a lot of money off of this. Similarly, the airlines take the most popular awards ("saver" type domestic coach awards) and "price" them to be the lowest value redemption possible, but that doesn't keep most people out there from using them only for that (you can get a "free flight" for "just" 25000 miles!). Again, the airlines make money this way, because these seats are restricted and they only give them away when they feel they'd not likely sell them.

If the math were simplified, value-hungry FTers would no longer find much value in miles, while the airline would less value in them also (because they could use them to trick consumers into "wasteful" spending as easily).

And getting back to stores (tho not necessarily Neiman Marcus specifically), the other game that some stores like even more than loyalty programs is rebate programs, again because they can be used to trick consumers (who see the savings they'll get from the rebate, but then will forget to send the rebate in time or otherwise not qualify) into spending more than they otherwise might.

Finally, if miles were so simple there were no giant "loopholes" to exploit, where would FT and IF be? (You might not be asking this question here because this website might never have come to exist!)

AA has Business ExtrAA's which is dollar based. Most airlines that experimented with rewards for dollars spent are not flying now. Some time ago, I had a letter to Randy (Inside Flyer) that reviewed the fallacy of high fare pax complaints about low fare pax receiving bene's. Without the volume of low fare passengers, it would be likely that widebody planes could not be operated cost effectively so you end up with Icelandic's business model and fly 757's everywhere. That wouldn't be much fun.

SAS has its select elite level given to big spenders. But most SAS top-tiers don't come close to getting it.

the question sort of misunderstands the purpose of mileage programs

The reason they were launched was to get flyers to stay loyal to a particular airline, no matter how much or how little they spend.

The airlines wanted the loyalty of someone who takes two trips a year to visit grandma, as well as the businessman who flies numerous trips.

In some ways the importance of retaining the little guy has increased with the advent of Southwest and other discount airlines. The loyalty programs can be an alternative to discounting fares, a point of difference.

But that said, the airlines do offer the tiers to reward heavy flyers and the credit card companies--which are more interested in the money than whether planes get filled--are increasingly offering some money based programs (e.g. United "choices" from Chase

Well, on AA at least, the concept of Elite Qualifying Points is meant to reward those that fly regularly on higher fare tickets -- Full Fare, Business, and First Class earn respective bonuses. Granted, EQP only matters for elite qualification, but its something.