BAEC (FFP of BA) has two balances, one for miles and one for tier points. You use miles for awards, but the seconds are for level qualification (e.g. lounge access, check in desks, advance seat allocation, miles bonus, priority boarding); on the BA forum there're info not about MR but tier point run involving 5th freedom rights in Middle East.

They won't stop this because then they'd be competing entirely on price. At least now there is some differentiation.

Before FFPs we flew the airlines without regard to miles or points. During regulated travel when prices were set by length of the trip it was service and amenities that set one airline apart from another. Or perhaps one carrier had the toehold in your market.

Then came FFPs and the entire award/reward mentality took off like a posphorous fire. Now we expect points, miles, widgets, and credits for everything we do, whether or not it is an airline program or cents of for gasoline based upon the amount you spend at the grocery store.

I suspect the programs are here to stay. Price may be a factor in the entire equation but it is often not the driving force. When one is elite with a particular program the perceived benefits play a role in the choice. I like the ability to choose my seats and board the aircraft early. Without UGs I would still consider this a benefit. OMA doesn't have priority security lines but most everyplace else does. The ability to bypass the stampede during heavy traffic times is a benefit. The feeding frenzy to charge for checked bags and other nuisance fees and my ability to avoid those charges is a benefit. NW gives comp UGs and while I would miss them if they went away it wouldn't be a factor that would push me to another carrier (yet).

US can cut out the bonus miles for elites. I don't fly them and as long as it doesn't spill over I don't care. UA can eliminate the 500-mile minimum. I don't fly them and as long as it doesn't spill over I don't care. It's a given that WP is going away so I have the wait-and-see attitude of what shakes out. I'm not going to knee-jerk, but will re-evaluate if the finished product doesn't serve my needs. I left DL years ago for reasons other than price. I wouldn't hesitate to do so again.

In many markets prices are competetive so, just like during the days of regulated airline travel, it is the service and amenities that sets carriers apart. The only way FFPs would go away would be for all of the airlines to drop them. I really don't see that happening.

The only current trend that I find alarming is the drive to add fees to redeem FF awards. I think the time has come for our elected officials to look at providing the types of consumer protections that are in place for credit cards and other products. The airline industry is doing it to themselves. The catch-all phrase that they reserve the right to change the program at any time is becoming a rallying point that consumers can band together against in revolt. I think it needs to become as weak as a hotel making a blanket statement that they are not responsible for damages when you are in their care. They make those statements but they have no legal standing. They are meant to deter the average person from filing suit. The smart person sees through this and a decent lawyer pokes holes in it with the standard of reasonable care.

I don't see how the contract is any different with FFPs than any other purchase. Imagine if your mortgage lender arbitrarily told you that they were doubling your monthly escrow just because they felt like it. Of course you wouldn't stand for that. At the time of the purchase you have offer, acceptance, and consideration when you buy the ticket and the airline accepts your money and puts you on the flight. That should cement the benefits in place at that time for FFPs. But who am I to think that the legal atmosphere in this country, with politicians in the hip pocket of big money, is operated on a premise of common sense?

Re: OP. Hard to say where to begin on this one...

The revenue from non-flying sales and basically selling ACCESS to customers is huge and goes beyond the obvious (i.e. reckless selling of miles). Just look at how many credit-card issuers are trying to get at consumers for that very profitable business and how many consumers have opted out of mailings, phone calls, etc. Team up with an FFP and presto!, you have a business relationship and can send mail where your competition can't. Airlines will also point out the superior demographics of the customer base (a bit like the NY Times does). And it's not just for the legacies; look how hard Spirit Airlines is pushing its credit card.

FFPs for legacies are also very powerful tools against LCC competition. Assuming fares get matched, people very often pick the legacy hoping to someday go someplace like Hawaii or Australia (think "Cathy" cartoons). The legacy can't match the cost structure of the LCC but might be able to outlast it.

They're also very important in holding onto hub captives. Business travelers will try to line up flying on one carrier to maximize miles. Here in Atlanta there are no doubt corporate travel managers who try to put people on AirTran or wish there'd be less resistance to that, but corporate travelers try to get on the carrier with the miles. The really savvy ones are even suspected of gaming the system by timing when they put in the ticket request.

Besides, airlines control seat inventory and can make it hard (and expensive) to try to get seats they may have otherwise sold.

Level of benefits is definitely driven more by competition than anything else. Which is why some of the worst deals and earliest use of surcharges came on "national" airlines that have a vise grip on their own hubs.

Which begs the question: is UA the most convenient, best-timed carrier for your travels, or have you acquired 1K status by introducing flexibility to your scheduling process?


A lot? Probably like 100%. Business mileage runs aren't all that common...



To focus on the main point, I can only use my group of acquaintances. My friends that don't fly regularly care nothing for status or mileage programs.

Those that do fly more than once or twice a year care a great deal. I guess you could call them "Kettles", as they largely have no status. But the Kettles I know are using miles to get to Hawaii for their honeymoons, play poker down in Vegas, or travel back to our alma mater once Big East basketball starts back up.

So you say the ratio of travelers that care to those that do not is 40:60. I'll concede that.

However, those in the 40% group fly way more than those in the 60% group. At least in this sample, the 40% that care about miles are doing 90% of the travel, and would be furious if mileage programs disappeared and airlines competed solely on price.

Both.

I'm not arguing that I, as a customer, don't benefit from the frequent flyer miles. I definitely do. I just don't understand why UA benefits. For every one of me who flies UA because of miles there is someone who flies AA because of the miles and DL because of the miles, etc. It's all a wash, AFAIAC. So, why not just get rid of the entire scheme?

So what? If everyone did it then people would be furious but they'd still have to fly. I doubt folks will start driving ORD-NYC when frequent flyer programs are gone.

This was in reply to the assertion that most people don't care about miles. My point being that while most people don't care, "most people" don't matter here. Regular customers of the airline (not "most people" and not just elites) do most of the travel, bring in most of the revenue, and do care about their miles, frequently making purchasing decisions based on them.


An interesting point, and one that should worry frequent flyers. My response to this is that the airlines make serious money selling miles to banks, restaurants etc. which keeps the programs we love profitable and viable. If this revenue stream disappeared, one could use this argument to separate mileage-earning programs from airlines.

Look at the larger picture, beyond the fact that FFers generate a stable core business for the airlines. Notice how your FF program now includes credit card partners, and dining partners. Well, you'll soon see the US programs expand their FF programs into frequent shopper programs, broadening their reach to be more useful to those who only fly once or twice a year. AC has turned its FF program into the country's second largest shopping points card, and major profit centre. In fact, AC was able to sell Aeroplan into the public market and make over a billion dollars...the subsidiary became worth more than the mother airline! Recognizing this, QF is planning a similar more.

US carriers have been slow off the mark to innovate in these times of changing paradigms. Perhaps it is actually because of the competitive atmosphere that innovation becomes stifled...nobody want to be the first! But even internally, airlines cannot afford to drop these programs -- aside from the loss of elite business -- because the sale of miles to credit card and other partners is a good cash flow and a bankable source of steady income, versus the vagaries of running the rest of the airline!

In short: FF programs actually do make the airlines money and provide cash when it is most needed. They ain't going away any time soon!

If everyone did it at the same time, they'd have the FTC and DOJ at their doorstep the next morning asking how they just happened to do it all at once. Antitrust 101. Jeez, if you're going to suggest that they commit a blatant violation of the antitrust laws, why not just suggest that they all triple their prices at the same time too? They'd love to do it, but never would....

Real world: If only a couple did it at first, frequent travelers would flock to the other carriers faster than the first carriers could say "oops."

Unless they lobby Congress to outlaw FF programs, or to tax them, which would have the same effect.

Money, money, money.

When an airline has the legal ability to sell funny money in exchange for lots of real money by operating a Ponzi-type scheme where the airline pays out to its participants only when and how the airline wishes to pay out, an airline giving such a game up is not such an easy thing for the airline to do -- especially in circumstances where the airline uses the mileage program as a way to generate real cash to subsidize its primary operation and postpone paying the ultimate price for a primary operation that has significantly lower profit margins and is even an overall cash drain and income hit in a way that mileage programs are generally not.

Having trouble raising cash in the capital markets on very good terms, some airlines even try to raise money from financial institutions by selling financial institutions miles for real cash (at even larger than usual discounts to quickly raise millions of dollars) or even selling the FFP to investors. The airlines might not know it or admit it publicly but they are walking a tight-rope -- they cannot afford to kill the goose that gives them the fool's gold eggs that they sell for real gold while the market still buys it and holds it, but they also are pushing the goose to the limit.

The FFPs being a differentiating item that prevents the full commoditization of the industry is true, but the airlines seem to mostly have forgotten that FFPs are one of the few things that prevent even further commoditization in the industry than is already the case. [I am not sure the airlines really care that much as they mostly act as if physical product is enough, especially when there are service issues; in other words, the airlines have largely acted as if most all customers are replaceable and that retention through customer service efforts is generally not worth it to them since product and price is what they are selling. Consequently (in this regard but others too) the airlines are reaping what they sowed -- namely, a more commoditized marketplace.] I don't think the airlines in the US really care about commoditization much at all, so that concern is not the primary reason they are keeping FFPs still.

I doubt this. I think the majority of flyers would continue to fly based on price and schedule. FT is a unique community, remember.

The majority of people who get on a plane probably don't pay FFPs much attention, but that's not the market the airlines were going after with FFPs when they were introduced.

The majority of those current frequent flyer business travellers who currently routinely use a FFP enough to earn some kind of "elite" status with the airline and/or airline alliance would probably adjust their habits if their airline of choice were the first to ditch a FFP entirely and travel decisions were actually somewhat within their discretion. I presume that, as an entire group, this is a segment the airlines have hitherto been afraid of alienating too much because of their overall net contribution to the airline exceeding their proportion of the customer base. In other words, I wouldn't be surprised if a minority (e.g., less than 25%) of some airline's customers account for the majority (e.g., greater than 50%) of the airline's revenue and for an even greater proportion of whatever could be classified as being a cash positive and or margin-improving contributing customer to the airline.

That's been true up to now, but even Ponzi schemes eventually show negative cash flow. At that point their originators shut them down one way or another. Are we there yet?

The airlines are still able to sell large volumes of miles (and are even attempting to sell substantial parts of FFPs) to serious, huge players on the financial markets. I take that to mean two things: 1) that the FFP schemes are generally far from over; and 2) that the present owners of the FFP are desperately seeking to raid the schemes' piggy banks (which they've successfully used in the past by not acting as a fiduciary for scheme participants) a few more times while hoping the "greater fool theory" doesn't bite them first. How many more times they do this and how much longer before they bite off more than they can handle is not yet clear, but it's getting closer and closer. [To carry on along the second point, this is also sign that the FFP operator insiders are no longer confident in the utility of FFPs to meet their needs as they once were -- and when management insider sales exceed management insider buying, that's a powerful signal to consider too.]

There will be buyers' remorse and there will be sellers' remorse, but not all buyers or sellers will be in the same boat. Alternatives exist when/where such alternatives are effectively sought by FFP members, and there are ways to play the game without being burned the way the FFP scheme operators might want the non-operator scheme participants to be burned.