why don't airlines stop their mileage programs?
 

With US Air's announcement that they're no longer giving out bonus miles to elites, I have to wonder: why not just bite the bullet and take this huge liability off their hands? Stop giving out miles altogether.

Why don't they do this?

Some will say that, in some instances, the mileage programs make money while the other parts of the airline don't, like United. While this might be true miles are still a huge liability of the airline, no?

Some will say that they need miles to keep loyalty. I call BS on that one. Most flyers fly on 1) price and 2) convenience. Very few folks in the scheme of things fly based on miles.

So let's just get on with it. All airlines should get rid of their miles liabilities and stop this gradual bleeding.

I cant see it...
 

...its the main reason I stay loyal to AC, without the FF program I'd fly anyone...from a loyalty standpoint i believe this to be their most effective tool...and lets face it...most of us here are biz travellers and are not flying on the cheap tickets so why piss off the main income generators?

The ff programs obviously bring in more money than they cost. Unfortunately the airline keep morphing their ff programs into Ponzi schemes.

MisterNice

I think the people that fly based on FF program are in the minority.

I am loyal to NWA for the miles. If I didn't get them I would fly whoever.

Except that most customers do already fly whoever, I submit.

Or some people can't. If they have corporate booking engines that dictate who they fly, they don't have a choice.

If you have choice then why would you spread your miles between multiple airlines? If I have 15,000 miles with UA and 20,000 with NWA - I can't book my wife on a trip with me as fast as I could if I had 35,000 with NWA only.

They make a TON of money selling miles to resellers, like credit card companies, etc. Also, the flying public, Ma and Pa Kettle included, are addicted to miles - I can assure you that if a major airline stopped its FFP cold, not only would they lose a tremendous amount of business, but they'd likely be sued like crazy too.

US is going to be hit with Cockroach v.2.0 due to the loss of bonus miles - assuming their FF masses don't just give them the finger this time and leave outright.

In any case, the loss of revenue from mileage sales would be a no-go for airlines. DL avoided a potential liquidation by selling a ton of miles to Amex.

How many people have airline credit cards? I think there are a lot of people who sort of pay attention to airlines frequent flyer programs. Maybe not the extent of paying a significantly higher fare for a ticket but not always the cheapest. Also, some of these people will just go to the airlines site to book tickets and only look around if the fare seems excessive.

On the topic of credit cards - the banks pay a lot of $$$$ to the airlines for those miles, and with restrictive redemptions, the liability isn't anywhere near its book value.

DL won't scrap its FF program since AMEX would have a fit and they are the ones who bailed out DL last time. Air Canada spun off Aeroplan and made a lot of money.

And don't forget alliances - no FF program, No Star Alliance, or OneWorld, or SkyTeam. No alliance means you get no feeder traffic at either end of your routes, no codeshares that allow you to pretend to be bigger than you are, no revenue from other airline FF redemptions for your seats, no round the world tickets (OK I don't imagine that is significant) and reduced ability to have exclusive corporate travel due to reduced destinations etc.

(Yes, Orbitz etc can still stitch you into a booking, as long as you still interline, but that will still be a big drop in bookings vs Orbitz etc + all your airline alliance partners etc).

Oh - and of course, no FF program and therefore no alliance means no reason for every other airline to compete against you on profitable routes forcing you to compete on price which of course doesn't work if you have a higher cost basis than the competition and no ability to run some routes as loss leaders to attack other airlines since you have no safe routes to rely on for income.

No FF programs = no Flyertalk.

Although the majority # of people-wise are lowest-cost no-loyalty people, doesn't the majority of $$ to the airline come from frequent flyers?

I'm sure I've made more revenue for United than ma or pa kettle since I fly on 7 day fares.

Me thinks someone else is the minority. Maybe they are just bitter since they can't pick and choose an alliance, or maybe his/her company steals their miles.

Who knows what their agenda is except maybe just to get us riled up... One of those "I can't have it, so either should you..." type of deals it seems.

Most pax would not change their flying habits for the sake of miles. Most pax do not collect miles, don't fly very often and just look for the cheapest fares possible. To cater for these people, airlines have found ways to make their fares look cheaper than they really are, and adding on extra costs for fuel, baggage, payment, etc. There is little point in thse people collecting miles anyway as they'd probably never have enough miles to make a redemption worthwhile.

But some people are persuadable by miles. I expect these people would typically either be business travellers whose tickets are paid for by somebody else, or who are pretty wealthy. Now, if you can persuade these people to fly on your airline when cheaper choices are available - or to pay more for a ticket on your airline than they had to - then you'd want to help them do that. Miles and status redeem themselves by filling empty seats and by letting people sit in a comfy lounge and have free coffee and free whisky. The marginal cost of having a passenger in an otherwise empty seat - even in F - must be quite small. And the prospect of being able to fly in international first class for free - even if it takes three years of hard slog to get there - is a pretty tempting prize for an average miles-whore. That's the kind of prize that will have people paying extra for tickets, flying when they didn't need to fly, and coming back to your airline.

:confused: Get you "riled up"? Dude, if you're getting riled up over FF miles then the problem isn't me....

Umm no, not me. Your the OP. Your post seems quite "excited" as to why they don't rid of them.

I said that may had been your agenda, I can't figure out why else one would suggest get rid of FF programs, or at the very least, the reward portion of it........ on a frequent flyer board none-the-less.

I'm not saying they should. I'm questioning why they don't. The posting style is Socratic for those that could not figure it out.