The Future of Frequent Flyer Programs: What Should We Do?
 

First USAirways, then Delta Air Lines, now British Airways...

Just one look at the threads in any of those forums summarizes that the way of life in travel as we currently know it is in serious danger of deteriorating or disappearing altogether - and in some cases, the deterioration is well under way.

The purpose of this thread is to have a roundtable discussion involving everyone with ideas as to what we can do - if there is anything we can or should do - to stop or slow the current (or eventual) hemorrhaging of these frequent flyer programs.

Mostly anyone even remotely associated with frequent flyer programs will be affected by the current course of the future degradation of these programs by their airlines, including (I really dislike mentioning this) FlyerTalk and other companies of the WebFlyer network.

Should we as frequent flyers band together globally (regardless of program) to take action together? Should we continue to take actions separately, as separate factions of different frequent flyer members are doing currently, with buttons, billboards and/or protests? Should we just quietly accept the seemingly grim future of the frequent flyer program and choose our flights accordingly? Should we limit our travel, or perhaps stop flying altogether?

In terms of frequent flyer program(me)s (I know - there are many more serious things about which to be concerned, some of you are thinking), this is a serious issue. What do you think?

I agree with you 100% that this is a serious issue. That is why the general flying public, and especially we frequent flyers need to learn to manage our expectations. What do I mean....? Actually its rather simple:

1) the days of getting a lot for nothing are over. no more chepo fares eligible for upgrades to premium cabins

2) chepo fares will probably start earning less miles. take that or else you will be fooled by earning full mileage only to get the same (or more) taken away from you through mileage inflation

3) the best perks are going to be exclusively for the best customers. unless you have an insider at a carrier that will bend the rules for you... most low revenue/low profit customers are going to have to deal with less/smaller or no perks at all

I agree with the assessment of Gaucho100K and I don't think there is much that can be done about it, either. Even today's somewhat diminished returns are likely to be recalled as "the good old days" because the system looks rather unsustainable and the red ink would seem to indicate that is probably the case (though FF programs are only a part of the problem). Example: for a relatively paltry $1,300 outlay, I've picked up at least silver elite status until the first quarter of 2005, bagged enough miles for a couple of free domestic r/t tix, all but assured myself of a number of first class upgrades in 2004, traveled to Europe twice and hit both coasts for weekend joyrides/respites. Many people on this board would consider that to be overspending in comparison to what they are able to do. Now THINK about that!

I have said it all along:

Although I have (A) not had way too many miles to worry about--like 1 million or anything, and (B) I never believed that the whole loyalty gig would last as a marketing scheme from the airlines...

BURN EM!

Bring your miles up to even 5,000 levels and then BURN EM!

example:
5, 10k NWA is miles+money awards.

50K is a free econ ticket to Europe.
35K is Hawaii on many airlines...
100,000k is a week in HHilton Hawaii or something...
Etc.

Burn em--or give them to family and friends to do so! Give an award today. Have the person buy you some good wine for your partings!

BURN EM!
(or they'll just 'Ansett' you someday!)

I think it's cyclical. Right now, the airlines are in 100% cost cutting mode. Therefore, there is little competitive initiative beyond the basic fare-matching that they always do. They are looking at places to cut out near-term costs, and FF programs are an easy target. (Not that I think the changes are logical...)

Eventually, one airline will decide that increasing rewards will increase revenues and profits, and they will start enhancing the programs again. We've been through this a few times.

Right now, I firmly believe that the airlines do NOT want more customers. In fact, many airlines seem to be using every customer service opportunity to DISCOURAGE me from flying. Perhaps they want to paint as bleak a financial picture as possible right now to get more concessions later. I don't know.

But I will give credit where it's due: I have flown about 15 recent segments on AA on mileage-run-quality fares, earned lots of upgrades and bonus miles, even gotten a couple Op UG's, and received pleasant customer service at almost every station. I don't think the fly is falling quite yet...

Marathon Man is absolutely correct.

The decline in the "value" of ff miles makes the NASDAQ's drop look like a minor correction.

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CO treats me like a king, Rodney King

If the airlines diminish the value of FF programs to the point where people start to loose interest, they will cut off the only remaining profitable part of their business. Frequent flyer programs cost the airlines very little since the rewards are capacity restricted. To limit the perks and "cheap" tickets is a sign that the airlines do not know how to run their business---Southwest has the most generous frequent flyer mileage program in the industry and they only sell "cheap" tickets.

I burn those miles as fast as I get 'em for the flights and upgrades I want NOW. We've already seen the degradation of F and J to shameful service levels; now the degradation of mileage earning. Beauty.

Should the 2 airlines I do the my 180K a year on (AA, AS) pull this garbage like BA and DL, it's adios to the "friendly skies" for this guy, and I'll take the $40K I spent on travel last year with me. Horror of horrors, I'm actually getting a little tired of putting my can in a seat this much in a year as it is. All I need is a few more reasons to turn the faucet off.

In some ways it may not be a good idea to burn your miles. Although that is the "safe" thing to do.

For example, under the new BA rules you will be able to upgrade from World Traveller Plus to Club Class for 25,000 miles. And at the moment it's not all that tough to earn 25,000 miles in many of the programs. But in a few years that may be a different story. As BA is now only going to give you a quarter of a mile/per mile flown if you are on a discounted coach ticket.

My point is that right now it's pretty easy to earn 25,000 miles. But in a few years if all of the airlines go the way of BA that may not be true. And at that time if you want to sit in Business or Club Class you may be sorry that you used 25,000 miles to fly on a ticket that could have been purchased for $400.00.

I can see the day when you'll get 1 mile for every $5.00 charged to a credit card.

At the moment if I fly to Europe on AA (and I'm PLT so I get a 100% bonus) 5 times @ $400.00 per trip (total $2,000.00) I then earn a free Business Class ticket that has a value of $7,000.00+. And those days may be nearing an end.

I think a lot of the miles are used for upgrades, Y to C. On Transatlantic UA lately, I think the majority of the people in C with me are UG.

The Airlines may be considering clearing C out for Revenue Passengers, then cutting the C fare from the typical US origin rt $7,000 to the typical Europe origin of $3500.

Perhaps airlines are being forced to think in terms of cost effectiveness. If you fly out of IAD, DEN, ORD, SFO, you have to do UA. Atlanta,DL, DFW, AA, and so forth.

Everyone talks about Southwest and their generous program, but few fly on Southwest, because they don't go anywhere to speak of.

I see a lot of people commenting on BA and DL that I really don't ever see around the BA or DL boards. Lets be straight both have announced or made changes, but they are VERY DIFFERENT.

If you had 1,000,000 miles on DL on 31st DEC. you could redeem 12.5 RT's in BIZ beteween the US and Europe. Today you can redeem the same amount of flights with DL and this has NOT been diminished. No miles themselves have been retroactively effected

If you have 1,000,000 miles on BA today you can redeem slightly more than 7 RT's to Australia in First. On July 1st, you will only be able to redeem slightly more than TWO. While this is a NA example, and not all examples are so extreme, it demonstrates how BA has hurt miles "in the bank".

Both BA and DL have changed the way you earn status. If on DL you bought more expensive fares before, you will qualify 33% to 50% FASTER than you did before. On BA you will need to fly as much as TWICE as much (analyzing my own case 80% more) to retain status, EVEN IF YOU ARE ALREADY FLYING ON THE MOST EXPENSIVE TICKETS.

BA has slowly chipped away at many BA gold benefits for several years (rapidly speeding up the last several months). DL is quickly devaluing the Medallion program by taking away perks pretty much all at once (although SWU's a couple years ago hurt).

I defend neither, although what BA is doing with already earned miles is not right, especially for NA members. Sign me up for the class action suit.

I agree with you that BA's net changes are far worse than Delta's for the frequent traveller community. BA's are really a shot that may be heard around the world and affect first all OneWorld member and then "competitively" matched by the rest.

Gaucho100K --

we frequent flyers need to learn to manage our expectations.

That message is concise, sensible, insightful, accurate and refreshingly honest .... so it's hardly surprising that a lot of FTers tuned it out.

Truly, for this past year I've begun to doubt the fundamental sanity of some of our fellow FT community members. God knows, they'll deny this vehemently -- but it's as if they're genuinely blind to the business realities of 2003. I've never before seen seemingly educated, coherent people so widely ignore facts while continuing to hammer away on outdated slogans.

"We're your most loyal and faithful customers," "We'll vote with our feet," "My airline should be increasing elite benefits and F service!!" ....

... meanwhile, in the real world, AA continuesto lose $5 million a day, NW hits $1.2 billion in losses for '01 and '02, UA is maybe a half-inch out of the grave & US is even closer, CAL stock is selling around $5, DL can't seem to lay off or attrition away its staff fast enough ...

A fair number of FT folks are in a serious disconnect to reality, and getting more ironclad-defensive about it every day. So that's a long way of telling you, Gaucho, that I agree with your assessment -- but doubt that it will genuinely sink in with some folks until the first major heads-up.
(For anyone keeping score, my bet is that heads-up will come the day UA sinks into Chapter 7, with no competitors jumping in to buy up their routes or equipment. A lot of folks in UA's East WallaWalla-style markets may quickly realize that there are worse fates than stricter upgrade rules or diminished F wine choices).

Thanks for your support, Don. Do you wanna borrow an anti-flame suit I have somewhere around here? http://www.flyertalk.com/forum/biggrin.gif

Seriously, Im not trying to be apocalyptic, Im just trying to be realistic. Sure, the changes will hurt us where we feel it most, but I just dont think that crying foul will get us anywhere. Finally, as to organizing ourselves into militant groups and complaining together, Im not sure I see the point... we all can vote with our wallets, thats the best way to do it. Speaking of wallets, my solution to this dilema is clear, I need to see how I increase my cash-flow to start paying J and F class, else Im going to go back to one of my old hobbies before I started flying so much... http://www.flyertalk.com/forum/biggrin.gif

While I certainly agree that we FFs need to manage our expectations and that we need to realize the current economic climate and its impact on the airlines, implying that FFs and FF programs are the reason for AA's $5 million/day loss (or the losses of other airlines) is preposterous. The fact is that FF programs have been and continue to be a profit center for the airlines.

And while we are realizing those things, let's also realize that when someone redeems 25K miles for a trans-con coach award ticket, it's likely that the airline received $375-$500 in revenue from the sale of miles for that ticket. Seems to be a much better deal for the airlines than selling that ticket at the $200-$300 trans-con fares that easily available to most flyers. Someone posted on FlyerTalk somewhere that the airlines are basically trying to figure out how they can reap the benefits of selling miles while not ever having to deliver a single award seat. Although said jokingly, it seems more like a reality today.

I can't fault the airlines for attempting to squeeze the last penny out of the one profitable part of their business. But I do find it curious that while the major airlines have been screaming about the pricing of SouthWest and JetBlue for years, they are now driving me right into the discounter's arms by gutting their FF programs...the one thing that led me and many other flyers to stick with the majors even in the face of higher prices and inconvenient routings. Well, that game is over is my view. I'm not about to take the devaluing of my miles lying down. I have and will vote with my wallet when warranted, miles be dam*ed. In April, I will be taking my first ever flight on a discounter, Southwest, because AA and others seriously overpriced a BWI-BDL trip...the miles are simply not worth the extra $45 they wanted. I also flew Delta last month on a leisure trip. I am not at all a Delta fan, even less so with their recent SkyMiles changes, but for $158 to JAX (many $ cheaper than the competition) how could I resist. Especially when I received miles for the trip in my SkyMiles account. Hope Uncle Leo loses a few $ on that one!

So, in summary, while I understand the airlines position, I have to conclude that in the end devaluing FF programs will hurt them more then help them.

Just because winning seems hopeless, doesn't mean we don't fight back and fight back HARD!, Delta has its Rats, & US has it Cockroaches a fact that I had in.

What we need is to turn the roaches and rats into rhino's and ram this issue home. make them feel the heat now because there will be a time when the economy will turn and profits will be back with a vengence.

The unions are mostly powerless to stop the wage concessions, but we are not powerless, we can and should vote with out mouths and with our wallets NOW! Form you own ww.saveskymiles.com or cockroach group for your airline. let's build a data base of media outlets friendly to our cause on slow news days.

Write your Congressional leaders and ask to testify before Congress on airline matters you're a citizen you have that right. They take us for granted and try to bully us. I for one will not be bullied. This is one Cockroach that is hard to kill

Yes- the airlines are drowning in RED INK. It is also their fault. They make the rules, we just get to use them to our own benefit.

I spent 6 years in the trade show business. One year I was on the road for 200 nights. At all our trade show industry meetings we talked about how the internet and video-conferening would hurt trade shows. Because 4 years ago, trade show attendance was up, the inductry thought that alternatives to being there would not really affect it.

They were wrong. Like everything else, it took longer than expected for the new technology to become widely used.

We are at the point where ALMOST ALL travel is discretionary. For the airlines to survive they have to ackowledge this. If they keep antagonizing their best customers, they will NOT stay in business.

I dont think that frequent flyer programs are to blame for the industry meltdown... so in that aspect I am in agreement with those that are protesting.

My point is that its makes no sense for frequent flyers that are smart enough to know how to play the system and understand all the rule details, to expect the airlines (many of which are -btw- in financial difficulties) to treat them like true VIP and extend them all the perks.

Furthermore, I strongly disagree when someone insists that fare savvy flyers that buy the lowest possible fares to accrue only mileage and status in ff programs are the BEST http://www.flyertalk.com/forum/rolleyes.gif customers, and that airlines should do the best they can to not alienate them. Therein lies the crux of this issue....

Yes, these people may have the highest tier in a given program, but they are basically free-riders (in economic terms) and do not constitute the customer that makes an airline profitable.

Well said, Tango. My thoughts exactly.

Personally I'm much more concerned about having financially stable airlines in the USA than the perks. If I buy a coach fare (which is all of my travel), I expect to ride in coach.

Now then, if United were to eliminate Economy Plus for Premiers, I would seriously consider alternative airlines. But I'd stay loyal with almost any other reduction in perks save that.

I felt a little guilty sitting on a IAD-SEA flight a couple weeks ago, upgraded to F using 500-milers on my $248 round trip fare, next to a guy on his way back from FRA probably on a C fare (or at least H so he could upgrade). The gravy train has to end soon.

Why would you feel the least bit guilty? You made the system created by the airlines out of greed work for you! Trust me this Friday when I fly from PHL to GRR and the fist leg to PIT is in 2C I feel no guilt whatsoever that I paid $177.50 RT. Profit is not a PineyBob problem! No one held a gun to B Ben Baldanza's head and forced him to charge me that price. If he's dumb enuff to sell a ticket for that, then I'm smart enough to buy it, and leverage my status as Cockroach Preferred to get into first. Did I write the fare rules? NO!!! Did I write the FF Program Rules??? NO!!! DO I decide the price of the ticket? NO!!! All of these issues are not my problem. Is it my problem that for years they have spent billions to lobby Congress to gain various things and now when the market changes all their efforts blow up in there faces? NO!!! If the so called majors want to look at why they are where they are I would suggest they stand in front of a collective mirror.

My job as a PAX is to leverage the system to my advantage in terms of what my goals and objectives are. If it's just cheap travel for liesure or business then I buy the cheapest fare from whomever goes where I want to go. If Their are other circumstances that are unique to mt particular situation then I chose what works for ME. I mean I Am not supposed to leverage the contract to my advantage? Fairness and airline profit NEVER enter into my equation ever!

In my profession of Sales Training we have and expression "What's In It For ME"! or WIIFM for short. Every personal or business decision we make passes the WIIFM test! From the basics of brushing your teeth (THe WIIFM is fresh breath). Remember the airlines defined the rules of battle now that the battlefield has changed they want the customers to pay for their folly and my answer is a flat NO!!!! NOT WITHOUT A FIGHT! It's MY MONEY, NOT THEIRS. and if they aren't around in a year, Tough, you reap what you sow!


[This message has been edited by PineyBob (edited 03-08-2003).]

I agree with you. You are smart enough to play the system... good for you. But, why do you hold it against the airlines when they do an analysis and determine that smart customers like you are NOT the center of the universe, and instead work to reward other flyers that give them more $$$...???

It sounds to me like you are just accustomed to getting something for nothing... and now that the party is over... well, you know where Im going.

Its funny how many flyers are just screaming bloody murder and jumping from carrier to carrier that will maintain their sand-castle perks for a little longer (for free, that is). The best example of this behaviour is a militant group of 1K flyers over at the United board... fuming about the now defunct and pretty much useless (for chepo fares) SWUs.

Of course, as one other FTer poster the other day, things may change when UA stops operating and AA goes closer to Chapter 11... maybe things will be once again taken with the right dose of perspective?

[This message has been edited by Gaucho100K (edited 03-09-2003).]

It sounds to me like you are just accustomed to getting something for nothing... and now that the party is over... well, you know where Im going.

Why fume and fuss? because this is a somewhat short term situation. Profits will be back and the more perks preserved NOW means more perks later. Unions are powerless against the economic tide that is rushing over them. We as the providers of much of that cash get a vote. Remember the "Golden Rule"?? "Those with the gold make the rules" FFers are the single largest "voting block" within the industry in terms of cash to spend. We have econimic power and we should use it early and often to preserve what we percieve as earned benefits in what is sometimes YEARS of loyalty

I believe the airlines will cut/reduce whatever they think necessary, as it should be. However, if FF programs are diminished severely, I know of 2 credit cards that I will cut up and never use anymore. Perhaps they (Credit Card Companies) should be made aware of the probable backlash? "Follow the money" always seems to work.



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Have a nice day flying United!
ChgoBob

Follow the money is the sub text to the Golden Rule! I can't for the life of me understand why people would allow these changes to occur without a fight. So what if we are defending the economic equivelent of the Alamo!

Make them pay, because as soon as the shoe is on the other foot they will surely make us pay, and pay and pay and pay and pay.

Remember what happened shortly after the fall of the Alamo! Those brave defenders did not die for nothing.

Thank you for putting the exclmation point on my post! Well said.

Let me put it this way. I want my vendors to be making money (a little bit anyway). When I'm flying on a fare that comes to to around 4 cents/flown mile including taxes yet consuming a service that I _know_ costs far more than that, it's not in the vendor's interest. And it's not necessarily the best in the long run because if the vendor can't make a profit then I may not be able to buy from them again in the future.

That said, I'm in full burning mode right now with respect to airline miles. That IAD-SEA flight cleaned out the remaining e-upgrades I had. I was actually hoping (for UA's sake) that my upgrade didn't clear because there were enough people on international C tickets or 1Ks flying that an el cheapo customer like myself would get the service that he paid for. (not much in this case)

This is an excellent point. I, too, will be tearing up 2 credit cards. Why take one of the few aspects of commercial aviation providing positive cash flow and destroy it?


QUOTE]Originally posted by ChgoBob:
I believe the airlines will cut/reduce whatever they think necessary, as it should be. However, if FF programs are diminished severely, I know of 2 credit cards that I will cut up and never use anymore. Perhaps they (Credit Card Companies) should be made aware of the probable backlash? "Follow the money" always seems to work.

[/QUOTE]

All though we all get along despite being on differnet carriers and programs, we are gamblers in a casino. We know the house has an advantage but rather than band together, our individual greed gets the best of us as we try to actively seek out our own interests. Face it, the only reason most of want the airlines to do well is so that we may be able to use all of those miles we have stockpiled. Sorry to sound cynical but just being honest, thats all. Look at your stock portfolios and see how value has dropped, why should an unregulated industry such as frequent flyer miles be any different?



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"Fly me to the moon and let me earn alot of miles."

These indeed seem like dark times; I have to remind myself I used to get on FlyerTalk to scan for deals, rather than to vent. Reading of all the changes has been bad for the blood pressure.

Would have to largely agree with those who say that the true incremental cost for these FF programs is low because airlines manage the seats to try to ensure that as few as possible that would have been sold go to awards. And airlines like CO take that one further by being tight on "standard" awards, effectively devaluing the miles 50%.

It's important to keep voting with feet as much as possible (after all, DL can't blame Sept. 11 for empty seats forever).

JetBlue and AirTran and, of course, Southwest continue to stir the pot and pick off leisure travelers. Maybe they'll become viable options for FF-mile accumulation for many people. I suspect that the main things they lack are options for Hawaii and Europe and places like that, but maybe, with partnerships, they could offer something there.

I hope the big airlines can pull through this without too much damage. Some of it is the economy, some of it terrorism fear, and some of it changes to the underlying business model.

Gaucho, thanks for speaking some truth here. Fascinating that nobody has tried to put up a logical, coherent argument against what you've said ... because your analysis hits the heart of what's wrong with old-line FT thinking.

Your summary explains why the cockroaches-DLrats-UAwhiners etc. are doomed to fail - they don't deserve to win.

(Though I suspect they'll soon to be joined by disenfranchised pseudo-elites of AA when that line hits BK, I suspect. You can almost hear the whimperings now: "What happened to the VIPOWs??!?!? An outrage!!")

Couldnt agree with you more here.

What brought me to this site was the daily wealth of information which could make our flying experiences that much more enjoyable/affordable/possible.

What keeps me at this site? ...well, I dont know.

Perhaps the hope that those days might someday return, even partially. Delta, United, British.... nothing but griping. Sad http://www.flyertalk.com/forum/frown.gif

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Faire du ciel le plus bel endroit de la terre c'est impossible sans Concorde!
~ConcordeBoy

Try the Unofficial Continental Airlines Dictionary

Find a 12 Step program for FF membership programs. http://www.flyertalk.com/forum/biggrin.gif

Go with the flow. If the programs continue the downward spiral as they appear today then take advantage of perks ASAP. However, if the programs return to prior expectation levels, then reap the benefits. I am to the point of not even caring. I would give up my vaulted status at UAL for the opportunity to stay home and watch my children grow up. I have been UAL 1K for 9 years now and might not make it for 2004. I am also UAL Global Service, which is the top tier status that can only be obtained by invitation from UAL. While the perks are nice, being home as much as I have been this year is infinitely better. I guess I love my family more than the frequent flyer program that I once coveted.

Just a quick question. What is UAL Global Service? Never heard of it before. Thanks.

Anyone who blames the ff programs for the problems that the industry is not thinking straight.The only profitable part of many U.S airlines today is there ff programs and with a further reduction of them people will vote with there feet.Lets remember air canada had a deal to sell a stake in there program to onex and united was rumored to be thinking about the same.
If the airlines believe reducing FF benefits except to full fare pax will increase the number of full F/J/Y tickets sold they are full of themselves.I dobut most companies will allow workers to spend 2x the price in order to get more ff miles or to upgrade.With airlines like FL and B6 expanding routes and in FL's case adding an elite level to there FF program which by the way im told gives Biz class upgrades and waviers of change/cancelation fee's people will vote with there feet.To all the people who cry the LCC's dont go anywhere i can use miles on for vacation well try to get standard award on a certain airline to europe.You will probably end up being told you have to buy a 100k award.Devaluation of miles like this keep bluring the line between the some service carriers and the LCC's
-howie

The airline in question is CO. And stockmanjr is correct...the chances of getting a standard award on CO, to Europe or even domestic U.S., is slim to none.

I think that's a bit of an oversimplication. Here's a situation where FF programs have been used to keep prices up: Fortress Hubs. Whenever a LCC offers service to a Fortress Hub, the incumbent carrier will often match the low fares. If there were no FF program, this would probably be a good way to encourage healthy competition. But in the presence of a strong FF program offered by the hub carrier, a great many people will take the low fare but fly on the hub carrier. This "competition" is great for the traveling public, but only so long as the LCC continues to operate. A classic example of this is what Legend tried to do at DAL, AA's response, and how it all ended up. There are many other examples.

Probably not. I don't think any airline thinks it's going to substantially increase the number of full F/J/Y tickets sold industry-wide by any substantial margin. The issue is of those that do get sold, how many are on each carrier? If an airline offers free upgrades which are easy to confirm and other perks for those passengers on Y or near-Y fares, don't you think that those passengers that do fly on those fares will migrate to that carrier, all other things being equal?

Look what aa has done offering free upgrades for elites traveling on Y/B/M fares I think that is a very smart move.I completely agree the high fare travelers should get more perks including upgrade prority,free upgrades ,a bonus above what low and mid fare flyers get as far as mileage accural.I do not agree however with what BA/DL have done.
-howie

Last evening, I was first on the Waitlist for Upgrade with two empty seats out of EWR, when I left the PresClub Lounge at the beginning of boarding. But wasn't upgraded at the Gatedesk! But two gals were moved up from coach before the doors closed! They were not Elite level!

Since this has happened before, there is little reason to continue to work at being Elite with loyalty to CO. This encourages me to fly with a Partner airline, who knows what Electronic Automatic Upgrade means and sticks to it!