The Future of Frequent Flyer Programs: What Should We Do?
Mar 6, 2003, 6:10 pm
#1
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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?
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?
Mar 7, 2003, 2:18 am
#2
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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
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
Mar 7, 2003, 5:02 am
#3
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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!
Mar 7, 2003, 6:43 am
#4
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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!)
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!)
Mar 7, 2003, 6:46 am
#5
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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...
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...
Mar 7, 2003, 6:54 am
#6
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Marathon Man is absolutely correct.
The decline in the "value" of ff miles makes the NASDAQ's drop look like a minor correction.
------------------
CO treats me like a king, Rodney King
The decline in the "value" of ff miles makes the NASDAQ's drop look like a minor correction.
------------------
CO treats me like a king, Rodney King
Mar 7, 2003, 9:01 am
#7
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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.
Mar 7, 2003, 9:39 am
#8
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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.
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.
Mar 7, 2003, 10:44 am
#9
Join Date: Mar 2001
Location: Houston, TX USA
Posts: 387
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.
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.
Mar 7, 2003, 11:39 am
#10
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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.
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.
Mar 7, 2003, 6:08 pm
#11
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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.
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.
Mar 7, 2003, 6:17 pm
#12
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<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by hfly:
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. ....
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.</font>
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. ....
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.</font>
Mar 7, 2003, 9:43 pm
#13
Join Date: Jul 2000
Location: Connecticut
Posts: 893
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).
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).
Mar 7, 2003, 11:37 pm
#14
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Thanks for your support, Don. Do you wanna borrow an anti-flame suit I have somewhere around here? 
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...
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...
Mar 8, 2003, 4:24 pm
#15
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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.
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.