Leverage - playing the airline's game
 

On the most recent episode of TNT’s Leverage, the show evolved around a con called the “fiddle game”. This con game plays to the victim’s sense of greed by creating the illusion that an object, the “fiddle” – likely worthless in its own right -- has exceptional value, and that the designated victim will be willing to pay dearly to have it. This con reminded me of the pursuit of airline status, where the reward itself (status) has no real value, but it elicits enormous efforts from people who will go to great lengths to get it. As testament to this, read the plight of Global Service hopefuls down below.

The things we’ll do, and the lengths we’ll go to, to be rewarded with the opportunity to walk into the aluminum tube (soon to be composite if Boeing can get their act together on the 787) a few minutes earlier than others, and perhaps (if you are one of the lucky chosen few) move up a class in service. How clever of the airlines to have created such a program. It seems to me, though, that to keep this fiddle game fresh two opposing forces need to be fueled: new “more valuable” status needs to be accompanied by the perception of declining value of current status.

As the overseeing exec I'd want the worth of current status and mileage accumulations to decline each year in non-uniform increments – not enough to force people out, but enough to give flyers a sense that the water is running out of the tub. With some years worse than others, it will keep everyone on edge wondering. In any event, tomorrow can only be as good as today, NEVER better, and usually worse. The P1 that I coveted years ago is about worthless given the glut of 1K and GS folk flying, and the new policy of automatic upgrades: you guessed it: “ofer” on a consistent basis. That’s what I call smart. Last year with 500 mile upgrades I was in F on most flights.

At some point the two-for-one EQM promotion needs to be augmented with a three-for-one (and ultimately an n-for-one promotion for you MIT types). At its optimum think something like a Feb. 29th 10-for-one EQM. 1K for DEN-DXB. Once every four years. Mr. Enberg would say, “oh my”!

In the spirit of “to the victors go the spoils” there need to be a little more differentiation at the highest levels. Those who fall on the UAL-friendly side of the Pareto principle could stand a little more differentiation. There’s nothing like seeing your buddy at a slightly higher status level to have you begging to pay for full-fare F. And nothing would be better than slightly degrading titles for those who really didn’t make the level, but for the special promotion. Maybe an “Almost Whatever” status.

Lifetime mileage will have to come into play at some point, if for no other reason but to exclude the commoners from attaining the status of veterans, with logarithmic spacing: 100k, 1M, 10M, 100M, 1B. I’m working on P1 – 1M, and this trumps all you P1 – 100ks. And I like the idea of posthumous value, and passing your status down to your children – for a small, one time fee of course. I have others, but none better than the next.

It’s almost time for the level that’s so coveted, it doesn’t have a name. For you old dogs and doggettes, it’s the White Album of airline status for those selected few (and I mean count them on both hands few) who are whispered about on blogs. There needs to be a way to attain this almighty-like status with one truly unbelievable benefit: bypassing all security. Yes, your own special doorway into the airport and onto the plane.

Now that I think about it, I used to park outside the concourse at the old Stapleton Airport in Denver, walk up the stairs, and go directly onto the plane. And this, my frequent flyers, is how the fiddle game is played.

Happy status flying.

No it doesn't. Lifetime mileage like 1MM doesn't give you extra priority. 1P=1P

If this is a fiddle, I'm glad to join the band. Status has helped in the event of irregular operations. It's gotten me upgrades from Y to J and from J to F, to the benefit of my and my wife's sleep, enjoyment and work. And it's also gotten me extra miles that have taken us on wonderful vacations I otherwise wouldn't have been able to afford.

Yes, it was clever of airlines to create FF programs, but that does not make it a zero sum game. It's been clever because people want them for very rational reasons that reap big, very tangible rewards.

This is a hypothetical world we're talking about.

I disagree that airline status has no tangible value.

My 1K status saves me a ton of money (standby fees, award redeposit fees, phone booking charges, luggage fees, etc.)

More importantly, it saves me a TON of time, which I value far more than money these days.

Not to mention the comfort of sitting up front for the price of economy. That to me is exceptionally valuable.

YMMV.

I agree with a great deal in the OP. Most importantly, FF programs have evolved from minor loyalty programs 20 years ago to marketing schemes that really prey on the psychology of addictive behavior. Anyone playing video games these days can see some striking parallels, much like the "fiddle" in the OP.

I, too, have gotten great benefits from MP and don't consider it a zero sum game. But, I've also done things I would not have imagined even a few years ago...mileage runs, multiple TPACs in a single year, paying considerably higher fares just for a particular fare class.

I think it's quite plausible that the FF programs will continue to become more complicated and differentiate even more than they do now. The possible downside for the airlines is that they have alienated some customers with the complexity of the programs. It takes a great deal of time and a somewhat irrational addiction to keep up with things (or, at least, to game the system to near-maximum). Thank God for FT!:p

Cheers.

bolding mine: couldn't agree more ^ and i will add that the priority lines and more so, priority phone numbers have helped (and also saved my a$$ during irrops) on many occasion

I understand the sentiment of the OP however I don't I agree with Modern 49er that there is value.

I used to fly very little and due to a bunch business and vacation travel this year I may end up 1k and am considering a MR to make the last few thousand miles. However that's based on the value of the benefits given for the cost. E.g. if I spend $400 in tickets and get 4 SWUs and 2 CR1s they have tangible value and can be sold on the grey market.

Agreed that status can't be sold to someone else so in that sense it has no value.

There's no question the miles themselves have value however that's independent of status.

Now almost all of the 2P benefits are for sale so one could argue the value is what US sells them for.

Do I agree with UA's valuations of the items? No, however to quote most realtors "You don't know how much [your house of cards] is worth without selling it".

Bottom line, it's about maximizing value for the cost and it's cheaper for the airlines to give miles and status benefits then cheaper tickets. Us flyers find value in those benefits.

I disagree, I think there's a trend towards simplicity in FF programs. Look at JetBlue's program, they've simplified it. Southwest? it's simple. Simplification reduces training costs, service variation, etc. and shows up on the bottom line. I'm not a fan as I'd rather there be more ways to extract value from the system if you're smart enough. :D

Agreed that status can't be sold to someone else so in that sense it has no value.


If you are healthy, but can't sell your vigor to another does that make it valueless.

If you have vested corporate stock options, but they are not transferable does that make them valueless? Depends on the stock lately I guess.

On the other hand just because I can give you the shirt off my back, does that give it value if I just spent 12 hrs on a flight with poor ventilation and I have a prespiration issue?

Not really. As a 1P, you get 100% RDM bonus, that non-elites don't receive.

Fair enough, but UA MP seems to get more complicated all the time. I'm not opposed, as I also extract value from some of the wrinkles. But, I know others who throw up their hands and shut down the browser.

It is, after all, just a game.

But I do enjoy the "perks" that come with the status.:p

Te problem is all those "perks" are a benefit only for more flying. Something of a vicious cycle. You get status by flying more so you can get things while flying more. Add to that the fact that many of those perks are now for sale to anyone. So the question is if instead of being loyal to UA, you had purchased tickets based on price. Would savings on fares offset the savings derived from these perks? For frequent business flyers whose company foots the bill, probably not. But for those independents, or part time leisure flyers, I wonder if the costs actually work out on paper.

I'm gonna fly those flights anyways, so I might as well do it comfortably. Even if it costs me extra. I'm OK with that.

I'm sorry but mileage runs aren't fun? I've got local friends in Munich now thanks to runs. I've been able to go to the annual Leipzig (Germany) gothic festival in F b/c of status & RDM, etc. Hell, I've been to Iceland and saw some of the most beautiful land/seascape ever thanks to a medical diversion during a MR. ^

Sure, all the $ I've spent chasing status would have bought me a killer big screen tv and a whole lot of top-flight scotch, but there's more to life than drinking yourself into oblivion in front of a $5,000 tv.

e problem is all those "perks" are a benefit only for more flying. Something of a vicious cycle. You get status by flying more so you can get things while flying more. Add to that the fact that many of those perks are now for sale to anyone. So the question is if instead of being loyal to UA, you had purchased tickets based on price. Would savings on fares offset the savings derived from these perks? For frequent business flyers whose company foots the bill, probably not. But for those independents, or part time leisure flyers, I wonder if the costs actually work out on paper.

Of course they wouldn't! But based on the well known fact that 88% of statistics are made up on the spot, I'll have you know that 92.9% of top tier elites are travelling 96.2% of their revenue tickets on the company dime- so they don't care too much (within reason) about the cost of tickets on different airlines- they just wanna sit in J when their company policy will only pay Y!

Sorry to call a spade a spade, but personal gain combating company policy is the major driving factor for the success of ALL FF programmes...

I would say it is the airline's attempt to fight the commoditization they would certainly see if corporate travel depts were fully in charge, and create some brand loyalty among those consumers who would otherwise be the most price sensitive. And I would say the complexity does add to the fun for most. Personally I would guess they are thrilled that FT exists, as it is a sure sign of consumer engagement.

Game
 

Let the GAMES continue.

What a great sport and hobby.

It's just fun to play the game, and IMO the benefits justify the means.

wwbgd

Interesting thread.
Since I have turned travel into my hobby, I have spent New Years in Vienna, met thousands of new friends at Oktoberfest in Munich, viewed the masterpieces in Paris museums, and trod the ground of the Death Railway in Thailand....and have just gotten started.
I guess I could have turned to expensive cars or stamp collecting, but everyone enjoys their own pursuits. To each their own....
And when I travel for business, I now enjoy a more comfortable seat and better service.
Guess I am being duped so expertly that I don't even realize it....hmmmmm:rolleyes:

Although this may have been intended as a UA-focused thread, its subject is far broader than a single carrier. Please follow as the thread moves to TravelBuzz. Ocn Vw 1K, Moderator, United and TravelBuzz.

yes, some of "the perks" are available to everyone (such as buying up to e+, rcc one time use passes and ufc) but it is still status that trumps so the part time leisure flyer is still gonna be s.o.l. (or father down on "the help list") during irrops and that to me is the one huge benefit of having status.

Travel for fun/vacation/relaxation is separate from pure MRs for status only.

And then its a personal choice b/w the costs of MR (money, time, stress, etc) vs the benefits. I know of ppl who do taxing MRs but enjoy the benefits once only. To me paying additional $s for that one-time benefit far outwieghs the cost of MRs.

Then again - this is personal travel. Business travel is often non-negotiable so you might as well get the best status deal out of that.

Although I don't agree 100% with the OP, I do see his point. A lot of perks for status (like no phone fees or free checked luggage) were once not perks at all -- everybody got them.

And some of the low-level elites aren't feeling the love any more -- Delta FOs (silver) are excluded from the new SkyPriority.

There is definitely value in getting upgraded to F 99% of the time. I value it highly. But we should be realistic about it, and admit that it isn't totally free. We jump through hoops to get it, and sometimes pay higher fares to fly our preferred carrier.

There is definitely an aspirational aspect to tiered loyalty programs. Otherwise, the qualification requirements would be opaque. Gold/Silver/Plat = we want these guys to fly more. Concierge Key/UGS = these guys fly so much we merely want to not lose their business to a competitor.

+1

Enduring a bunch of grueling flights in Y so that you can fly a few times in F doesn't appeal to me either. I'd rather have top-tier or nothing in this case.

A lot depends on what you do for MRs. My "mileage runs" are fun, but then again, I'd be taking a couple of weeks off outside the US regardless (just doing it on the lowest fare rather than the lowest EQM-earning one.) I enjoy planes and flying (it seems like a lot of FTers don't) but the same-day-turn domestic MRs seem rather pointless to me - clearly other people's mileage varies (and indeed, most of my non-mileage-earning coworkers think my habit of getting to Tokyo via ORD/DFW rather than direct from SFO is nuts.)

Here's the problem: if we travel at all, we're paying to play the game whether we actually play it or not.

If I book an airline ticket, I'm buying my seat and some fraction of a future seat. Even if I don't provide an FF number, I'm still paying for that fraction of a future seat - the cost is baked in no matter what.

It's sort of like if I walk into a store that accepts Amex and I choose to use cash, I've just purchased a product and I've purchased 1 Starpoint per dollar - I simply chose not to accept the Starpoint. I effectively tossed it into the tip jar, because its cost was definitely baked into the price of my purchase.

Hotels are the only travel product with a fairly predictable "out" if you don't want to play the game. In most cities, there's now enough data to inform your Priceline bid, making it easy to assess the cost of a basic room vs. the cost of a room, points, cancellability, perks, upgrades, lounges, promotions, welcome amenities, and an absence of snottiness from the front desk clerk.

But for airlines, at least on most U.S. carriers, you're buying the fiddle whether you like it or not.

Therefore, why not play it to the best of your ability? :)

I think the OP goes from a rather obvious observation that people spend more than can be rationally justified on status to suggesting the airlines should be in the casino business.

I don't criticize what others do with their money, if they value airline status more than dollars in their pockets than so be it.

Airlines most of all want to make a profit (especially since so few do). If airlines were truly going to make the system more beneficial for themselves they would move to a 100% revenue based status. Other than a make work project for expensive consultants, trying to adjust benefits in the way the OP described would earn the airlines nil in extra dollars.

Via Preference is a simple program, spend $1000 get X status, spend >$2000 get Y status. No gaming the system, no mileage runs. If you want status spend the $ on 1 ticket or 50. If the airlines did this it would end 75% of the discussion on FT.

I agree with this, but OTOH, in some countries, the right connections gets you this perk anyway ;)

The original challenge with that is that a straight-revenue scheme looks and smells too much like a kickback.

If a client is paying $500 for my business trip and I pocket $50 - even if it's in the form of an airline credit to use later - it smells fishy. It's probably considered unethical by most, perhaps even illegal in some contexts. Think of it in the absence of the FFP's as we know them today: think of the original designers of AAdvantage in 1980 or so, targeting the program almost entirely to business travelers.

Using a fake currency ("miles"), detached from revenue spent, sanitizes things enough that the programs are generally deemed ethical and mostly ignored by the IRS. You could *still* argue that miles are a kickback designed to make business travelers select a vendor based on their own needs instead of the client's. But there's enough detachment there that our culture now largely accepts FFP's as a normal part of our society.

Even today, I don't think it's in the airlines' long-term interest to tie rewards directly to revenue. That moves miles closer to becoming a quantifiable currency - something dollar-denominated and more closely scrutinized by government regulators. We, the travelers, definitely don't want the government to get more involved, even under the guise of "protecting" us. If miles become defined as a fraction of our revenue spent, some of our best awards likely go away or rise dramatically in cost to us.

This is a very important point, but on the other hand there are multiple credit cards out there that provide benefits directly tied to cash. Now, this is typically defined as a "rebate" but it doesn't change the fact that in business you can sometimes charge something on a credit card, be reimbursed for the expense, but also pocket the additional benefit. And of course some airlines have FFP's that are directly revenue-based.

More broadly, I don't think the airline really cares so much about "BIS miles" as they do about profits. Someone who flies a ton, always on cheap tickets where the carrier loses money, is not really their ideal customer! So we have seen an move to align FFP benefits more clearly with profits.