Open Source FF Program
 

For a few people, the recent changes in airline FF programs are welcome fixes to thin out the crowds. For the rest of us, I think we feel like they are no longer earning our loyalty. So, I have been thinking about a new kind of FF program, and am putting it here to see if we can come up with a workable type of alternative.

From what I see, there are a few things an FF program provides:
Exclusivity
Priority Handling (changes, early boarding, luggage, etc.)
Free Checked Luggage
More room on board
Free Drinks
Meals
Lounge Access

I am envisioning a program that is separate from the airlines themselves. I am not sure if it is a program, or a credit card, or what - that we need to work out. But I will follow up with a couple of ideas for everyone to pick apart.

As an overview - I am thinking of something akin to a debit card type of program. I am thinking now that there would be an annual charge, although that can change, and you get a debit card with a set amount on it. I don’t know how to do this (yet) but it would be beneficial if that could somehow be limited to use at airports, hotels, and on flights. In addition, instead of booking tickets directly through the airline, you would book through the club, kind of like Travelocity. The club would essentially be a clearinghouse for tickets, I will explain that in a minute. I also envision establishing airline lounges in all the major hub airports for member use.

On Board

I don’t think we can do anything for special treatment, but I think we can fix the seating situation somewhat.

I think the major part of the program is an alternative to the upgrade. I envision the club serving as a kind of consolidator – they would purchase a few seats on a select number of flights. Most likely these would be airlines such as JetBlue, although I see no reason why the majors can’t get involved. Since you will be purchasing and getting benefits through the club, the airline itself will not matter as much. The club would purchase rows of extended leg room seats. Then, they would sell two seats in every three seat row, leaving the middle seat empty (ala European Business class). While this would not be first class, It would be a definite increase to economy. The club can price these seats at 1.5 times the cost of what they pay for an individual seat. The airline wins because they know they have sold those seats no matter what.

The rest of the program relies on a pre-paid card that the member can use to pay for the services they incur. For instance – membership covers checked luggage, so the member would simply use the prepaid card to pay for the luggage charges. Same with on-board drinks and food purchases.

I would like to see it developed with member lounges in major airports. That way members not only have a place to go on layovers, this can also serve as a service desk for the member. I could even see there being a catering type service where the member can pick up a premade meal that they can take with them onboard for flights where a meal is normally not served.

So, this is a start. I figure it might be interesting to kind of open source a program, and if we do come up with something feasible, maybe we can find a way to implement it. At least it will be better than sitting around moping over all the benefits we are loosing, right?

Open Source FF Program
 

you want to create a loyalty program without airline participation. doomed to fail

I don't think anyone has a "loyalty" program anymore. Loyalty programs are about trying to get people who do a lot of business to do all that business with only you. The recent program changes over the past few years have shifted the program to a more of a rewards program for big spenders. If anything they are driving away loyalty for those people who don't spend big but do a lot of business. But that is a discussion for a different thread.

I am looking at a rewards program. I think it could potentially work because you can tap the non-major players. For instance JetBlue who doesn't have a complete nation-wide network yet. Same with Alaska- now it makes a little more sense for someone based on the east coast to fly Alaska.

At the same time, I am thinking subscription based might be an option, too. An upfront fee that would guarantee you more room and free drinks and such.

The fact is that merger after merger has resulted in consolidation in the airline industry. There is little need for a loyalty program, since passengers don't have nearly as many options as they did before.

If you live in Atlanta, you are going to fly Delta. Why should Delta spend money on a loyalty program to retain your business when you have no other choice?

The cutthroat competition in the airline industry after deregulation led to the development of loyalty programs. Now that capacity has been rationalized, there is much less of a need.

Back in the 1980s when we had eight or ten network carriers competing, loyalty programs made sense. Now we have three network carriers plus Southwest, and they're all making good money, so there's a much reduced business case. The airlines don't care anymore about attracting the marginal flyer to fill planes. It's more profitable for them to put less capacity in the air and fill it with the most profitable customers plus people who have to fly, and not do anything to reward anyone else. These programs are withering.

Oh, and the idea of running a loyalty program with no loyalty element doesn't make a great deal of sense. You're basically thinking of something like Priority Pass which, for a fee, provides perks at certain airports no matter which airline you are flying.

one can use foreign alliance partners for programs

would be nice to see more VIP/VVIP services at airports

The fatal flaw in so many of the US programs were that they rewarded low ball spenders more than top customers. By that I mean that top customers, who buy Business or First, already get many of the benefits packaged in - priority boarding, drinks, food, leg room, lounge access, Fast Track security etc. So the real benefit they got was miles. But people like me, who buy economy tickets get miles but also many of the above benefits - so it's a relatively better package and it's what attracted me to UA in the first place.

What I think the airlines are realising is that the FF program can dilute the premium offering - so they are moving away from that. In a sense that was always the case in Europe certainly where cheap fares often earn fewer miles and don't go much of the way towards status. But those sorts of options are more complicated in the US where credit card deals reign supreme, so the movement is more towards cash back schemes.

Sad for me, but inevitable I fear. When it happens on UA, my choice will be Premium Economy on BA or VS - more expensive certainly but at least guaranteed reasonably comfortable.

It depends on whether you view current programs as loyalty programs, a reward program for spend, or as a business generation tool. In any case, there are several other threads already discussing this.

I am not trying to recreate a loyalty program - I think loyalty is pretty much thrown out the window at this point. What I am trying to create here is a program to recreate some of the benefits that we enjoyed through loyalty programs on major airlines, but among the LCC and smaller-tier airlines that would make up for the fact that you couldn't rely on just one of them to meet all your destination needs. And I guess I am also trying to find a way to take advantage of the ground the majors have given up to make flying fun again and maybe build up enough air travel again to encourage new entrants.

How is this any different from just paying for first/business class or extra legroom rows in Y? Why not avoid worrying about programs in the first place and just buy the best F/C fare you can find. Or fly coach and buy an extra seat?

If you really want to make flying fun again, get rid of TSA!

TSA isn't going anywhere. Yeah that would be nice, but I am not going to dwell on that.

As for the buying first, the problem is that that is not a reasonable option anymore. I lump that in with the program devaluation - the airlines are creating this ever widening gap - a first class ticket is so many times more expensive than a coach ticket you simply cant afford it.

There is more likelihood of buying two seats, though even there it is a bit unfair. I am trying to capitalize on that, and find a way to bring back some of the other benefits that you loose out on - for instance free luggage, free drinks, lounges... I am also trying to find a way to essentially give small carriers a fighting chance to compete with the majors. I hope that we will see more new entrants, but it is unrealistic to think they can build up a nationwide network in any reasonable amount of time. JetBlue is only just getting there themselves, Virgin is not even close yet, and even Alaska hasn't pulled it off. So by participating in such a scheme, and really there is very little the airline is doing to participate except for selling tickets at a contract rate to the program, which is not dissimilar to their contract rates now, the smaller players can band together to grab some of that traffic.

I think the general trend is the opposite. In most cases, the gap between coach fares and first class fares seems to be narrowing as opposed to widening. At least in the US Domestic market, the first class premium is coming down on average.

The number of DL/UA elites whining about First Class Monetization and/or "TOD" (tens of dollars) upgrades would certainly indicate that airlines are selling more first class seats as opposed to giving them away for free to upgraders. And if enough people are doing this to truly negatively impact elites' upgrade percentages, then basic economics tells us that the price of the paid first class seat must have come down.