Comments on: The Future of Airline Loyalty Programs http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/ Sat, 20 Mar 2010 06:04:31 -0700 http://wordpress.org/?v=2.9.2 hourly 1 By: Ripoff Alert « Justin Nachod’s Blog http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68395 Ripoff Alert « Justin Nachod’s Blog Mon, 15 Dec 2008 01:32:25 +0000 http://crankyflier.com/?p=1729#comment-68395 [...] info By jnachod Categories: Uncategorized While reading a recent post on the Cranky Flier blog about airline rewards programs, I read that United Airlines sells a round trip ticket from Washington Dulles ( which is actually [...] [...] info By jnachod Categories: Uncategorized While reading a recent post on the Cranky Flier blog about airline rewards programs, I read that United Airlines sells a round trip ticket from Washington Dulles ( which is actually [...]

]]> By: Eric Meadows http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68339 Eric Meadows Thu, 11 Dec 2008 20:48:48 +0000 http://crankyflier.com/?p=1729#comment-68339 As a Platinum flyer on Delta much of what Jason states resonates and brings a new view on the value of airline miles, but for someone like me the miles are secondary or tertiary to other program benefits like upgrades, seat selection, upgrade certificates and additonal perks that I garner every time I travel. I guess it depends on your perspective and mission with flying on how you view the current iterations of frequent flyer programs. I simply would like to note that mileage is only part of the larger equation and given your mission might only prove to be part of the picture. As a Platinum flyer on Delta much of what Jason states resonates and brings a new view on the value of airline miles, but for someone like me the miles are secondary or tertiary to other program benefits like upgrades, seat selection, upgrade certificates and additonal perks that I garner every time I travel.

I guess it depends on your perspective and mission with flying on how you view the current iterations of frequent flyer programs. I simply would like to note that mileage is only part of the larger equation and given your mission might only prove to be part of the picture.

]]> By: The Traveling Optimist http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68306 The Traveling Optimist Wed, 10 Dec 2008 20:23:52 +0000 http://crankyflier.com/?p=1729#comment-68306 Ask any airline manager who's been in the business longer than the last 15 years and he or she may well tell you of one story that still resonates and frightens them all to this day. If I remember it correctly, it goes something like this: When FF programs were just beginning and fraud suits were starting to fly, Pan Am opened every seat on every flight for one day to allow customers to burn miles. One flight out of all of them took an unimaginable hit. A 747 left LHR for JFK with every seat in the house taken by free travelers. Except seven. Do we as a customer base care? Absolutely not. Is Pan Am still around? For this and numerous other reasons....absolutely not. Thus spake Randy: A Thursday morning flight to Des Moines? Take any seat in the house. Friday afternoon to Chicago? Cash, check AND credit card, please. Ask any airline manager who’s been in the business longer than the last 15 years and he or she may well tell you of one story that still resonates and frightens them all to this day.

If I remember it correctly, it goes something like this:

When FF programs were just beginning and fraud suits were starting to fly, Pan Am opened every seat on every flight for one day to allow customers to burn miles. One flight out of all of them took an unimaginable hit.

A 747 left LHR for JFK with every seat in the house taken by free travelers. Except seven.

Do we as a customer base care? Absolutely not.
Is Pan Am still around? For this and numerous other reasons….absolutely not.

Thus spake Randy: A Thursday morning flight to Des Moines? Take any seat in the house. Friday afternoon to Chicago? Cash, check AND credit card, please.

]]> By: Randy http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68305 Randy Wed, 10 Dec 2008 20:02:00 +0000 http://crankyflier.com/?p=1729#comment-68305 In revenue management, I always viewed it as my job to make sure that high yield Y or B class seats were left for frequent fliers to book right before a flight. It was a gamble on how many hold back. Yes there are the gripes of an $800 ticket vs. a $200 ticket, but it would be easy to sell out the entire plane with $200 tickets. Holding back inventory till the last minute for the forecasted $1000 ticket is an educated risk. If the airfare wasn't higher, there would be no incentive to hold back inventory till the last minute. Business travelers would be confronted with sold out flights when trying to book a ticket to a last minute meeting. How big the full vs. discounted spread should be is an open debate. Their is the potential for spoilage by not selling the seat at a lower price earlier on. Business travelers on the company dime are also not as price sensitive as someone spending their own money. Individuals also plan farther ahead than most business people can. Virgin America is one of the few to deal with the high yield reward issue by giving points based on money spent and not miles flown. All the other mileage programs have devolved into a revenue source, not a loyalty program. Bonuses can easily be matched, so there there is little incentive to reward their best customers through program rules. Behind the scenes Sales gives out goodies to their best accounts. On the flip side, revenue management tries to make sure the store isn't given away. I was pretty brutal about FF availability on Friday and Sunday evenings, and any flight around 5PM. Other times of the week the plane go be half open for FF. We had rules that at least 10% of overall inventory had to open to FF, or else we could open ourselves up to a fraud lawsuit. The 10% was over the course of the year, for the entire system, and each market and by time of year varied widely. Of course this was many moons ago. I still wonder whether UA's pledge to hold back at least 2 FF seats on every flight is still in affect. Silly to promise that on your best flights of the year. FF seats actually do get assigned a cash value in managing inventory. With half of the miles sold, they sometimes represent better fares than what are sold in a market. In revenue management, I always viewed it as my job to make sure that high yield Y or B class seats were left for frequent fliers to book right before a flight. It was a gamble on how many hold back. Yes there are the gripes of an $800 ticket vs. a $200 ticket, but it would be easy to sell out the entire plane with $200 tickets. Holding back inventory till the last minute for the forecasted $1000 ticket is an educated risk. If the airfare wasn’t higher, there would be no incentive to hold back inventory till the last minute. Business travelers would be confronted with sold out flights when trying to book a ticket to a last minute meeting.
How big the full vs. discounted spread should be is an open debate. Their is the potential for spoilage by not selling the seat at a lower price earlier on. Business travelers on the company dime are also not as price sensitive as someone spending their own money. Individuals also plan farther ahead than most business people can.
Virgin America is one of the few to deal with the high yield reward issue by giving points based on money spent and not miles flown. All the other mileage programs have devolved into a revenue source, not a loyalty program. Bonuses can easily be matched, so there there is little incentive to reward their best customers through program rules. Behind the scenes Sales gives out goodies to their best accounts. On the flip side, revenue management tries to make sure the store isn’t given away. I was pretty brutal about FF availability on Friday and Sunday evenings, and any flight around 5PM. Other times of the week the plane go be half open for FF. We had rules that at least 10% of overall inventory had to open to FF, or else we could open ourselves up to a fraud lawsuit. The 10% was over the course of the year, for the entire system, and each market and by time of year varied widely. Of course this was many moons ago.
I still wonder whether UA’s pledge to hold back at least 2 FF seats on every flight is still in affect. Silly to promise that on your best flights of the year. FF seats actually do get assigned a cash value in managing inventory. With half of the miles sold, they sometimes represent better fares than what are sold in a market.

]]> By: The Traveling Optimist http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68304 The Traveling Optimist Wed, 10 Dec 2008 19:27:32 +0000 http://crankyflier.com/?p=1729#comment-68304 Randy hit on a key differential regarding airline revenue practices (I demure to use the term "strategy"). The last thing revenue analysts in any business want to do is give away free inventory. On the sales side, however, perks, giveaways and other inducements are the norm for chasing the solid dollar they can count on. Thus the never ending battle between sales "giving away the farm" vs. revenue management trying to squeeze a decent profit out of it all. More miles? More restrictions. Redemption Inflation. Plain and simple. And it matters not to the inventory managers if the "real" bread winners are being rewarded fairly compared to the occasional customer. Can't get nonstop to Paris? Try Amsterdam or Brussels, burn some miles on the TGV and add something to the vacation! Randy hit on a key differential regarding airline revenue practices (I demure to use the term “strategy”). The last thing revenue analysts in any business want to do is give away free inventory. On the sales side, however, perks, giveaways and other inducements are the norm for chasing the solid dollar they can count on. Thus the never ending battle between sales “giving away the farm” vs. revenue management trying to squeeze a decent profit out of it all.

More miles? More restrictions. Redemption Inflation. Plain and simple. And it matters not to the inventory managers if the “real” bread winners are being rewarded fairly compared to the occasional customer.

Can’t get nonstop to Paris? Try Amsterdam or Brussels, burn some miles on the TGV and add something to the vacation!

]]> By: David http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68303 David Wed, 10 Dec 2008 19:20:13 +0000 http://crankyflier.com/?p=1729#comment-68303 Alex - some airlines already do have a multiplier doing precisely that when deciding how many miles you get. British Airways won't let you join their FF scheme until you've bought a full fare economy ticket (or something more expensive) and gives only 25% of flown miles if you're in cheapo economy. Alex – some airlines already do have a multiplier doing precisely that when deciding how many miles you get. British Airways won’t let you join their FF scheme until you’ve bought a full fare economy ticket (or something more expensive) and gives only 25% of flown miles if you’re in cheapo economy.

]]> By: Alex http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68302 Alex Wed, 10 Dec 2008 19:04:04 +0000 http://crankyflier.com/?p=1729#comment-68302 Why don't they just introduce a multiplier based on which fare bucket you book into? Cheapo economy 50% full-Y 100%, C 200%, F - 300%. With various levels inbetween (semi-flex Y 75% etc). Why don’t they just introduce a multiplier based on which fare bucket you book into?
Cheapo economy 50% full-Y 100%, C 200%, F – 300%. With various levels inbetween (semi-flex Y 75% etc).

]]> By: David http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68301 David Wed, 10 Dec 2008 18:49:23 +0000 http://crankyflier.com/?p=1729#comment-68301 A - does the person at the check-in desk really care about you when you're not a high-elite flyer ? There's a bunch of people behind you in the queue - and they've got to get them all processed quickly, while ensuring that pax are seated reasonably evenly around the plane for trim A – does the person at the check-in desk really care about you when you’re not a high-elite flyer ? There’s a bunch of people behind you in the queue – and they’ve got to get them all processed quickly, while ensuring that pax are seated reasonably evenly around the plane for trim

]]> By: A http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68300 A Wed, 10 Dec 2008 18:24:52 +0000 http://crankyflier.com/?p=1729#comment-68300 Here's my biggest beef with the whole setup of the "rewards" programs. Like Cranky, I don't book travel just to get miles. Be it business or pleasure, I'm always looking at schedule and price. That said, I am a member of all the programs, but tend to use the benefits soon as something is available. With the constant changes I figure it's best to get something now than wait for something better. So, if you are pumping up your miles with CC purchases or hotel stays or whatever just for a free trip to Hawaii, so be it. That's your perrogative and if airlines want to do business that way, that's their decision. All that said, I am many times a year flying on that full fare ticket. You know, the ticket that often times puts that flight in the black. But because I'm not a super elite customer that does a million miles/year I get treated the same as the guy that booked a rewards ticket from points earned purchasing dog food at Walmart. I don't think it's too much to ask that I maybe get put in a seat up front or get the short line or some of the other perks in appreciation for the price I paid. Many times I've been flying on $1500+ domestic tickets while there are empty seats up front. What is that? Here’s my biggest beef with the whole setup of the “rewards” programs.

Like Cranky, I don’t book travel just to get miles. Be it business or pleasure, I’m always looking at schedule and price. That said, I am a member of all the programs, but tend to use the benefits soon as something is available. With the constant changes I figure it’s best to get something now than wait for something better. So, if you are pumping up your miles with CC purchases or hotel stays or whatever just for a free trip to Hawaii, so be it. That’s your perrogative and if airlines want to do business that way, that’s their decision.

All that said, I am many times a year flying on that full fare ticket. You know, the ticket that often times puts that flight in the black. But because I’m not a super elite customer that does a million miles/year I get treated the same as the guy that booked a rewards ticket from points earned purchasing dog food at Walmart. I don’t think it’s too much to ask that I maybe get put in a seat up front or get the short line or some of the other perks in appreciation for the price I paid. Many times I’ve been flying on $1500+ domestic tickets while there are empty seats up front. What is that?

]]> By: Bobber http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/comment-page-1/#comment-68298 Bobber Wed, 10 Dec 2008 16:40:13 +0000 http://crankyflier.com/?p=1729#comment-68298 Hi Cranky, It's the impression I've had from those most opposed to the current format of reward schemes. I'm all in favour of rewarding loyalty AND profitability - whether that's by enhancing the mileage bonus one receives by being at a higher level of elite status or by the class in which you booked your ticket (thus rewarding the high yield, late-booking travellers). Either way, something has to change as it's nigh on impossible to spend the ruddy miles in any case, as (until the co-pay comes into force) you need to book in full-fare Y to use Miles on United to upgrade, and if you're going for full-on reward travel you need to book about 300 days in advance to stand a chance on the civilised flight schedules - otherwise you end up bunny-hopping across the Western United States with a 2 and 4 yr old on a flight from LHR (not recommended!). Hi Cranky,

It’s the impression I’ve had from those most opposed to the current format of reward schemes. I’m all in favour of rewarding loyalty AND profitability – whether that’s by enhancing the mileage bonus one receives by being at a higher level of elite status or by the class in which you booked your ticket (thus rewarding the high yield, late-booking travellers). Either way, something has to change as it’s nigh on impossible to spend the ruddy miles in any case, as (until the co-pay comes into force) you need to book in full-fare Y to use Miles on United to upgrade, and if you’re going for full-on reward travel you need to book about 300 days in advance to stand a chance on the civilised flight schedules – otherwise you end up bunny-hopping across the Western United States with a 2 and 4 yr old on a flight from LHR (not recommended!).

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