Thank you to everyone who commented, emailed, and tweeted about what you wanted to see from the airlines regarding loyalty programs. I joined with Nicholas Kralev from the Washington Times on Friday morning up on the stage to tell the crowd what you said. Did they listen? I’m sure some did, especially since data connections on BlackBerries didn’t seem to be working so well. That doesn’t mean anything is going to change, of course. At least we were allowed to say things as we saw them and nobody pulled our mikes away from us.

In all of your comments, I saw three main themes relating to loyalty programs (some of you strayed a bit too far into other areas for this conference).

Simple and Easy
Many of you said you were fed up with all the complex rules that have evolved over time in some of these programs. No airline employees actually spoke up when we tried to get feedback during the conference, but we did have other attendees jump into the conversation. Nicholas asked why there had to be so many small differences between some programs that simply made it difficult to grasp all the rules, and one person stood up to say that it was a balance between fairness and simplicity.

I explained that there was an understanding with customers that the simplest program (fly 10, get 1 free, for instance) isn’t always the best way to do things, but there are some things that don’t make sense even in that framework. For example, the last minute award bookings fees that Seattle Sleeples mentioned may make sense in the context of revenue management, but from a pure customer perspective, they can’t really be justified. The disconnect is the problem there.

Customer Value
I didn’t try to single out United, but that ended up happening more than once. One area where this came up was in regards to creating value for elites. (Thank you, United in Denver, for mentioning that in the first comment.) United’s recent decision to sell premium amenities to anyone is a perfect example of elites feeling like they aren’t being valued. Chris also echoed this concern in his desire for customer appreciation events. People want to feel valued, and some people, like asad, don’t feel they’re looking at lifetime value very well.

Someone spoke up saying that people are used to being rewarded with miles so airlines aren’t going to change that. Of course, some are, including JetBlue with their new spend-based model, but either way people end up being rewarded for the wrong behavior. People may fly a lot of miles on a $99 fare and end up not being very valuable to the airline at all, but they end up reaping the rewards. This goes back to that whole fairness vs simplicity argument.

Honesty/Integrity
The last point was one that I thought was expertly explained by Gary Leff from View From the Wing. In fact, I pulled up his comment on the big screen and started reading from it directly. So, I’m going to republish that here.

Honesty, Transparency, Integrity.

Those sound old fashioned, but I’m serious. Bear with me.

Don’t talk about ‘enhancements’ that are really devaluations. Your customers resent being lied to.

(Oh, and don’t ACTUALLY lie, either. Don’t promise something like the ability to redeem award seats on your partner airlines and then when a partner is offering an award seat don’t refuse to let your customer book it. And don’t tell your customer that the airline “isn’t offering the seat.” And don’t tell the customer that the partner airline doesn’t even fly the route on that day. I’m talking to you, United. 100% seriously.)

Offer a clear value proposition and STICK TO IT.

I disagree with @Chris who says no devaluations. Just be clear about what you are doing and give PLENTY of notice. So that there’s a clear connection between an offer, customer behavior, and a reward. When you offer benefits, customers fly to earn those benefits, and you change the rules of the game just as they’re about to experience those benefits… #FAIL … seriously. So declare by the end of February, 2010, say, what the 2011 program will look like. And stick to it.

In this same light, I agree with @Chris, though, that there is good online social media communication from a couple of companies like Starwood. Engage your customer, honestly and transpanretly. With a strong customer service presence and not a marketing, PR, or spin shop.

Tell the truth. Declare it openly, warts and all. And then deliver on your declarations. And your customers will love you for it.

Surprisingly, the one thing we failed to bring up was the Starnet blocking that United engages in. It’s particularly funny that we didn’t mention it since Nicholas wrote a column that effectively thrust this into a wider spotlight. But we got so caught up with other examples of lying about something being done to “enhance the customer experience” that we ended up running out of time.

I know someone asked for a video, but I don’t think it was taped. If I find a video, I’ll post it.

Thanks again for all the feedback, and hopefully this had some impact.

United Learns That Some People Don’t Want Free Upgrades – BNET
United has now made upgrades free for all elites, but that doesn’t mean everyone is happy. They’re taking away benefits as well.

Slight Gains in Premium Traffic in August – BNET
The IATA premium traffic monitor is out again and the news is, well, slightly better? Yeah, I guess so.

Complaints Go Down as On Time Percentage Rises – BNET
This shouldn’t be a surprise. On-time performance goes up, complaints go down. Go figure.

how not to check a bag – Anti-Bride
Some tips and tricks for avoiding having to check a bag.

Frontier Airlines Tries To Diversify Away From Denver . . . Again – BNET
Frontier has decided to add flights between Oklahoma and Florida. Hmm, this could work.

Lufthansa Brings Back Internet Over the Oceans – BNET
It’s been a long time since you could use the internet on an intercontinental flight. It’s coming back.

Road testing the Cranky Concierge – Gadling
Grant Martin over at Gadling took Cranky Concierge for a spin last weekend. He liked what he saw. Read the details.

Expert travel assistance from a travel dork – Musings of The Global Traveller
Another look at Cranky Concierge. Come on, give it a shot if you haven’t yet.

I know I just wrote about Southwest yesterday, but the news keeps coming. This time, it’s not a new city but rather, putting a couple of existing cities on steroids. Both St Louis and Denver are growing. One of these, I like a lot. Wanna guess which one?

You’re probably not surprised to know that it’s St Louis that makes the most sense to me. With American’s pull down and the airport’s decision to get aggressive with incentives, it was only a matter of time before someone would come in and start cherry-picking the good routes. It looks like Southwest is the first to stake a decent claim. They’ve already announced flights to Boston and Minneapolis, and now they’re adding a third daily to the latter before it even starts. They’ll also be starting service from St Louis to six new cities in May.

There will be two a day to LA and Nashville alongside one a day to New Orleans, Raleigh/Durham, Seattle, and San Diego. What’s interesting here is that LA and Seattle are two of the nine cities to which American will continue flying from St Louis . . . for now. (Notice that Southwest is also starting service to two former American hubs – Nashville and Raleigh/Durham.) Hmm, looks like Southwest not only wants to fill in what American has ditched but also wants to push American out the rest of the markets. Smart move.

The other airport receiving new service is Denver, and that’s probably not a surprise considering how bullish Southwest has been. I honestly don’t get this one. They must see something that the rest of us don’t, because I don’t see United or Frontier going away any time soon and their results haven’t exactly been stellar there so far.

There will be a single daily nonstop to five new markets in March – Hartford, Boise, Ontario, Detroit, and Washington/Dulles. In May, LaGuardia will get a single Saturday-only flight (they don’t have enough slots to do more frequent flights). In addition, Oklahoma City, Sacramento, Tulsa, New Orleans, Portland (Oregon), Oakland, Baltimore, and Seattle will get one additional daily flight. (All of those start in May except for Oklahoma City in March.)

Of these new markets, only Hartford doesn’t have nonstop service from another carrier at this point. Boise is served by both Frontier and United, Detroit is served by Frontier, and Ontario and Dulles are served by United. They just keep growing this thing, but I’ve yet to see a good justification for why.

I don’t think this is going to require a big expansion – they’re probably just reallocating airplanes from elsewhere again. One, I like. The other, well, not so much.

I mentioned yesterday that I am attending the ARAC FFP Mega Event this week and that I’d be speaking tomorrow. Well, it turns out that I could use your help.

This event is attended by industry people – the same people who are responsible for making changes to their frequent flier programs. Most of the events so far have been about how companies have successfully extracted more money from customers while “improving the customer experience” or something like that. But tomorrow, I will be joining up with Nicholas Kralev from the Washington Times for this discussion:

Listening to your customers- what are customers saying about loyalty programs?

So we’ll have the ears of many decision makers tomorrow on the subject that I know you all love to talk about. Let’s have it. What would you like me to say to them?

There is a lot of route news for Florida fans this week, but the biggest of all is that Southwest has announced its newest city . . . Panama City. No, this is not the airline’s first foray into Latin America. It’s the other Panama City. The one on the panhandle of Florida. The one in the heart of what they call the Redneck Riviera. Huh? Apparently Panama City is not exactly the kind of place that I had pictured in my mind (at left).

This is a huge departure from the recent Southwest new city trends. Remember, we’ve seen big city airports this year – LaGuardia and Boston alongside Minneapolis and Milwaukee. This move into Panama City takes a different tack. In fact, it makes Southwest look a lot more like AirTran than Southwest.

The Panama City Metropolitan Statistical Area (MSA) has a whopping 164,000 people. Yikes. But if you add in the Pensacola (2.5 hours away), Tallahassee (2.5 hours away), and Ft Walton Beach (2 hours away) MSAs, you end up just over a million people. All of those towns may have their own airports, but only Pensacola has a low cost carrier. They see 4 flights a day from AirTran. So is there enough demand for this to work? Southwest seems to think so. Or maybe they just don’t care.

How can I say that? Well, take a little look at the deal they’ve put together. The St. Joe Company is a huge developer (largest landowner in Florida, apparently) that’s working on some massive projects along the panhandle. One of those is a brand-spanking new airport that’s rising from the swamp. It will open next May (and that’s when Southwest will start service). St. Joe wanted to make a big splash with the new opening, so they’ve given Southwest a sweetheart deal. Check out the 8-K. (Thanks, Airline Biz)

The so-called “Strategic Alliance Agreement for Air Service” between Southwest and St Joe puts down some guarantees. St Joe will get the following:

• Southwest guarantees that it will keep at least 2 flights a day to four cities (no cities have been announced yet)
• Southwest will share profits with St Joe
• Southwest will not start flying to any airport within 80 miles (that includes Ft Walton Beach), and if they fly to an airport within 120 miles (that appears to include Tallahassee and Pensacola), there are penalties

Those are some pretty hefty commitments. What is Southwest getting in return?

• If Southwest loses money on these routes, St Joe will make up the difference every single quarter for 3 full years (St Joe can cancel if the payment is more than $14m the first year and $12m the second)
• An agreement will be signed between Southwest, the Bay County Tourist Development Council, the Panama City Beach Convention and Visitors Bureau and the Beaches of South Walton Tourist Development Council to develop marketing efforts
• Southwest will sign an agreement with Coastal Vision 3000 to get free room nights at rental properties to use for marketing purposes

This does sound like a good old-fashioned air service guarantee scheme on steroids. That’s why I say this is very much something out of AirTran’s playbook and not Southwest’s. But will it work? It might. There is a lot of really nice, new development in this area that definitely wipes away the Redneck Riviera name. At this brand new airport, it’s possible that this guarantee will help “prove” to Southwest that it is in fact a profitable market. If that’s the case, Branson must be calling Southwest right now asking how they can play this game as well.

This one is definitely out of left field, but I guess they don’t have much to lose.

[Original image: http://www.flickr.com/photos/jsclark/ / CC BY-SA 2.0]