I don’t think I’m overstepping by suggesting that airlines have borderline disdain for infrequent fliers. Even though those people are actually critically important to the success of the airline, most carriers have given up on ever trying to gain their loyalty. It’s a purely transactional relationship from the airline perspective, and travelers should treat it as such. Being loyal to an airline makes no sense. Recent frequent flier program changes have only made that more clear.
We all know that airlines care most about the big money, frequent fliers who buy expensive tickets. When United President Scott Kirby was at American, he revealed a fascinating stat.
87 percent of our unique customers fly us one time per year or less, and they represent over 50 percent of our revenue.
It’s remarkable to think that 87 percent of travelers on American only fly the airline once a year or less, but it is entirely unsurprising that those people make up only half the revenue. That means the other 13 percent make up the other half. This dynamic is shared by all legacy carriers, and it explains why those airlines all spend so much time focusing on the 13 percent by crafting elite status benefits that are just good enough to keep them from defecting.
The important thing to remember, however, is that those other 87 percent are still very important to the airlines. Sure the elite road warriors generate most of the money, but if the 87 percent didn’t exist and the back of the airplane was empty, that flight becomes unprofitable.
For years, the general belief was that there was no way to actually engender loyalty from the riff-raff. They would buy almost entirely on price and if there was another consideration, it was the schedule. Loyalty? Marketing. Bah. That won’t impact them.
Despite that belief, there were still efforts to target those infrequent fliers. Just look back to earlier days of the frequent flier program. Miles didn’t expire and a roundtrip domestic ticket could be had for 20,000 miles. Even if you didn’t fly often, you had a goal you could work toward. And that might encourage you to pick one airline over another, of course, assuming price and schedule cooperated.
Over time, however, these loyalty programs have been virtually shredded to the point where it makes no sense for a frequent flier to be loyal to an airline. Two things in particular have happened to really move the needle on this. Airlines have increasingly removed the ability for travelers to set a mileage earning goal, and credit cards have become a better way to earn miles than flying.
The Elimination of the Mileage-Earning Goal
The first part is particularly newsy since United recently announced it was following Delta’s lead in eliminating award charts entirely. I spoke with United’s VP of Loyalty Luc Bondar just before the changes were announced. He was quick to point out all the customer benefits of not having an award chart.
The main potential benefit is, of course, that the airline now can offer lower redemption rates for flights that aren’t going to fill up with big money fares. That Tuesday flight from El Paso to Denver in February would have been a flat 12,500 miles each way under the old program structure, if low-level seats were available. Now they can go down as low as 5,000 if United wants. But of course, nothing was stopping United or any airline from lowering rates below the published amounts before anyway. Certainly nobody would have complained about that.
The downside is that, as you certainly know, the price can now flex a lot higher as well. Let’s go back to El Paso. I think this says it all:
That is El Paso to Denver right before Christmas, and it varies wildly. Peak days will cost more and off-peak days will cost less. This might sound intuitive, but it takes away the ability for the infrequent flier to save up for a trip.
It was hard enough hunting and pecking for availability before, but at least you knew it was 12,500 miles one way so you could get the right amount. But now you don’t know what the right amount will be for any given day. If you don’t know what you’re saving up for, then why would you bother saving at all? You wouldn’t.
The Rise of Mileage-Earning Credit Cards
The even bigger issue may be the rise of credit cards. It used to be that flying was the best way to actually earn miles, but that changed long ago. Now the best way is to earn miles when you spend money on a credit card. And the credit cards that have the most value are those that allow you to earn points to transfer into multiple airline programs.
Sure, you can always get an individual airline credit card, but why? Yes, you can get some perks like a checked bag or priority boarding, but that hardly seems worth it for an infrequent flier. You’re better off just paying the bag fee.
Instead, you can go with one of the main bank currencies, American Express Membership Rewards, Chase Ultimate Rewards, or Citibank ThankYou Points. Even Capital One got into the game recently and now allows transfers. With these cards, travelers can earn miles and then transfer into an airline program when the time is right.
Does United have a good rate one day? Great, then you can move your Ultimate Rewards into your MileagePlus account and redeem. But is United insanely expensive and Southwest is cheap? Then move your points there. You get the idea.
For nearly every infrequent flier, those credit cards are going to provide far more utility than an airline card will. Anything that keeps the miles out of a single airline program and allows for flexibility has value. The banks have really stepped up while the airlines just continue to add complexity and uncertainty to their own programs. I just see no reason to be loyal if you aren’t going to fly enough to get elite status.