As reported in the LA Times: Loyalty worth peanuts to airlines.
This was the year in which airline passengers learned where they really stood with the big carriers they’ve been loyal to over the years.
Beginning Jan. 1, Delta Air Lines will start handing out frequent-flier miles based not on distance traveled, which is how it’s been up to now, but on dollars spent.
Travelers who spend more on tickets — that is, well-heeled types who can afford first-class and business seats — will get more miles than people who fly coach.
United Airlines will make the same change March 1. American Airlines says it will compete by offering bonus miles to its biggest spenders.
Changes in airline frequent-flier programs are typical of trends in company rewards plans in all consumer-oriented industries, experts say. Once-generous terms intended to reward rank-and-file customers increasingly have become obstacle courses of fine print and exclusions.
“It’s harder for the average person to get rewards,” said Scott Neslin, a marketing professor at Dartmouth College’s Tuck School of Business.
“I don’t think companies are consciously trying to turn people off,” he said. “But they’re making things more difficult so they can focus primarily on the people they’re really after.”
And those people, of course, are the ones with the deepest pockets.
To be sure, loyalty programs always have been intended to foster long-term relationships with the best customers. Casinos, for example, won’t comp rooms for just anyone. They’re targeting the whales that place the biggest bets.
But the trend is clear: Programs that in the past were more inclusive of all types of customers are evolving into programs that are exclusive in nature, lavishing rewards on the wealthy and offering whatever’s left to others.
West Los Angeles resident Ingeborg Quaglino, 75, estimates she and her husband have been members of United’s MileagePlus program for about 30 years. They try to use their miles every few years to travel to Europe.
Quaglino told me she tried recently to book business-class seats for a trip next September to London, Paris and Zurich, Switzerland, to see friends and family. She hoped to use the MileagePlus Saver Award program, which provides discounted seats but limits their availability.
Under the program, business seats would run about 115,000 miles each, or nearly 40% of the typical cost.
“I believed that by booking so far in advance, it wouldn’t be difficult to get the Saver rate,” Quaglino said.
United had other ideas.
“They told me that if I wanted to spend 300,000 miles for each seat, I could book them right away,” Quaglino recalled. “But if I wanted the Saver rate, I’d have to call back.”
She asked United if she could book Saver seats in coach for the September trip and then upgrade to business later. No, the airline replied. Once you’re in coach with Saver tickets, you can’t make any changes.
“It seemed very unfair,” Quaglino said. “We’ve been MileagePlus members for such a long time. It’s such a shame they don’t make this easier.”
Rahsaan Johnson, a United spokesman, said no offense is intended to long-term customers such as the Quaglinos.
He said United tries to make Saver seats available to as many MileagePlus members as it can. But it’s not always possible to accommodate everyone’s travel plans.
“When we reach the point when we think they’ll sell best, we’ll make them available,” he said of business-class Saver seats.
I asked him when that point usually is and, along the same lines, how many seats are typically set aside for MileagePlus members. Johnson declined to say. I’m not going to give you the secret sauce,” he said. “That’s competitive information.”
His advice to the Quaglinos: Keep calling back, maybe even once a day, and hope for the best.
Chris Elliott, a consumer advocate who focuses on travel issues, said he wasn’t surprised that an airline loyalty program was giving some members the cold shoulder.
“These programs are no longer meant to reward loyal customers,” he said. “They’re meant to reward shareholders. “Calling them loyalty programs is a misnomer,” Elliott said. “You’re giving the airline your loyalty and they’re not reciprocating, unless it’s convenient.”
Beginning in March, United will award coach passengers five points for every dollar spent. Those spending more for first-class and business seats will get anywhere from seven to 11 points per dollar spent. Delta’s program will operate pretty much the same.
American still will hand out miles for distance traveled. But it also will award bonus miles for passengers traveling in first or business class.
Barry Berman, a marketing professor at Hofstra University, said many businesses are becoming pickier about who gets rewards. “They look at you and decide whether you’re a key customer or a peripheral customer,” he said.
Key customers, needless to say, are the ones who represent fat stacks of profits. Peripheral customers are probably you and me.
It’s completely understandable why a company would want to prioritize in this way. It would be irresponsible not to pamper your best customers to the best of your ability.
The danger with shunting some customers to the periphery, however, is that sooner or later they’re going to feel unwanted or that their long-term business isn’t appreciated.
The Quaglinos are feeling this way about United. They said they won’t necessarily be turning to the “Friendly Skies” carrier when they travel in the future.
“You don’t want to be seen as offering rewards only grudgingly,” said Oleg Urminsky, an associate professor of marketing at the University of Chicago’s Booth School of Business.
Or maybe you do. Maybe the airlines are on to something.
By so blatantly favoring their wealthier customers and so obviously offering table scraps to everyone else, the airlines have made clear where different people stand in the pecking order.
The Quaglinos now have a better idea of what they can expect from United, and how much, or little, their repeat business is welcome. Their loyalty to the airline, they understand, will get them only so far.
If United’s goal was to communicate such disdain to long-term customers, the company has succeeded.