Something strange is going on. Reports still indicate that Corporate America has not yet returned to flying. You’d think that the major airlines would have figured out by now how to leverage their frequent flyer programs to convince those in the corporate sector to return to the air. After all, when corporations cut travel budgets in the late 80’s they found the programs to be so enticing to the business traveler that it was difficult to keep employees on the ground. In a 1986 Wall Street Journal editorial, Michael Kinsley said, "Frequent-flier plans are an ingenious system for giving the benefits of competition to the person who decides how to spend the money…." He goes on to close the editorial by saying, "What we are witnessing is a massive, open and wildly successful campaign to corrupt the morals of the corporate class."
Have these programs become so satisfied off of the easy money that pours in from the ever-expanding roster of non-transportation partners that they have forgotten how to market these programs to Corporate America? Today’s economy isn’t any more fragile than in the Gulf War period of the early 90’s, yet the frequent flyer programs were still able to figure out ways to stimulate people to pay to fly then (vs. redeem miles to fly). After Delta SkyMiles’ valiant effort to leverage its program in an effort to get people flying again immediately following the events of 9/11, the last nine months have seen spotty progress. Sure there have been marketing efforts like Northwest WorldPerks’ renewed partner promotion, United and its credit card income tax promotion and the hotel free weekend promotions. But if things are as serious as the headlines and the airline CEOs claim, then I’m at a bit of a loss as to why the ultimate travel stimulant — miles — isn’t being used more extensively and effectively.
Could it be these programs have become so populated with non-Corporate America members that airlines worry any type of broad-based promotion will be used by hordes of mileage junkies to rack up millions of miles at the lowest possible cost, thus not creating the type of RPM (revenue per passenger) they were able to generate in the days when these programs truly used to be "frequent flyer" programs. There are just enough business people traveling that the programs can’t leverage benefits like upgrades to stimulate the Corporate America economy, so at the end of the runway we’ll all just have to sit and wonder — have frequent flyer programs lost their ability to work for the purposes they were intended?
There’s no doubt they work as a ‘loyalty for the masses’ incentive and, given that American, United and Delta each have performance goals for their frequent flyer programs to generate at least a billion dollars of non-transportation revenue this year, this new-found revenue simply can’t save the industry — or can it. While the airline CEOs and analysts have slapped down the charts showing the decline in revenue per passenger, no one has peeked behind the curtain and asked about the net income from other sources the airlines may control.
It’s really none of my business how they do their math, but one thing is certain — I’m going to be really pissed if I lose a single mile because a program can’t get its marketing methods in gear and make this work. So come on all you frequent flyer marketing experts — convince me to fly more than last year (hint, hint).
P.S. Next month we expect to complete our magazine re-design. So look for a cleaner and easier to read layout and yes, we’re working on the return of Programs & Partners.