Opening Remarks – November, 25 2003

Opening Remarks – November, 25 2003

Lost in Translation
Northwest WorldPerks, United Mileage Plus and America West FlightFund each recently released announcements regarding their 2004 elite programs, and though the announcements weren’t wrapped in ribbons and bows, the Christmas gifts they contained for members and myself were no less appreciated.

I think the fact that each of these programs chose to stay the course helps to mollify the seemingly ongoing message from a number of travel writers that frequent flyer programs in general are so ‘devalued’ that all members should quickly cash in all their miles — that there is no longer any valid reason to belong, and the end of the world is soon to come.

These frequent flyer programs have worked hard to make today’s marketplace work for them and their members, and I’m especially pleased to see United’s announcement, as just one year ago it seemed everyone (save myself and, evidently many of you) had given up on seeing any improvement for the airline, let alone Mileage Plus. Look closely at their changes and you’ll see a ‘revalue’ of some of the basic benefits from a few years ago. The extra bonus miles for flight activity above 100,000 miles, for one, is long overdue.

The order in which this year’s changes were announced is the most interesting I’ve seen in the nearly 20 years that elite level programs have been around. I think Continental had hoped that by announcing its changes early it would give other programs a hint of direction. But, just like a football game, sometimes the most important signals don’t come from the sidelines, but rather from the field. The attention that groups such as SaveSkyMiles have garnered certainly would seem to have helped WorldPerks, FlightFund and Mileage Plus make their decision. But my guess is, the choices made by these three programs had less to do with pressure, and more to do with finding a way to create valued distinction in a competitive marketplace.

As for American, I think comments recently made in The Wall Street Journal will give you some idea of where American might be going. In an online column titled “The Middle Seat” that ran recently in the paper’s online edition, Scott McCartney put the proverbial cup to the wall and printed some of the comments made by American Airlines President Gerard Arpey to a group of Wall Street analysts. Arpey is quoted as saying American is pondering whether it should change the way it awards first-class upgrades, since Continental gives away space-available upgrades and the OnePass elite program often rates high in surveys (such as the Freddie Awards. in which OnePass has won more “Best” elite-level program awards than any other airline).

The problem with any change like this is that American sells some $120 million a year in upgrades to members of its AAdvantage program, and it would be very difficult to qualify any change to upgrades and try to justify the subsequent loss of revenue. If American listens to its members, there likely isn’t going to be any change, no matter how tempting. The feedback on this comment on the FlyerTalk bulletin board was one of “don’t change.”

Now, when was the last time you ever heard members of any program argue against more upgrades?

The fact is, I’ve always rated the AAdvantage program fairly high and if asked, would advise Mr. Arpey against a change like that. Let OnePass be OnePass. If he wants a real hint, look no farther than elsewhere in Dallas. There’s no program more simple than Rapid Rewards and the way things are going, that is the competition, not just Continental.

What I liked about Scott’s column is the following statement by him, “You can win back customers by offering good value, not by making it more difficult for customers to get what they want. Finding ways to lessen the cost of frequent-flier programs by cutting benefits won’t win loyalty from business travelers. On the other hand, giving them valued rewards — such as free upgrades — is at least a step in the right direction.” This observation seems to give credence to both the elite moves by Delta and Continental, as well as Northwest and United.

Now on with the holidays. There’s plenty of good information in the “malling” of frequent flyer programs in this issue. So load up the browser and spend Christmas on the Web. Spend money now, and spend miles later.

So, in the spirit of the season, around the world and in many different languages — Joy To The World, and Your Miles Too.

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