InsideFlyer
Alaska Airlines recently hosted a wine reception for its MVP Gold members. What other types of events have you held for your elite members and why do you host them?

Rick Rasmussen
We take pride in having a strong relationship with our customers and strive to take advantage of our smaller size to be closer to them. This is especially true for our most valuable customers. We host monthly lunch events across our network for our MVP Gold members. The goal of these meetings is to listen to our customers and hear firsthand the things we are doing to win their business every day, and even more importantly, the things we need to pay attention to in order to keep winning their business. Feedback from these lunches is shared across the leadership team at Alaska and Horizon. In addition to the Gold lunches, we also have a 12-member Gold Advisory Board made up of a rotating group of very engaged customers who meet with us quarterly to help define program strategy, improve Web site functionality and share feedback in many different areas.

IF
Can you share with us how many award flights were redeemed in 2008? And the percentage of these seats to paid seats? And has this percentage changed during the current lagging economy?
Rasmussen
In 2008, 936,000 roundtrip awards and 499,000 one-way flight awards were redeemed and flown on Alaska and Horizon. Those awards represent approximately 12.4 percent of the total passenger miles flown on Alaska and Horizon in 2008. In addition, approximately 214,000 roundtrip flight awards were redeemed and flown on our airline partners. Award bookings in 2009 continue to be very strong as customers continue to find value in using their miles.

IF
Delta recently added a fourth tier to their elite-level program. Can you see a time when Mileage Plan would add another elite tier?
Rasmussen
Yes. We have been honored at the Freddie Awards with recognition for the Best Elite Level program. We intend to make sure that both the Mileage Plan program and our elite level program continue to create industry-leading value for our customers. We greatly appreciate all of our customers, but we also recognize that their relationships with us, and the amount and type of business they give us vary greatly. It only seems right to recognize the very best of the best individually.

IF
Mileage Plan introduced “Fly & Buy Miles” a few months ago to allow members to buy miles in conjunction with a flight. Why does Mileage Plan offer this and how have members responded?
Rasmussen
We have traditionally offered miles for sale through our Instant Miles and Gift Miles programs, so the launch of “Fly and Buy Miles” is really an extension of that idea that takes merchandise from the back shelf and places it in the checkout line. Results to date have been encouraging.

IF
Your Web site states that Mileage Plan has “Immortal Miles that Never Expire” (as long as there is account activity in two years). Can you see a day when this policy might change?
Rasmussen
When our program launched, we considered an account to be active if there was any activity at least once every three years. As the costs of running the program increased, we took a closer look at our policies and award structure and made several changes in November 2007. One of these changes was the new two-year activity policy. We aren’t currently planning any changes to this policy.

IF
Why is Alaska ending its partnership with Continental?
Rasmussen
We’ve enjoyed a successful partnership for many years, however, both companies have evolved and grown to the point where maintaining our frequent flyer and codeshare relationship no longer makes good business sense. Continental is joining the Star Alliance and with our Newark service combined with our upcoming Houston service, we can take our customers to the big markets that we needed CO to help us with in the past. We don’t expect a big impact to our customers as Continental has always been our smallest domestic partner. Our customers were not finding a lot of award space on Continental and their flights have never counted toward MVP or MVP Gold status. Customers will have until October 24 to earn CO miles or to redeem miles for an award ticket.

IF
Will there be any other partner changes coming up that you can tell us about? Any new award options or program changes?
Rasmussen
We’ve just launched a partnership with Air Pacific, the Fiji based carrier that covers the South Pacific and we are in discussions with other airlines that would add unique value to the program.

IF
Why are frequent flyer programs so important to airlines in the current economic downturn?
Rasmussen
Frequent flyer programs are important to airlines in any economic climate but are even more important as we navigate these challenging times. In our industry today, it is absolutely critical to keep profitable customers and win new ones. The programs, if managed correctly, have the ability to reinforce the relationship between the airline and its valuable customers and also attract new customers into the fold. Our program also allows us to better understand the true value and profitability of individual customers, and as a result, better direct our resources and make more intelligent business decisions, critical components of success in a challenging economic environment.

IF
Is there a different dynamic to the relationship between airlines and their loyalty programs, compared to previous recessions?
Rasmussen
In the last few years, some programs have gone down the path of significantly diluting benefits to reduce costs. Loyalty programs have traditionally played an important role in stemming attrition but the continual reduction of benefits in some programs has made it easier for travelers to ‘remove the golden handcuffs’ and consider other options. We’ve had to make some changes to our program as well, but we continue to listen closely to our customers in order to avoid diluting the benefits that they value most. Even after these changes last year, we were honored to have been voted “Program of the Year” by our frequent flyers in the annual Freddie Awards. We feel that our efforts are working as we are seeing increasing numbers of top tier customers from other airlines approach us and ask to match their status in our program in exchange for their business.