USA Today Article: Are frequent-flier programs losing their luster?

Discussion in 'Blogstand' started by Captain Oveur, Apr 25, 2011.  |  Print Topic

  1. Captain Oveur
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    Captain Oveur Gold Member

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    Woke up in Paris to the International Edition of USA Today to see this article, including a quote from Randy.

    Plus this survey:
    Airline Overall rating:
    AirTran B
    Alaska A-
    American B+
    Delta B+
    Frontier B-
    Hawaiian B-
    JetBlue C
    Southwest B+
    Spirit C
    United A-
    US Airways C+

    Source: InsideFlyer


     
  2. MSPeconomist
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    This was in the Friday/Saturday/Sunday USA edition, starting on the first page of the Money section. The lead travel article that day was about concierges.
     
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  3. JohnDeere19
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    JohnDeere19 Gold Member

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    I love seeing US Airways that low...I've been nothing but happy with redeeming miles through them (albeit things have gotten a little more difficult, i.e. LH F US-EU)
     
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  4. excelsior
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    excelsior Silver Member

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    "Now, it's just a moneymaker with airlines selling miles to credit card companies, florists and everyone else under the sun, and then limiting when you can use them."

    Spot on.. the programmes need to focus more on elite benfits for this reason!
     
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  5. mikeef
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    mikeef Silver Member

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    I love, love LOVE articles like this one. Like anything else, it's about knowing how to work the system, and every article that tells travelers that FF programs don't have much value is one fewer person with whom I am going to have to compete.

    Mike
     
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  6. MSPeconomist
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    Grade inflation!
     
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  7. DonV.Smith
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    DonV.Smith Gold Member

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    Good article, there are many valid points to it.
    I can say that I've had good success with reward travel so far... but it's been a while since I tried, too.

    I also think reward programs have shifted a bit as demographics shift. There are a couple of generations in the air now that have grown up playing video games. Yes, I went there. The similarity I see is in the points accumulation - how many I can accumulate for that next level... Which admittedly has been the case anyway... But it feels to me that companies are exercising similar strategies to games in allowing you more ways to achieve more. The problem would then seem to be over-saturation potential at a certain redemption level, of course... So then pushing reward redemptions up.

    I'm sure reality is that the programs have a great may influences, whether competitors, other industries, surveys, complaints, etc. I/we all just want to be able to redeem reward flights without needing to plan several months in advance.
     
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  8. Kaanapali
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    Kaanapali Gold Member

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    Definitely...where are they getting these grades? :confused:Or are these grades merely a comparison against each other based on today.....

    Based on the subject of the article....these grades should be based on comparison with what each program USED to be....:rolleyes:
     
  9. 2soonold
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    2soonold Gold Member

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    I enjoyed the article. Things are changing; sometimes it works for ya, sometimes it works against ya.

    I sorta agree.
     
  10. FLYERIL
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    FLYERIL Silver Member

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    I noticed that the author of the article only tried to get low awards on Delta. It's almost like he picked the program that was most likely to prove the point he was trying to make in the article.
     
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  11. Randy Petersen
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    Randy Petersen Founder

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    That did seem strange.

    What always stands out for me is that literally every article is about members not being able to redeem for the lowest price. I can't think of any instance where my whole impression of The Gap, Nike or even Apple is narrowly focused on the idea that i wasn't able to buy what i wanted at a sale price. I can't remember the last time I ever went into a Gap and shopped the sale rack and berated the manager because one of the shirts they had on sale wasn't in the color and size that I wanted. Maybe me but I remember the last 'inside' stats i saw was that more than 76% of members actually fly in 25K awards ... the sale rack, which seems a fairly high percentage if we regard that as controlled inventory. And of course, around 9% of all passengers on AK, AA, SWA and DL fly on free awards? Dang, didn't someone say that no one can ever redeem their miles? Now, I haven't tried redeeming my DL miles lately ....
     
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  12. FLYERIL
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    FLYERIL Silver Member

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    I noticed that, too. Particularly, that the various interviewees were all frequent fliers, but they all complained that they could not easily book saver awards on any day they wanted, and worst of all, they had people who earned non-BIS miles taking away THEIR award seats. (I'm not excusing the pathetic award inventory that Delta generally has.)
     
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  13. SS255
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    SS255 Silver Member

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    The airline's least profitable customers may be taking our free 25,000 mile coach award seats, but they're not taking our upgrades. :D The DL Diamond featured in this article can drown his sorrows in an endless supply of free alcoholic beverages from the comfort of his upgraded F seat while all of the infrequent fliers occupying his free coach seats are suffering in the back.

    I think that the two best-kept secrets of frequent flyer programs are 1) that you get the most bang for your buck using miles to upgrade, and 2) often if the only coach award redemption level available is at the 50,000 mile mark, you can often find a free F seat for the same 50,000 miles. Most people just want the cheapest free seat they can get, and do not consider other alternatives.
     
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  14. Randy Petersen
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    Randy Petersen Founder

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    Here's a couple very interesting data points: of the hundreds of millions/billions of miles that AAdvantage awarded members last year, only 38% came from actually flying. As well, guess who the number one purchasers of mile bonuses from kiosk offers at checkin are? Yep, more than 50% of those paying for more miles are elite members. Are there really "too many miles when the actual best customers are bidding them up? Again, the singular fascination to redeeming only at 25K miles is a wonder, though understand who wants to ever pay full price for a free award? And yes, I/we know that they really aren't free... We earned them. Always good discussion and I find that great dialogue.
     
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  15. Dovster
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    Dovster Gold Member

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    I have -- and did well.

    I had one Biz Elite award ticket (TLV-ATL-LAS-TLV) which was a "low" in one direction and a "medium" in the other.

    I repeated a few months later, flying on a M fare and upgrading with PMUs. Because I was stopping in ATL in both directions, instead of connecting, this requires 4 PMUs. I only had three left, and was willing to pay for one domestic segment with SkyMiles, but Delta upgraded me without the SkyMiles.
     
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  16. Wurm
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    Wurm Silver Member

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    Hotel nights via Delta Marketplace can be a nice way to actually use DL miles. I don't know the exact CPM figure, but the way I look at it, the money I am not spending on the hotel acquired with DL miles can be used for another aspect of my trip.
     
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  17. TRAVELSIG
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    TRAVELSIG Gold Member

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    Great call Wurm. I burn a lot of DL miles in this way- particularly with Intercontinental Hotels in London and San Francisco.
     
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  18. Dovster
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    Dovster Gold Member

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    I consider the Delta Gold Amex to be the equivalent of the HHonors Surpass Amex (Delta costs $95 per year, HHonors costs $85).

    Every dollar spent on the Delta card for ordinary purchases gives you 1 SkyMile. Every dollar spent on the HHonors card gives you 3 Hilton points.

    It is logical, therefore, to see a SkyMile as being worth 3 HHonors points.

    I have an award reservation at the Hilton Prague from June 9 to June 15. It is costing me 157,500 HHonors points. If we use the 3 to 1 ratio, that same reservation should cost me 52,500 SkyMiles. In fact, I considered using SkyMiles and looked on the Delta Marketplace.

    The price there is 479,264 SkyMiles.

    In short, I would have to spend 9.1 times as much on an Amex to get this reservation through Delta than I do through Hilton.
     
  19. beaubo
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    beaubo Silver Member

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    FFPs create expectations that set themselves up for negative perceptions.

    If indeed your presumption that 25K awards are indeed 'sale prices', then FFPs should be marketing their awards
    at 40K in all their pitches, so it is crystal clear that 25K is indeed the 'sale price' and customer expectations can be managed accordingly. It is the FFPs that have willingly and knowingly put the 'sale price' as the seeming benchmark in their advertising and marketing. Most FFPs don;t even reference in their marketing that that the 25K awards are in fact 'sale prices'. And even the term 'Saver' awards does not imply a 'sale', but rather judicious use of miles. So, if 25K is a 'sale price', lets start seeing the FFPs position them so much more forthrightly.

    As grizzled veterans, we are used and/or can see through the FFP-Speak, but I think its it a bit of a stretch to expect the casual user of FFPs to really grasp that the 25K award is essentially a 'teaser rate'.
     
  20. Randy Petersen
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    Randy Petersen Founder

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    Totally agree and certainly pin alot of responsibility on the industry. But "professional journalist" as well? And for the more 'grizzled' veterans, we remember when there were no 20K or 25k awards and the only way to earn miles ... flying. Imagine that.
     
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  21. ctporter
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    ctporter Silver Member

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    The miles and points I accumulate are from actual flying not from other sources such as CC. But, I am beginning to think that I should rethink my cc uses and look at one that earns miles. On the other hand, what is most important to me is where I sit on my business trip, and that is the HUGE (to me) benefit of any FF program, getting the preferred seats or upgrades to FC. Somehow, I just never seem to have time to redeem my points
     
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  22. samonyc
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    samonyc Silver Member

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    But the MarketPlace gives you access to many more hotels than Hiltons. I'm looking at a Hilton in London, which is 50,000 HHonors points a night in November. For the same period, it's 32,842 SkyMiles a night. That's not one-third the price, but there are 200 other options available, most for a lot fewer miles. The Marketplace seems to reflect actual dollar rates in effect for the reservation, because it can vary throughout the year, whereas with HHonors the rate is always the same, based on hotel category. It would make sense to use HHonors points for peak travel redemptions and SkyMiles for hotels off-peak or when you need more options.
     
  23. MSPeconomist
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    MSPeconomist Gold Member

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    I think the article overemphasizes the redemption of award tickets. To me, FF programs consist of the entire package of not only awards but also all of the elite perks such as upgrades (and their precise rules as well as actual practice and availability), IROPs handling, special dedicated telephone agents, special counters and security lines, special/reserved seating, early/priority boarding, lounge programs, fee waivers, expedited baggage handling, expressions and tokens of appreciation, etc.

    Any grading system necessarily either focuses on just one of these aspects or must use an aggregation or weighting system which is arbitrary. Yet different FF program participants have different priorities and these individual priorities cannot be captured in a single overall rating or letter grade. Very rarely will one program dominate another in all important dimensions. What ultimately matters is which program is best for a given individual's preferences and travel patterns or (equivalently) how good of a fit the program is for some individual.

    The structure of a given airline's FF program and the programs of all of its competitors jointly determine the resulting number and mix of consumers that the FF program captures for the airline. Airlines care very much not only how many passengers they serve but also how profitable this set of customers is for the carrier.
     
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  24. beaubo
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    beaubo Silver Member

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    The increasingly de-bundling and monetization of FFPs have somewhat undermined your notion of judging a program on more holistic criteria.
    * EQMs are now offered as credit card spend bonus which dilute value of hard earned BIS status earning...and invariably access to elite perks
    * purchase 'Elite For a Day' programs provide elite benefits without the loyalty of BIS status earning
    * folks with substantial credit card spend that builds up account balances anesthetizes burning double miles where
    BIS-earning focused customers without cushion of huge mileage balances, really feel sting of not using Saver awards
    * upgrade buy-ups at time of booking without need for status, compromises using elites using mileage as preferred upgrade currency because risk of decreased avaialble premium inventory
    * Amex Plat and Priority Pass, and the upgrade cash buyups obviate the need for BIS elite loyalty for ongoing lounge access

    Truthfully, there are so many ALA CARTE means of feeling the love of an FFP elite without the yearly qualifying treadmill, that I feel like I'm a big shot in every program I have 'monetized' cobtact with, not just the ones where I have earned the shiny card
     
  25. MSPeconomist
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    I think we're basically in agreement. Your points tend to support my argument that the entire FF program package must be evaluated based on the individual's own priorities, including, for instance, precise upgrade "rules as well as actual practice and availability" (my words in the post you quoted). This most certainly includes consideration of the carrier's decisions to attempt to monetize FC, sell elite benefits, or grant status and miles to non-flyers when evaluating the program. Similarly, in evaluating the value of airline FF programs that include lounge access, I look at my alternatives such as AmEx Plat and Priority Pass, not only in terms of focusing on the additional lounges that I can enter using only my FF benefits but also the impact of the AmEx Plat/Centurion and Priority Pass programs on lounge crowding.
     
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