I’m bullish on airline loyalty programs. I have been pretty much since the moment I started flying as I realized the fun I could have getting a bit more for my travel dollar. Part of that positive attitude has come from being a top-tier elite in at least one program for most of the past 15 years (I did lapse at one point). And part of it came from playing the “game” of points and travel. And while I absolutely think that there is still value in collecting points and paying attention to the benefits, I’m starting to question the true value of “loyalty” more and more. I recently wrote a column for the Runway Girl Network about the topic and I keep coming back to the same underlying question: At what point is the “loyalty” to an airline no longer a smart investment?
That story is focused mostly on the consumer side of the equation. At what point does it stop making sense to pay extra for a diminishing suite of benefits? Most of that comes from the fact that in prior incarnations of the programs is was possible for a low-spending passenger to benefit disproportionally from the contributions they were making to the carriers. That’s not necessarily a right or wrong sort of situation, but it is not hard to see why the companies running the programs weren’t too keen on it.
But what about from the airlines’ perspective? Are they driving potentially “loyal” traffic away by reducing the benefits at lower elite tiers? And if so, is it enough revenue to matter? I believe the answer to the first half of that is a resounding yes. I believe that more mid-range customers are looking harder at their travel spend and choosing wallet loyalty over airline loyalty. The harder part to measure is the second half of that question: does it have an adverse effect on revenue more significant than the cost savings which come from making the changes? My guess is that it does not, especially not in the current travel and economic climate.
Consolidation in the industry means customers have fewer choices and are paying higher fares. Add in ancillary fees (or share of credit card fees for those who exempt themselves from the surcharges) and the airlines might actually be in a position where they can dictate the travel experience more than ever since deregulation. We’ve entered an era where airlines (at least in the USA) are starting to be run as businesses in other industries, not kept out in their own little world.
And there are small signs of some passenger experiences getting better overall in the industry, even as more and more customers are being crammed into planes. The airlines are doing what they can to distract with in-flight entertainment and connectivity at levels never seen before. Or maybe it is offering a different selection of beer on board (that you’ll pay $6/can for). Or even an eye mask and earplugs for a redeye flight, even in economy class. But those little wins don’t require loyalty from the consumer to realize. And if they happen to make the passengers a bit more loyal, possibly even to the point of spending a little extra to fly that airline, then it was for the real-time amenities, not the points.
And there’s nothing at all wrong with that.
Related Posts:
- What’s important to your flight booking selection?
- Qantas Frequent Flyer switching to a fixed-earning scheme
- Winners and losers with Delta’s new revenue-based SkyMiles earnings
Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.
I’ve never put extraordinary effort into chasing status… I’ll make some effort, spend a bit more. But as the benefits for low and mid tier (which I usually am, or was) get reduced, I’m much less inclined to do so.
Of course some years, my travel is more for work (and therefore paid by my employer), other times it’s personal travel. So I wonder, are there any reliable numbers on what percentage of elites earned that status by their own wallet, vice employer-financed. Many companies and government organizations give employees little choice over carrier.
The lowest tiers are basically worthless at this point, and middle tiers are becoming more and more devalued. I think the airlines are being too aggressive by driving their loyal customers to consider cost more importantly now. If another recession hits the airlines will be SOL.
I don’t think the lower tiers are worthless — exemption from (usually the first) bag fee, early boarding, and a good chance at a better seat are not negligible. I am DL silver for this year and next, and this will actually make me more likely to consider flying DL on vacation, given that I won’t have to pay to check bags for the family and I can get Economy Comfort seats for free or a reduced price.
However, I don’t pay for my own flying to get there, and I don’t think it would be worth spending any amount of my own money to do so, given that each airline now has an affiliate credit card that provides much the same benefits at a relatively low cost.