Loyalty Programs Were Not Meant to Be Good For You

Let me repeat that – loyalty programs were not meant to be good for you. They were meant to be good for the airlines, hotels, and whoever else has started one since the Green Stamp days. Perceived benefits aside, they were (and still are) meant to enhance the bottom line of the companies that control them. Back in the days of 60 percent load factors being a banner year, your run of the mill “frequent flyer” program made perfect sense. The spread between top and bottom fare was lower. The internet as we know it did not exist. Tossing a seat to a program member that was otherwise empty anyway was easy. All was well.

The scene shifts to the current reality. Load factors are routinely north of 80 percent. You, me, and our mothers are minting miles like candy, but excess inventory for redemption is like finding a knitting needle in a smallish stack of hay – not impossible, but not all that easy either. Worry abounds, but that hasn’t stopped our friends at the programs from selling miles to card companies and flower shops, nor us from finding ways to earn as many as possible. Enter the “revenue-based” loyalty program.

While I’m not as in love with the new reality as many think, that doesn’t mean I can’t see what’s going on around me. Ballooning mileage balances vs. shrinking redemption opportunities. We’re all addicted – the airlines to the quick sale of a point, us to the high of making a point out of thin air. The companies have the upper hand now. I don’t know if it will last forever, but I do think it will last long enough for American AAdvantage to join the rest of the domestic US industry with a revenue based program. All the crying in the world won’t stop it, but I’m almost certain there’ll be another game to play. Things change, just stay informed. If the new reality results in more rational economic decision-making for the majority of us, I’m all for it.

-MJ, September 29, 2014

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[…] of the business, including loyalty programs. I wrote a little piece not too long ago implying that loyalty programs were never meant to be good for you. Obviously, as a program member, there must be something in the program that you feel is good for […]

reeder

I was reading this interesting thread on CC about a possible generational gap and what “more modern” means as well as “loyalty”. http://boards.cruisecritic.com/showthread.php?t=2108171 It seems like the Airline revenue based trend is starting a rather large questioning of how much my loyalty is worth, because I’m certainly not giving it blindly if the rewards don’t outweigh the costs. Business road warriors definitely have reasons to keep hotel loyalty (free internet, exec lounge, and upgrade statistics). Do leisure cruisers have a good reason to, though, if another cruise line has a similar product with similar hardware? I’m Celebrity Select and so… Read more »

Paul

I posted this thought on another blog the other day, but I would really love to know what percentage of the US population lives in a monopolized market anyway (ie not by an airport dominated by a single carrier). I live by EWR and yea, the United “loyalty” program is nice, but it’s irrelevant in my decision to fly United 99% of the time. I’m simply not going to have a layover when I don’t have to. The airlines have simply won this game, they’ve convinced the regulators to let them consolidate down to practically zero competition and eliminate what… Read more »

AlohaDaveKennedy

No way – we are all entitled to loyalty programs that are good for us. My government said so when they created the US Mint deal and allowed us to mint frequent flyer miles at the same rate that the Fed prints toilet paper, umm…I mean dollar bills.

Travel Dude

True… but companies, and the bloggomg community, have encouraged this thinking.

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