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
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 far, the perks are things which I could outright buy, as they’re not providing any dedicated service lines vs airlines which do. Azamara’s “free nights” seems ill defined and getting rid of a tangible money saver like free laundry was a poorly communicated loyalty program revision. They brought back the internet minutes and laundry based on popular demand.
“More Modern” – what does this mean? Or rather, why are so many cruisers asking what it means? How is it a surprise that I want ships which match modern decor trends shown by new Hyatts, SPG, or even Las Vegas (grown up posh rather than glitzy tacky) with plenty of outlets and a roomy shower? Why wouldn’t a target demographic of a younger age want more and better internet connectivity if the average American only gets 12 days off and is expected to be reachable? Everything else in the travel industry has apps, why can’t a ship reduce the daily printouts and just send the schedule to my smart phone? Cruise vacations compete for vacation dollars and land vacations are continually modernizing. Even DisneyWorld went to the tap based MagicBand payments and entry system. Why shouldn’t ships which are Noro incubators?
I haven’t been interested in Quantum class itineraries for the next year but am certainly will look into them in the next three years. They’re a bit more active with in-room announcements and Oasis verandahs are less comfortable than Solstice verandahs, but might be a good place to spend vacation dollars if RCCL is able to capitalize on smaller and interesting ports.
Too bad only Azamara and Celebrity collaborate on loyalty accrual. That makes Royal a competitor instead of a contributor to the overall brand.
@Paul,
That’s an interesting question. I live in Atlanta, and I fly Delta. I do have a choice of Southwest on many nonstop routes, but default to Delta for the upgrades, boarding priority, etc. In that sense, I suppose they’ve won me over with the “loyalty” program. I’d bet that a majority of the population lives near one of these hubs.
I’m not sure I agree that AA, AS, DL, UA, B6, WN, VX, etc. equals a monopoly, even if one airline has a large number of departures in a given market. It’s certainly fair to say that the reduced number of domestic airlines has resulted in a market where the airlines do not need to offer a given customer as much as they used to to incentivize travel. On the other hand, I wouldn’t hesitate to look at a 30 minute flight to CLT or 2 hour flight to DFW as a cost of doing business, so that might impact my perspective.
This is a number I don’t have, so I probably shouldn’t speculate with a question, but I’ll go out on a limb. Even with their newfound profitability, are the airlines really all that profitable when compared to other industries? How do their margins compare to FedEx, UPS, or Intel?
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 competition remains through the “landing slot” system of monopolization and they won the game. Revenue based programs are just a side effect of the fact they won.
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.
@Dave,
🙂
True… but companies, and the bloggomg community, have encouraged this thinking.
No denying that, Travel Dude.