Thursday, July 30, 2009

Expanding Frequent Flyer Benefits

For decades, airlines have rewarded frequent flyers with perks based on how much they travel each year. The travelers in turn have given most or all of their business to the carriers with which they were entitled to the highest levels of perks.

Now, airlines shrinking to keep their planes full in the face of a recession-driven decline in travel have a new challenge: how to retain those valuable frequent flyers.

Fewer, fuller flights mean fewer opportunities for to upgrade or book free tickets, driving down the value of their miles. Cuts in staffing mean fewer people to take care of these travelers when they need to rebook flights. And, of course, service itself often takes a hit when employees experience pay or staffing cuts.

The key is to find ways to reward the most valuable frequent flyers, those who hold elite status in an airline's program, and especially those with status in the highest tier ranking. Here are a few changes already underway:
  • Delta is unveiling a new top level in its SkyMiles program (Diamond), and will now offer "rollover" qualifying miles for those who fly more than the number of miles needed to qualify.

  • United is eliminating fees previously charged for award tickets booked within 21 days of travel.

Of course, airlines need to make money, so any cut in fees or expansion of benefits to top-level elites will be felt by everyone else--and especially by the "ordinary" (non-elite) passengers.

But as United spokesperson Robin Urbanski put it, "Significant revenue comes from Mileage Plus members, so in order to continue earning their business and grow it, we are making our program more beneficial. Making it easier to use their miles will give us more repeat business."

In other words, reward the people who care. The rest will just buy the cheapest fare no matter what you do.

No comments: