Airline loyalty programs are incredibly profitable enterprises for airlines, and they’ve evolved a lot over the past decade. Beyond the actual program changes as such, I can’t help but briefly reflect on the frequency with which changes are made, and how that impacts travelers’ perception and understanding of these programs.
Continue reading: Constant Loyalty Program Changes Erode Loyalty
Share your questions, experiences, and thoughts below.
It's very trendy to say that airlines dont make money flying passengers, but that's not true. I know Gary Leff has shown something that purported to demonstrate that, which is where you probably encountered this notion, but it's simply not true and based on a flawed reading of the accounting. Also, even where it looks like it's possible, the vast majority of the revenues coming into an airline are from the actual flying of the passengers. While the revenue coming from these programs is important, it's simply icing on the cake that wouldnt even be coming in if not for the passenger revenue, which is the majority in an airline. I've worked in profitability analysis for a number of airlines domestically and abroad and we all think it's funny when these bloggers trot out these tired tropes.
That said, I fully agree with you that these programs are getting too complex and removed from a member's experience. They're distracting and people are getting fed up.
It’s been pretty clear for years that airlines only pretend care about flyers. They’re in bed with banks and “consultants”. It’s easy to do when the industry is essentially an oligopoly, at least in the States. Given current demand I doubt much changes.
I started off thinking I agree... but thinking about it, I disagree. If programs are constantly changing, people expect them to continue to change. People either know the change "for the benefit of their customers" is BS and is actually code for a devaluation so already expect erosion i.e. if their travel habits on that airline were gonna change, they'd already have changed. Or, alternatively, they are/were not paying much attention to the intricacies of the program and any changes made to it, and a further change isn't going to change their travel habits. I think there are only a few on the margins who move from the second scenario to the first and it's only those people who may actually change their loyalty.
Ben, the changes to loyalty programs and the moving target on identifying value spots is one of the big reasons this blog is so popular. This is good for business for you! We all come here for years on years for you to tell us what product to fly, what lounge to go to and what credit card strategy to follow. I’ve been a big volume traveler for 20 years, I know a lot, but I depend on you to also help me. And you do! So, Benjamin, the marathon continues! Game on!
I think these changes are a result of AA tweaking the LP program 1 year after analyizing customer trends. Eliminating the 30 segments likely the result of some big spenders on long haul flights not getting enough segments for the rewards. Raising the rewards level to 250K, out of sync with EXP 200K - likely was to keep EXP at 200K. But EXP at 200K doesn't get you much but priority - you already earned Emerald with Plat Pro.
Dynamic rewards were already there. I don't really see this as a big change - just a tweak.
At the end, what was suposed to be a "loyalty" program ended in a "profit" program where other variables are much more important to the airlines than the proper loyal costumer....
We can fairly understant, what is just unfair with the travellers are where the mileage system ended, with unfair and absurdly high miles per ticket where it is trully impossible to obtain a "free" mileage ticket just by flying.
Best know quote, "the best mile is the one spent! Do not acumulate..."
I don't think the AAdvantage program changed very much. The vast majority off members (unlike us!) are probably not engaged in the details of the Choice Rewards (or whatever they're called this week) so the changes to elite levels were (1) Gold from 30k to 40k and (2) greatly reduced earnings on basic economy.
Ben,
I think it is pretty clear that you are in the very top echelon of airline customers that understand not only the programs in which you have loyalty but also the entire industry even if your loyalty is still driven by factors such as where you live and how much service a carrier offers which are major determinants for most airline purchases.
Airlines are adapting to a very changed economic reality post-covid including that business travel as it once existed will be a smaller part of airline revenue than pre-covid. AA's execs have repeatedly noted that they are seeing much more "blended travel" with it harder to distinguish between leisure and business travel. Presumably that also means that many customers make more of their own travel decisions and get reimbursed for only parts of that travel.
Loyalty programs are huge sources of revenue esp. for the big 3 - and they, like any other business will lean on their strengths during the recovery. People are signing up for new airline related credit cards in record numbers. Whether it makes good economic sense for even semi-loyal passengers or not, they are connecting their loyalty to credit card spend as much if not more than travel - which is a departure both from pre-covid and also the way fully reimbursed business travelers work.
Hopefully the changes start to die down as airline revenue recovers and the air travel patterns become more "standardized"
I would extend this argument beyond the airlines to credit cards.
When premium cards raise the annual fee each year with ever changing travel rebates, discounts on whatever brand is offering the card issuer a promotion, etc. its hard to build loyalty to Amex /Chase/Citi/CapitalOne. Junkies like myself and many of your readers will do the math and often determine there is enough value to squeeze out to justify the fee, but only after investing a lot of time. I'm sure Amex saves a fortune in the breakage of people not using their flight credits because theyre harder to use than say the Sapphire's travel credit, but I dont think they're helping build loyalty.
The title of the email that went out yesterday announcing the changes was "Loyalty Point Rewards – a more rewarding AAdvantage® experience." Based on my typical flying habits, the changes make it far less rewarding, and I suspect the same is true for many others. I wonder about the internal conversations preceding such emails, whether the authors actually know they are telling a baldface lie or whether they have so little understanding of their own system that they have convinced themselves it's true. I could not live with myself if I had a job that required a constant disregard for the truth such as one finds with airline marketing.
Years ago, I was loyal to Northwest and its partners, but with its acquisition by Delta, following by the rapid deterioriation of both loyalty earning and redemptions (always marketed as wonderful improvements), I cut ties and moved to AA and its Oneworld partners becaue it was more predictable and a better value proposition. However, because of all the changes in the past couple of years, in 2023 I will become a free agent permanently, especially for premium cabin long-haul flights.
So, in sum, yes these constant changes have eroded my loyalty, now twice with 2 different systems over the past 15-20 years.
Like you, I have noticed that quite a few AA "frequent flyers" know little or nothing about Loyalty Points and how that relates to status. And quite a few are going to be surprised on March 1st.
Wait until the recession next year when bookings fall off a cliff.
They will be back in earnest.
Delta revealed everything you need to know in their recent lounge access changes. I am a Diamond medallion and have a Delta Reserve AmEx. The email I received announcing the changes had the correct header showing my status but the first line addressed me as a “valued Delta SkyMiles Reserve member”. They care more about the $550 I spend on an annual fee than the $15000 I spend on airfare. Same could be said to UA and AA these days.
Completely agree. As someone who follows closely, even I'm confused by the constant stream of changes. When I talk to others who have high status tiers, they have no clue how the programs work any more. I don't even think the agents do at this point.
Wouldn't it be "rewarding" if American Airlines acknowledged our backlash, and came up with a loyalty program as THE trendsetter and become the "Must Have" among us frequent flyers? I'd shout it from the clear blue skies that I'm an American AAdvantage member.
Ben, the average person's knowledge and understanding of any subject is (shockingly) limited. Parallel to your experience with the two persons seated in front of you on the flight, I have heard people talking about a range of subjects (that might be categorized as general knowledge) and have been astonished. Imagine a graduate of an Ivy League school not knowing who Plato was but remembers hearing the name. This sad state of affairs even extends to people who *should* know a given topic . . . because it's their job.
I'm not saying it's good, but one easy explanation for this dynamic is -- airlines employ a whole team of people whose job it is to manage the loyalty program, and those people can feel like they are doing more, have more to tell their next employer that they were responsible for, etc if the program is constantly changing than if they are just sitting there "watching" it. I'm not sure you can change that, other than to notice that back in the day when the airlines didn't have any money, the programs changed less, perhaps because they didn't think it was worth paying quite so many people to be responsible for the programs back then.
Randy, you are correct. Since the implementation of the current Loyalty Points system, I have had several conversations with the executive liaison team at AA about the adverse consequences of (among other things) the segment requirement. This was a blind spot but, upon enlightenment, they clearly understood that a change was needed. From a competitive standpoint, I've suggested they consider Delta's (and Flying Blue) rollover MQM feature for application to Loyalty Points. They are considering it. Don't be surprised if we see this in the next year or two. Lastly, on my next call, I will suggest they clarify how the elimination of Saver award inventory will affect partner airline redemptions on AA.
Agreed. Frequent/loyalty programs is absolutely a "game" that all readers choose to play. Many more do not and are often leaving money on the table but objectively saving time by not engaging in the minutiae of these programs. Ben's business will thrive because of it not in spite of it.
It's not unlike (choosing examples from each side) why a flat income tax will never ahem fly...nor will a single payer (e.g., Medicare for all) healthcare system. While both would eliminated BILLIONS in administration or "friction" there are far too many people who benefit from said friction. In the "loyalty" game we are the ones benefitting from the friction. We find the new loopholes/pockets of excess value, the companies then close them. Rinse, repeat.
Someone mentioned changes with credit cards as well. They ARE a moving target. Banks are in an ongoing competition among themselves for credit card customers. It's like a game of chess. Move, counter-move, move, counter-move. Whether it is the banks or the airlines, as Tim Dunn stated, it is the response of a company to an ever-changing terrain of market forces and customer behavior.
It might be easy to think that. But, it is more likely to be a matter of tweaking. Consider alternatives, implement one, see the resulting data points, adjust, and repeat. (It's called systems management.) Remember that AA just eliminated its 40+ year old AirPass program. Given limited resources, AA (and other companies) continually review each business segment's value-add. If it's below the "line," it's cut. Continually reviewing the loyalty program is no different.
The changes are due to the gradual shift towards massive changes in the underlying earn/burn structure of loyalty programs - particularly airlines.
The initial concept of earnings based on miles flow was complete misaligned to the concept of loyalty. The same goes for using miles based on fixed charts. Both created arbitrage opportunities for the customer or savvy users to gain outsized value out of the programs (i.e. most everyone on this blog). Airlines in particular a doing a gradual migration towards revenue based earnings and usage, while also incorporating the credit card spend into the equation. The alienation of high ranking members could be too much to do all at once, but gradual shifts over a 4-6 year horizon will numb the impact and the result will be 'well more changes but i'm okay for now'.
The ones the boo the changes towards fixed earning and redemption are simply upset at the removal of the arbitrage that previously existed based on an initially flawed system. You were able to gain outsized benefit and now it's back to a fixed rate... oh darn. As we look at the ability to earn miles in the future having a 1 cent cost and earn per dollar spent on a card or spent with the airline is logical. It creates a fixed cost for the airlines that is known - 1 percent mark-up for loyalty program + overhead. It ensures that loyalty is rewarded to those that drive revenue to the company vs. those that take advantage of the previous system (e.g., what's more valuable to AA, a person that spends $50,000 a year on a co-branded card or someone who flies from Dallas to Europe 4x a year on $600 economy fares?
The gradual shift will continue for some years until the system is fully changed. The only question that is still out there is who will be rewarded with the highest status in the future, and what will that tiering look like? AA is testing the waters with points and will evolve it. UA is getting there. Delta is employing a wait and see approach.
The most comical yet sad thing is that when these loyalty programs make rubbish changes, they announce the changes as if they are wonderful and beneficial to loyalty members. It's shite advertised as filet mignon.
The MBA types who create these "changes" must view customers as little more than data points. Loyalty programs are now "who can get the better of whom" programs. The airlines benefit when the lemmings do what they can to accumulate points/miles/status and the "schemer types" benefit when they can "score" front of the cabin seats cheap. It is all transactional not relationship based ... much like the bulk of Western society ... sadly.
The biggest mistake we all made was thinking that loyalty programs were created and maintained for us as consumers. They were created to generate revenue for the company. And that's exactly what is being proven day after day and year after year. Get your head out of the sand.
Whoa whoa whoa. STOP STOP!
You can’t talk actual business sense on this blog! It’s a gossip blog! Please stop!
But real talk, I don’t understand how Lucky can consistently avoid acknowledging this reality. Maybe he’s afraid to piss off his credit card overlords, which if so fair enough I suppose. But at least stop blaming the airlines at every single turn.
Meh, they JUST came off of the greatest (aviation-related) recession of all time, and they're doing this.....
Or they have effectively sold their loyalty programs to the cc companies who are way more experienced at understanding and implementing rules that actually make money.
What are you talking about?
"The States" is consistent with all the major competitive market landscapes, with three global carrier systems, 3 coastal regionals, one nationwide LLC, and 2 natonwide ULCCs, several regionals.
EU - 3 global systems, two "nation"wide ULCCs, several regionals, vacation charters.
PRC - 3 global systems (all co-owned), multiple regionals.
etc etc. That your favorite livery may be gone, doesn't change that.
Airline loyalty programs have moved away from people that fly the airline on a very regular basis to people that charge like crazy on an airline co-branded credit card. US domestic airlines are becoming credit mills that prospect for applicants by flying them from Point A to Point B.
Now if this projected harsh recession comes about airlines are going to get the double whammy. Fewer people to fill (cheap) seats (the wealthy will just do fine) and far fewer people being approved for a credit card. It will be weeks, if not days, before airline executives show up on the steps of the White House asking for a handout.
And guess what, at 1 cent per point, airline and hotel cards become useless outside of a free checked bag and slightly better boarding position. Airlines are hoping people are too stupid to notice that cb cards between 2-5% are better.
YES!!! So many changes. And frankly so many things that are STILL unclear in THIS YEAR. Many of AA's partners still aren't clear on what actually earns Loyalty Points and what doesn't. I get "surprised" every 30-45 days on ehat actually posts to my account and how it posts. It's insane.
As a FF for 20 years the airline loyalty programs are become BS for us. Credit cards already have their own awards programs. FF programs should be rewarding to flyers not buyers. I was loyal to Delta 20 years and when they changed SkyMiles I switched to Alaska. They award flyers - for now! Maybe airlines will hear us FF when we stop flying.
Ben - I'll tweak what you said about airlines wanting customers to understand their product. Airlines' worst nightmare is customers understanding their product. They want you to **think** you understand the product, or think you're getting a good deal. If people understood the product, Basic Economy would have never taken off, and that's just one example.
Loyalty programs have always been a shell game. Loyalty programs are driven by the corporate bottom line, and that corporate bottom line is partly driven - or driven back - by customer engagement. If you don't believe me, look at Delta's claim about nobody being an elite when everyone is an elite and compare that with their track of record toward actual elite flyers. Or Bonvoy watering down benefits because there are simply too many members (among other reasons they are watering down benefits). The list goes on...
Everyone is angry now because AA flipped the script and those who saw value in AA status and redemptions are going to have to work harder to get the same value. Or work harder for much less value. And that's upset the loyalty apple cart and everyone is back to square one.
Ultimately, the best tip I can offer anyone comes from a Balkan proverb my grandmother taught me at an early age: "The kind of money you have will dictate the service you receive." We're rapidly approaching that point in the loyalty world with 1cpp across the board. That is, if we are going to ever get anything we actually want beyond a standard room and a middle coach seat, we're going to have to pay for it.
Is the March 1st AA program year start date anything other than arbitrary? Why not January 1st? Maybe I’m missing something significant but it’s just another confusing thing among many.
So called loyalty programs are not about loyalty but about how much money one spends with a given airline. They're not really frequent flier programs, they're frequent spender programs. They don't actually build loyalty. Indeed, i just read about how people are excited to be top level in loyalty programs of the 3 legacy carriers in the US. It seems like this move away from tying status to actual miles flown has resulted in a loss of money. If a passenger spends $50K a year on three different carriers, how is this better then them flying $150K on one? I mean it's better for the other 2 carriers, but I don't this that's the point of a loyalty program.
Other than Alaska Airlines frequent flyer program and specifically their elite program I have no idea how DL, AA, and UAs program even works. I was 1K for many years on UA. Since I left UA about 8 years ago the program is drastically different..I have no clue what has to be done to achieve and maintain status. One thing I won't do is be forced to consider price in addition to how much I fly. Its one of the main reasons I didn't go back to UA. On Alaska im gold 75k (soon to be 100k). I know I have to fly 90 segments or 75K miles a year. Thats it. I then fly 100 percent of my business or pretty close to that on Alaska (although I do fly AA now a bit more due to being a member of one world). Even though I've flown AA this year more than I have in the past two decades. I have absolutely no clue how AAs current program works. All I know is I enter my Alaska FF number on the reservation. I tell you what, I've gone from maintaining loyalty on just United including flying a handful of mileage runs at the end of the year to maintain status to not flying UA at all because of what they have done to their loyalty program especially their elite program. The question is do current loyalty programs hurt loyalty, maintain loyalty, or build loyalty on just one brand? As for me it hurt my loyalty to UA as I defected to Alaska and moved all my business to their brand. I still do those end of the year mileage runs that I normally wouldn't take to keep my status. That is extra revenue for Alaska.
You might be rounding but if you are a Diamond and spend $15K per year that's ($15,000/125,000 MQM) $0.12 per mile flown... Certainly not the most profitable individual for the airline yet reaping the rewards of a top flier.
With the co-branded cards it creates a renewable revenue stream for very little. Everyone is talking about the upcoming recession like it's going to be devastating to the airlines. It's not. The demand for individual travel is still high, the uptake on first class monetization is also high. On top of that you now have the recurring revenue from cards. This is very similar to the Costco model. Make minimal profit on actually selling goods and reap the profit in terms of memberships. If the airlines can flex their fleet and costs similar to a recession and rely on the card revenue as profit then yes, being a Reserve card holder is more important than flying.
The changes still inspire loyalty. I may only fly 3-5 times a year, but if my primary credit card is AA, I’ll look at AA flights first. There are a lot more customers like me than people flying 30 segments, and fewer extremely frequent flyers all the time. Cards like Venture X give you great travel benefits without the travel requirements. If AA doesn’t change, Cap1 will kill their business.
Again, it is a myth that Airlines make most of their money off of loyalty programs/credit cards. What an enormous investment in aircraft, employees, rents, ground equipment, insurance & much more. All that just to make enough money from 20% or less of their customers. *Please beware of this & other strange aviation myths some of these authors believe**
Totally agreed. The race to 1cpp is great for balance sheets, terrible for loyalty-driven behaviors.
Once everyone has arrived at that fabled place, they will have to start competing on price / service, or continue the M&A spree so you don't have a choice.
Yeah, but goalposts matter with driving behavior. If you always move them, people will probably pay less attention unless there are clear benefits.
As to be benefits of AA gold, or nearly any tier these days... those are fading rapidly.
Excellent point.
Original, too. Haven't heard about this one the blogs or forums. But certainly can relate.
It won't be too long before Alaska goes the way of the US big three. They've already announced upcoming changes to their award charts and how partner awards will be priced. With their membership in Oneworld and codesharing with AA, the number of elites and benefits they dole out is already exponentially larger. They've typically lagged behind the Big 3 in implementing the most unpopular changes...but they have implemented them sooner or later, and, I suspect, the same will happen to their elite benefits.
Where do you live? If you live in Seattle then it really only makes sense to do Alaska. Elsewhere, I'm not so sure.
The changes being updated annually are the opposite of the definition of loyalty: “A feeling of support or allegiance.” Loyalty is a two way street but they when they change the rules after you have been working towards something, well, it just makes you want to only look for travel “deals” instead of using a single brand.
I was about to make the point that BobbyJ did a few comments below. Ben is naive when he states that "I tend to think that if you have a product you’re trying to sell to someone, the most important thing is to make sure that they understand what they’re “buying.”
No Ben. lots of industries don't want you to know what you are buying. Classic example is the insurance business:-(
The problem is that loyalty programs have become profit centers. What counts is no longer to maximize loyalty for the main product, but the profit center result of the program itself.
Totally agree that the more frequently that loyalty programs are changed the more it erodes their members’ loyalty. I’ve seriously considered dumping my credit cards attached to both American And Delta airlines because all they seem to want from me is to spend money using their cards. Not what I signed up for.
But that seems to be the issue: if airlines don't make much money flying passengers they don't care about losing FF
Totally agree with Ben's comments. Also, airline loyalty programs are a joke when you can gain elite status without even flying. Add in the never ending devaluations and I am seriously considering throwing in the towel and getting a simple cash back credit card.
Tough to complain about airlines not being loyal to customers, when the same travelers on the website often churn credit cards for the offers.
Airlines traditionally lose money or make in the single digit profit margins. I understand their desire to capture as much money as possible, since airlines took on a lot of debt during Covid and all are junk rated.
You can say that again. I have completely given up on frequent flyer programs. I have retained but one airline miles credit card, a Citi Miles Up (no annual fee), solely for the purpose of keeping my AA miles alive.
@JP Best comment I've read in a long time. Very well explained and simplifies why those of us who actually fly are pretty much expendable any more.
I got the email from american yesterday. I am platinum pro and nothing is changing but the name
I honestly believe those in charge don't actually know their own products. Between revolving door execs and outsourcing with people who never leave their homes they probably know the products les than we do. I had to explain to a delta reserve card customer support the difference between domestic Delta One & Delta domestic first class. If those in charge are not using their own products how would they ever understand the pain points.
It's not going to happen. Revenge travel hasn't slow down. Thanksgiving flight reservations matches pre pandemic even though airfares are high right now with oil prices up. Short of mass layoffs in 2023, what layoffs there are so far is miniscule to have any effect on the job market. Job market is still too high to blunt revenge travel.
I suspect it's so members don't end up with half their holiday travel in one year and half in another. It also allows AA to have the changeover when normal office staffing is back. (Some airlines use the month you joined the program - QF does - others the month you achieved status, I'm not sure why they have different dates, but that's where we are.)
Agree and not to worry about airline programs. Your last sentence when you mentioned cash back credit cards brings to focus my plan. I took out the Amex business checking account last week with the 60K bonus. I already hold the Platinum business card. So that gives me the ability to cash-in a 1 cent per point. Considering I earn at average 2.5 cents/$, I figure my backup to using points (miles) is in good shape. At some point, time to cash out. Chase with the right card is there too. Screw airline miles as either fly'em or loss them.
Changes potentially erode loyalty, but some won't care, for example if only one airline makes practical sense for them, and some big spenders won't notice. I have an AA account that's bounced along below status level since I lived in the States decades ago.
Other things also erode loyalty. My loyalty (to QF) has been tested more by prices, falling service standards and difficulty in finding award redemptions (beyond short domestic flights). I've already status matched to VA, and I'll mainly be booking based on price. I'll join enough FF programs to be able to park any miles my trips earn, and look to whatever means available for the perks I value. That will likely include enough OW (not necessarily QF) activity to retain QF Gold (OW Sapphire) for lounge access.
"Loyalty programs are wildly profitable for airlines, and you have a lot of people working there “doing things.” People can always some up with metrics by which they can show that what they’re doing is successful in some ways."
This statement is right on the mark! They have (too many) people populating these deparments, competing with each other to come up with the next bright idea to win favor with upper management and hopefullly get them a raise or promotion. In the meanwhile its members get left behind and become disengaged.
I have a degree in astrophysics. Honestly, my eyes glaze over when I read about some special program trick allowed them to score some business class seat. That's what all these changes are like as well. When will they stop playing these tricks? Probably when I read a story about what's the best economy class for the value, instead of some business class seat review on an international ticket I will never spend enough for on any credit card.
"Constant Loyalty Program Changes Erode Loyalty": I could not agree more and I have in the "game" since the beginning.
This year I switched all of my alliance earning loyalty programs from US carriers (United, Delta, American) to foreign carriers (Copa, Aeromexico, Iberia). Loyalty and "return on miles earned" goes a lot further with non-US carriers these days, and you still get benefits on the US partners in many cases.
Not to mention miles inflation! US airlines' perpetually falling redemption valuations make Venezuelan bolívares look like a stable investment!
You completely misunderstood. They care a lot about your 15k. But you are letting Delta take you for granted by giving them an extra $550. Heck if you've spend $25k, I'm sure you will still be a sucker and pay even more, like $750, for the Reserve card.
@JP
You sound just like Timm Dunn. Some broken logic and explanation but twist it so it sounds knowledgeable.
Costco isn't even a close comparison for your logic.
People are considering Costco membership dues as pure profit with no cost.
Not true at all. Just accounting tricks.
A normal member cost $60 and executive is $120 with 2% cash back.
Simple math shows that if you shop more than $3000 you will earn back your executive premium. Does that cost offset member fees, no. Even if the whole cashback cost can be traced to people spending the extra fee for executive.
But as close as to your misleading comparison, annual fee isn't the main profit source. It's the interchange fees. As long as you charge $10M, Amex could care less about your annual fee (but they charge you anyway, lol)
Same with Costco, as long as you're spending $100k, they could care less about your $2,000 executive cash back, that's 33x more than your gold star member fee. (but they charge you anyway, lol)
The truth is loyalty programs are becoming irrelevant. I used to get upgrades, but the smaller premium cabins make that infrequent. I used to get free flights quite often, but with Covid, airlines raised their miles needed for a flight. What would have gotten first class to Europe, now gets a ticket to Dallas coach. The new American program racks up points and status, but they have been rewards have been inflated to worthlessness. So I’m not loyal now, and just fly other airlines, paying for schedule and seating as I need.
I honestly believe if those in customer support are also in charge then we might as well let a chat bot run the airline or the country.
Before we send billions in weapons and aid to fight a proxy war maybe we should ask the same question, If those in charge are not living like their own people how would they ever understand the pain points.
As a business traveler, who flies over 130 flights per year (95% of those on American), I’m disgusted with the newest rules that state that no flights are required at all to become Executive Platinum. You’re absolutely correct, my loyalty is now gone, and I’ll fly whatever airline can get me to my destination the quickest. AA should be ashamed of the way they’re treating the dedicated frequent fliers!
For a change, I completely agree with Ben, and more... I think loyalty programs are heading to "a ship wrack" because the airlines keep raising the mileage requirements for premium cabins to stratospheric, ridiculously high levels (around 350K to 400K for one way award tickets to Europe). I wonder who could possible afford paying millions of miles for a family vacations in Europe (unless of course, if one would be willing to send some family to members to economy cabin). Unless you fly non-stop to Asia or Australia, you can't possibly accumulate anywhere close to those numbers. It's all happening when the banks, which provide a huge balk of profits to the airline--as Ben has correctly pointed out-- keep tightening their rules for getting bonus miles, thus removing many incentives to getting their credit cards. I think we're in the vicious loyalty-destructive circle, which could potentially lead ti their total surmise.
The example of self-destructive idiotic policy by AA to eliminate saver award that Ben mentioned in his post is a case in point.
You're wrong: airlines got more than $50 billions from the US government during Covid...
I wonder if Cody worked for an airline stating that "...it is a myth that Airlines make most of their money off of loyalty programs/credit cards..." It's not a "myth" but reality, as repeatedly confirmed by both the banks and the airlines themselves.
I surely hope so... and perhaps Citi and Barclays will follow the suite... I repeatedly stated that only the banks are in position to change this total lunacy created by the airlines, when they idiotically started linking the loyalty programs to the revenue parts of their operations, which I believe will lead to their self-destruction...
I've read most of the comment to this Ben's post (and they're correctly overwhelmingly negative with regard to the changes in AA loyalty program). However, I'm amazed that almost no one is talking about the elimination of Saver Award. Does everybody here has millions of miles on their accounts that the devaluation doesn't make any difference to them?!
"It creates a fixed cost for the airlines that is known"
If their main concern is explaining variation of actual v budget for the "loyalty" line in the income statement I can see why CFOs do that.
But if (as it should be) the aim is maximising profitability, then the strategy should be very different, because one should be targeting gains at those who have a choice of airline.
Ideally one should not reward anybody flying for a corporate client that has a tied arrangement except the procurement manager and people who can influence them.
One should offer reward inducements to flights on line to not be full, but not to those selling at a rate which suggests they will be full anyway.
One should reward more on routes where there is competition (which other things being equal have lower prices) than where there is no competition.
Doing it that brutally would be infeasible, but doing it on dollars spent is *further* away from ideal than on miles flown.
The same applies for hotels regarding nights rather than spend, although individual hotels are sometimes applying the last suggestion, through E.g. Rocketmiles.
Credit to https://www.headforpoints.com/2022/10/31/british-airways-move-to-avios-per-1-spent-2023/ for getting me thinking like this.
Some of the new Web Special awards are LESS than WebSaaver. The truth is, none of us know how this is going to affect value just yet. Currently, it seems like when places are popular we will pay more, but there will be places that are not busy where we will save even more. I think alot of people are sitting on Miles because of the last few years, and AA probably had an accountant involved in making the changes they did. There is a huge liability they are sitting on. Partner awards will become more and more popular since they are keeping the Award Chart.
Ben's article is on point and I hope this (including comments) is sent to AA's loyalty program decision makers. I earned my status with AA mainly by flying AA and OneWorld since I never cared about AAs credit card with earn points less than the others. But now, I can't even imagine keeping my status after 2/2023 without having to spend a ton. Elsewhere it was said, airline loyalty programs mostly reward non-flyers nowadays instead of those who actually fly. As rightly pointed by a poster here, not many flyers can afford to spend 300-400k per passenger one way and that's exactly what I find on many AA operated flights nowadays. What a shame.
As someone who came to AAdvantage with the US Airways merger in 2015, I recall when EXP took only 100,000 miles with no spend requirement and came with 8 SWUs (before PE came into use). So say that the program has changed is the understatement of the year.
With every change I feel like I've lost benefits. Even worse, they keep raising the bar, which reduces the encouragement to be "loyal" to an airline that's not loyal to me!
I fly somewhat often but not enough to earn gold status with AA next year. I typically have 3-4 domestic trips a year with AA and 1-2 international trips on Qatar to the other side of the world and back. If I credit to AAdvantage, I won't get status. So, will it make sense for me to credit to another OW program? Which one would you recommend?
Airline programs should go back to being for frequent flyers. Status by miles flown makes sense.
"Except probably 10 minutes into the discussion, it became totally apparent that neither of them actually understood the new Loyalty points system that kicked in as of 2022."
That's not a bug, but a feature.
I don't think you read the article. Lucky correctly stated that the airlines don't use those programs to secure frequent flyers but to make money through credit card affiliations.
Lucky is spot on.
Loyalty is not why airlines have these programs (it is the revenue generated through partners) so judging them as the Frequent Flyer programs of the 80s is pointless.
I was flying an airline I don't fly often last week, on a plane that had no first or business class. I would say that 75% of passengers were in the priority boarding line. As we all know, lounges are now significantly more crowded.
This demonstrates that unlike some other commentators argue - getting status *somehow* has become super easy.
I never understood why airlines based elite status on miles flown instead of spend. But now they also should know that I’m not loyal to any of them either. The miles are a scam. I just choose the cheapest fare, at the most convenient time. Flying today is just like taking a quick bus, but sometimes with free drinks and mediocre food.
I never understood why airlines based elite status on miles flown instead of spend. But now they also should know that I’m not loyal to any of them either. The miles are a scam. I just choose the cheapest fare, at the most convenient time. Flying today is just like taking a quick bus, but sometimes with free drinks and mediocre food.
Been lifetime Plat on AA, and almost that on UA, and no longer really fly either of them. At this point, all our travel is done on whoever has the lowest fare and most reasonable departure/arrival times. I no longer care about the large US network carriers and haven't in many years.
As a former addict, most people who are addicted to "loyalty" programs are either forced into the addiction by their company's travel departments deals with the larger carriers, or because they naively believe the junk they read on frequent flyer program websites (kinda like this one, and I do like this one!).
Of course the carriers "devalue" these programs. With trillions of "miles/points" on members accounts that aren't claimed, and a need to squeeze every drop of revenue from every single seat on every single flight, giving stuff away for free is just dumb. What started out as an honorable and interesting idea turned into a stupid and vapid scheme to convince people they could get free glamorous travel to Paris for buying underwear and bacon.
Joined AA Aadvantage in 1982, probably one of the first members, and it every year for the past 15 years there's hysterical headlines claiming "Devaluations coming" and idiotic posts of "we're going to sue"... uh hu, sure.
For the past 6-7 years, we've only flown Low cost carriers, both in the US and globally, and candidly, I can't tell the difference. A chair screwed into an aluminum tube at 500 MPH... they're all about the same.
Yes, I am not flying that much (certainly not since the pandemic hit) and the constant devaluations make me seriously reconsider my loyalty. What good is it to pay more for a flight to earn some miles and save for a free flight in the future, whereas I can get the savings immediate if I fly with Ryanair or another lowcost carrier. I can get a priority pass if I want lounge access or even pay per visit. Business class intra-Europe is not great seatwise so I might simply fly economy and eat in the lounge.
Very Frustrated! I've been a loyal United Customer for over 33 years. In fact as I boarded my United flight yesterday when I scanned my boarding pass the gate agent smiled and said "Happy Anniversary and Thank You for your continued loyalty to United and Mileage Plus" it was My 33rd year anniversary enrolled in MP. United use to go decades without making changes in MP not the case anymore and how quickly the airlines have forgotten about the pandemic and how no one was flying. It's sad really as loyalty use to mean something now it's short term gains for greater profits that eventually catch up to companies that think this way. Really who's contributed more to the bottom line, a one time first class passenger or someone who's been loyal and also who's been Premier to United for 32 of my 33 loyal years? Think about that United as you and all airlines push us to the limit with yearly changes. I read we would all be smart to abandon the loyalty programs and fly based in service and price. If that was the case many airlines would be in trouble.
Sadly companies are putting SHORT TERM PROFFITS OVER LING TERM GAINS. As they keep rising the bar to levels we can achieve the opposite happens, we choose to take our business elsewhere. I wonder if the bean counters thought about that...
Sadly companies are putting SHORT TERM PROFFITS OVER LING TERM GAINS. As they keep rising the bar to levels we can achieve the opposite happens, we choose to take our business elsewhere. I wonder if the bean counters thought about that...