United Airlines has made no secret of the fact that it thinks that its program is, in the words of one of its executives, “too generous.”
The revisions make sense, says Erin Raese, the president of Loyalty 360, a loyalty marketing association. “I don’t know a chief financial officer who would allow a company to give great value to a customer who is consuming a lot and paying less,” she says. “It’s not a profitable move for the organization.”
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But how far will airlines go? In travel, prices change so often that it would be difficult to use dollars spent as the sole criterion for rewarding customers, says Raese. “For example, I know the value of the reward I’ll receive when I reach a certain spending threshold with Staples,” she says. And it’s consistent, no matter how many products she buys or where the purchase is made. “But can you tell me definitively what an airline mile is worth in dollars? Probably not.”
For that reason, experts predict that a hybrid model, in which loyalty is measured through a combination of miles flown and dollars spent, will be used. Such a program would most benefit business travelers who fly frequently; these are the so-called “high-value” passengers whom airlines like Delta want to recognize as elite.
But changes like this have a way of making other air travelers rethink their loyalty. Kim-Marie Evans, a Delta Silver Medallion frequent flier, says that this is just the latest in a string of disappointments from the airline. It recently took away her free checked bags benefit and her lounge privileges. “Even though I log a ridiculous amount of miles with Delta, I feel completely unvalued,” she says.
Other travelers, who won’t have a problem qualifying for elite status under the new program, don’t have any trouble with the changes. Bill Doran, a consultant based in Greensboro, N.C., who has lifetime Gold Medallion status, says that Delta will continue to get his business because it offers reasonable fares and generous upgrades, which are useful on long-haul flights. But on balance, he acknowledges, the updates “benefit Delta more than they do the customer.”
As painful as these changes are, they make sense. Air travelers who may be tempted to give their loyalty to an airline like Delta now won’t cling to an empty promise that they can reach elite status any other way than by spending their way there. Some will refuse to participate and will instead purchase a ticket that makes sense for them, and not for their loyalty program.
Also, airlines will no longer find themselves in the awkward position of having to reward customers who don’t deserve it. That includes travelers who exploit loopholes in loyalty programs by engaging in end-of-year mileage “runs” designed to rack up enough miles for elite status. Those customers contribute little if any real value to the airline and consume perks that probably weren’t intended for them.
One by one, airlines seem to be restoring a little reason to their rewards programs. What took them so long?
E-mail Christopher Elliott at chris@elliott.org.
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