The Navigator: Are loyalty programs worth it?
Wednesday, September 8, 2010; 9:51 AM
Quitting a frequent-flier program looks easy: You cut up your card and donate the miles to charity. And that's it.
But after a recent column in which I questioned the value of loyalty programs, I realized that there's a little more to it. Living miles-free in a world that's polluted with points is exceedingly difficult - and for some, impossible.
Vera Finberg decided to toss her United Airlines miles into the recycling bin after a recent trip to Australia and New Zealand. The carrier made her buy more miles to redeem an award ticket and denied her priority wait-listing benefits because of a technicality, she says.
"We canceled our United credit card after that," she told me. "I go to Boston every six weeks and will travel to L.A. this summer. I may even go to Europe in the fall. I won't fly on United for any of these trips. JetBlue gets my vote for trips to Boston, and I'm trying Virgin America to L.A. So long, United!"
Problem is, people like Finberg, a retiree who lives in Fairfax, will now be tempted to join JetBlue's or Virgin's loyalty programs, which may work better for her but in all likelihood will just work better for the company offering the incentives.
It's easy to see why people might be having doubts about their loyalty. Take the issue of seat availability. A recent survey found that from June to October, 68 percent of the United award seats requested were available. United's numbers are so-so in comparison with other carriers. Southwest Airlines ranked highest, with a 99 percent availability rate for the same period, while US Airways trailed the pack with just 10 percent. (Neither Virgin America nor JetBlue was surveyed.)
There's also the value of points. Airline miles have been assessed as being worth anywhere from one-tenth of a cent to no more than two cents a mile, and not by an admitted skeptic like me, but by the companies themselves.
If airlines are calling their own loyalty points worthless and acting as if they are worthless, is it any wonder that customers are doing the same?
Alice Watchke, a teacher from Minneapolis, dropped her American Express credit card, which allowed her to earn Delta Air Lines miles. She says that leaving was easy; the card made promises it couldn't keep.
"When we enrolled, the ads all said, 'Round trip flights for 20,000 miles,'" she recalls. So she began collecting miles; she amassed 45,000 and her husband earned 62,000. When the time came to cash them in, she was told that she'd either have to pay a $150 renewal fee plus 60,000 miles each for the desired tickets, or buy the miles for an additional $400. Instead, she canceled her card.
There's no telling how many disgruntled frequent fliers and guests such as Watchke are out there. Travel companies do not disclose loyalty program membership numbers, nor do they reveal the number of miles members have earned, but by some estimates, there are several trillion unredeemed miles floating around out there. If you do the math, it's obvious that travelers are on the losing end of that equation.
Air travelers aren't the only ones terminating their loyalty program memberships. Anita Lewallen, a homemaker from Plymouth, Mich., threw her Hilton HHonors membership card in the trash after the hotel chain recently revised its redemption levels. But not before she burned up all her points.