Why There is Outrage Against Frequent Travel Loyalty Programs

A s much as I dislike the changes in policies and benefits which seem to continuously be announced from frequent travel loyalty programs in recent years, I must take a step back to get to the root of the outrage.

Let’s be honest with ourselves for a moment: many of us have been members of frequent travel loyalty programs for years. Speaking for myself, I have had my share of suites, luxury cars, fine dining experiences, complimentary upgrades to the premium class cabin aboard an airplane, access to lounges in airports and hotel properties — and even free gifts over the years — all at the expense of travel companies such as airlines, whose industry had seen days where billions of dollars were hemorrhaging every year.

I personally never let it get to me as I attempt to maintain perspective, as I am the type of person where if the only nearby parking spots are reserved for disabled people, I am thankful that I can walk far distances instead of grumble about the inconvenience of parking far away. However, I have witnessed fellow frequent fliers who were conditioned to expect their upgrades and benefits every time to the point where if one was not available, they would complain and even demand compensation — and there were times where a company was foolish enough to give them compensation.

Moreover, access to so-called “elite” benefits was cheap and easy. There were people who bragged about spending only a couple of thousand dollars to attain elite level status and enjoy perks whose value easily exceeded that spend. Caviar. Champagne. Lounge access…

…and services were often thrown in at no extra charge in order to further sweeten the deal. Spa and gym access. Limousine services. People waiting on you hand and foot.

How in the world were companies such as airlines “giving away the store” — so to speak — when they were bleeding cash left and right?

How? Simple. Anything to maintain loyalty. Keep the customer happy and spare no expense; and that customer will be loyal to you and keep bringing you business — never mind that losses instead of profits were being tallied.

Look at the long list of names in the airline graveyard: Trans World Airlines. Pan American Airways. Eastern Airlines. America West Airlines. Braniff. National. Continental. Northwest. AirTran. US Airways — soon, anyway. These airlines were either acquired or went out of business. Many of them had been through bankruptcy — some more than once, such as Continental Airlines. Each airline may have encountered different circumstances for their demise; but almost always, the outflow of cash exceeded income — and a business simply cannot operate that way year after year without consequences…

…yet frequent travelers kept right on taking advantage of their favorite airlines, hotel companies, rental car companies and other travel companies. How many of those frequent fliers actually helped their favorite airlines during those dark days?

Do not get me wrong: I was not sympathetic with companies such as airlines. They set the policies and rules by which the frequent travelers abided. They willingly gave away their business to virtually anyone who would patronize them. Many of the offers and deals which were available were simply too good to pass up…

…and yet in the United States, many of the airlines were subsidized with tax dollars whenever they truly needed a handout.

In other words: many travel companies — especially airlines — simply operated poorly; often with incompetent leadership. Times were bad. The thought of even daring to charge for a checked bag was ludicrous, as it would never catch on due to people not wanting to check their bags — even though that service was usually free of charge.

Then came the recession, which led to bankruptcies and then significant consolidation within the commercial aviation industry. Suddenly there was less capacity, fewer airlines, and an increase in demand. For the first time in years, airlines — and, to a lesser extent, lodging companies and rental car companies — finally were able to rein in the freebies and perks, little by little…

…which in turn hurt the frequent travelers, who decried the loss of benefits they had enjoyed for so many years. Significantly fewer miles and points for “free” travel. More restrictive access to lounges. Tighter control of upgrade inventory. Increasing difficulty in earning elite level status.

As frequent travelers, we are spoiled. It is as simple as that.

Suppose you are new to frequent travel; and you know nothing about the past. You still can earn free miles simply for flying as a passenger on an airplane. You still can redeem them for a ticket which is free — save for taxes, fees and any fuel surcharges. You can still earn elite level status in your preferred frequent travel loyalty program.  You might think that these programs are great, as you probably would not know any better. It is still free stuff with incentives to be — well — loyal.

Now many companies in the travel business are seeing billions of dollars in profits instead of losses. They can reduce capacity. They can charge for products and services that customers only ten years ago would scoff at even the thought of paying for them. They can cut benefits. You can complain all you like. Chances are that if you are complaining, you are not the target market of that company anyway. Do not expect your complaint to be taken seriously. Rather, expect an impersonal form letter which barely acknowledges your complaint and typically nothing more than that — if that.

I have said in the past multiple times that times will be good for the airlines and lodging companies as long as the economy is good; and when the economy falters and not as many people are traveling, there is the potential of profits decreasing — perhaps significantly. If that happens, expect some of the significant perks and benefits which were once lost to return again.

For now, however, travel companies basically have the upper hand. All you can do is either vote with your feet and your wallet — or reduce or stop traveling altogether. There really is no such thing as loyalty these days; and if there is, it is not nearly as strong as in previous years. Whether you like it or not, you are now most likely a free agent. The lodging company is not your girlfriend and the airline is not your boyfriend with whom you can have relationships. It’s over for now — and probably for a long time. Play the field. Do what works best for you…

…and if you are a veteran frequent flier, consider yourself fortunate that you traveled during the good times and the glory days for customers. Instead of being outraged, be thankful that you got to enjoy experiences in past years which you might not otherwise have been able to afford. As much as it can be “painful” to lose those benefits we had enjoyed for years, we must maintain perspective and be realistic: the fact that many travel companies were able to survive years of unsustainable business practices is amazing in and of itself — despite receiving assistance from government entities.

Time will tell as to whether or not the new policies and changes to become effective in frequent travel loyalty programs will be considered successful. Perhaps the increased exclusivity of elite level status in frequent travel loyalty programs will in turn improve the experience for the fewer people who will be able to qualify.

2015 should be an interesting year for frequent travel loyalty programs; and if enough customers reject some of those new policies and changes; expect them to either quietly return or be accompanied by an excessive amount of fanfare and marketing.

Fasten your seat belts in the event of possibly experiencing “rough air”…

  1. But the airlines MAKE money on their frequent flyer programs. They sell miles to banks, credit card companies , car rental agencies, etc. etc. If those miles no longer hold much value because of the massive downgrade in their worth, the airlines are only screwing themselves.

  2. Thanks for voicing this. For about a month I have considered just not reading Boardingarea posts because they are either credit card advertisements or selfish rants from mile burners who add nothing to the companies’ bottom lines. Further, most are so poorly written and full of grammatical errors and misspellings that one assumes these people can’t be too successful outside of the blogosphere.

  3. @Brian:

    You are quite correct; many of the bloggers are somewhat overentitled. One individual openly brags about how he maintains DL elite status mainly by CC spend. That should not beget loyalty from the company. Unlike many people who flog CC, and the many more who get tons of points through signup bonuses, I actually do a lot of actual flying. I have a few programs I use regularly, and I try to use them when possible. I also talk them up with no expectation of reward – it has worked well for me, maybe ou should try it.

    @Michael: Did you ever stop to think why programs devalue their points and miles? Perhaps it is because they have too many in circulation and that may actually represent a liability on their balance sheet. So increases in the “points cost” of awards are just like normal inflation.

  4. actually, you should list United among the airlines in the graveyard, not Continental, as Continental swallowed United, and then called itself the “new United”. But it is run by the Continental people, and with that philosophy (that’s been the problem with the merger!).

    1. Seeing that I am a member of the SkyMiles frequent flier loyalty program, a customs agent in Amsterdam during my unintentional trip around the world jokingly asked if I was a member of Northwest Airlines.

      He was joking; but he was not the first one, augias, as other people in the past have implied that Delta Air Lines is in the graveyard and not Northwest Airlines…

  5. Basically they devalue because they can. I suspect eventually the airlines will get greedy and oversupply the market and then there will be another big recession and they will be clamoring for flyers again. The one thing I would like to see is if you earn at a rate you should be given a chance to burn at that rate, or close to it. And it is actually in the programs best interest to maintain a stable currency. I will not give any loyalty to Hilton and have advised many others not to as I flat out don’t trust them not to devalue.

  6. US Airlines have survived, despite abysmal management, by being allowed to create an oligopoly at a time when the threat of competition from new startups or foreign carriers is severely reduced. FF programs were competitive tools that are no longer needed. One sees the same phenomenon at work in pricing. If there was competition, then the dramatic drop in fuel prices would have spurred lower fares. With an oligopoly, those days are gone.

    1. The government of the United States has definitely played a key role in the current state of commercial aviation, msmcmotown; and people warned that it would happen when the Department of Justice was considering each airline merger.

      While airlines have especially strict guidelines imposed by governments to which they must adhere for purposes of safety and other reasons, they also have been able to enjoy special protection and consideration of which other businesses and industries cannot — or are unable — to take advantage…

      …and the United States used to be one of the only countries in the world where there was not a clear monopoly or oligopoly in commercial aviation; although practices of oligopoly did exist. With significantly fewer airlines and difficulty of entry into commercial aviation — just look at the recent failures of airlines such as PEOPLExpress — airlines now enjoy a tighter oligopoly where they can do things now which would have been difficult to implement years ago…

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