Points Mean Prizes, But Not Everyone's Winning
Scott Mansonon 11 April, 2016 at 03:04
Scott Manson, former editor of BA’s High Life magazine, delves into the fascinating (and often secretive) world of airline loyalty programmes
Right now, somewhere in the world, someone is taking a totally unnecessary flight. The reason? Status anxiety.
This fear of dropping to a lower level on your frequent flyer plan is such that there are dozens of websites and forums filled with advice on working the system. Like video game aficionados, there’s talk of unlocking ‘secret’ levels – offering access to invite-only airside spas, staff that will stay with you from arrival to entering the aircraft or semi-mythical lounges where the vintage Krug never stops flowing.
And while these perks are strictly for travelers whose annual journeys could circle the earth several times, even those on lower tier programmes fear the loss of their benefits. Hence the phenomenon of ‘mileage runs’, which sees frequent fliers topping up their points by taking flights they don’t really need in order to remain at a certain status level.
James Kirkham, a former global CEO of social and mobile at advertising agency Leo Burnett, is someone readying himself for an imminent downgrade.
“I’ve just switched roles to oversee a UK start-up so this means no travel and no points. My status is about to drop from elite to standard any day now,” he says.
“I’ve considered squeezing in another trip or two just to maintain it – it’s a club you get used to and that you never want to leave.”
And while there will always be canny ‘travel hackers’ – such as David Phillips, who managed to convert 12,150 cups of Healthy Choice chocolate pudding into over a million Air Miles – the perks of airline flyer plans are becoming harder to attain.
In the US, changes to some airlines’ frequent flyer programs have seen them move to a spend-based model, allowing them to reward their highest spend customers. For example, Delta’s SkyMiles program is almost completely money-based. Instead of being credited for the miles they fly, SkyMiles members earn points according to the cost of their tickets. This approach has led to some customers feeling short-changed.
However, as this report by Deloitte on airline loyalty indicates, program members are far from loyal. Two thirds of respondents surveyed were open to switching to a competing loyalty program, even after achieving the highest status level.
In truth, it’s arguably more helpful to view frequent-flier programs not so much as perks but as just another aspect of the product you buy. So the more you pay, the more you get.
As David Lazarus, an LA Times writer, says in this airline loyalty article: “After all, there’s nothing strange about selling preferential treatment to bigger spenders.”
So where does the future of loyalty lie? It could be with partnerships. Hotels seem an obvious ally. Facing stiff competition from operators such as Airbnb, more hotel chains are also reconsidering their marketing strategies when it comes to loyalty programs. To give their highest value members the best benefits, it seems a natural next step to lure them to shared programs with airlines. In turn, this could coax members of other airlines’ packages to consider their shared offering.
At the very top end, where airlines compete with private aviation firms, more exotic and lavish perks could also help. The airline equivalent of the cruise ship’s ‘seat at the Captain’s table’, for example – although it’s hard to see how commercial carriers can compete with those private jets that allow passengers to pop into the flight deck. First class benefits with some operators include dedicated immigration officers, hotel-style on-board rooms with a bed, sofa and a shower and access to First Class lounges, regardless of who you’re flying with.
Imagination is the key here. To evolve their programmes, airlines will have to invest in more innovative, money-can’t-buy benefits and smart partnerships for passengers to keep faith with going for gold.
For those who get it right, the future of airline loyalty could evolve from being predominantly about customer retention to customer acquisition. Whatever the outcome though, you can guarantee that someone, somewhere will be figuring out the fastest route to the top.