honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Sunday, June 4, 2006

Frequent fliers feel less loyal to airlines

By DAN REED
USA Today

Sue Reiss used to rack up 150,000 miles a year on United Airlines. Then she got fed up, unable to turn frequent-flier mileage credits into free travel.

"Their loyalty to me left some time ago," says the sales manager from Marathon, Fla. "I've simply reciprocated by flying whoever is cheapest."

The airline industry's frequent-flier programs, introduced 25 years ago this month, seem to be under attack as never before. Reiss and a fast-growing number of other critics — consumers and experts alike — say the programs are becoming more trouble than they're worth to travelers and have outlived their appeal.

An analysis by USA Today and Back Aviation Solutions shows the percentage of domestic trips that U.S. airlines have been giving away free has been declining gradually — 6 percent in the final quarter of 2005, versus a recent high of 8 percent in the April-June period of 2002. Further, on a worldwide basis, mileage credits have been building up at faster clip than has free travel.

Nonetheless, airlines and some recent outside studies suggest frequent-flier programs are giving away plenty of free travel, attracting hordes of new members and keeping old ones reasonably satisfied.

Regardless of who's correct about the value of frequent-flier miles and the current state of brand loyalty, an assessment of the airlines' programs at the quarter-century mark shows two clear trends: The programs have drifted from their original purpose of promoting loyalty and instead have become important cash generators. Many travelers have taken the cue and are becoming less loyal, shopping for the lowest fare or joining multiple plans.

The world's 180 million frequent-flier members — many hold memberships in multiple programs — are earning miles faster than ever. Their accounts are brimming with 14.2 trillion mileage points, up from 6.6 trillion at the end of 2000, estimates Randy Petersen, publisher of InsideFlyer magazine and WebFlyer.com. Frequent fliers earned 2.7 trillion credits in 2005 alone.

Growth is fueled by the mushrooming tie-ins between airlines and partner companies, which range from credit card issuers and mortgage companies to flower shops and grocers. Last year, about 54 percent of all frequent-flier miles were earned "outside" an airplane, says Petersen, an expert who advises both travelers and the airlines.

Globally, carriers are expected to give away about 25 million trips this year, up from about 22 million in 2000.

Petersen says membership in the programs has been growing at about 13 percent a year. This year, more than 21 million people — 57,500 people a day — will join at least one program.

Meanwhile, airlines are jamming more paying customers into their planes, making it more difficult to cash in the miles for the two favored travel perks — free trips and seating upgrades. U.S. airlines are pushing as never before to fill seats with paying passengers. Today they sell more than 80 percent of them — up from a historic norm of about 60 percent.

Airlines no longer treat a returning customer as anything special. Many airlines, for example, will sell a premium seat for a flat charge at the airport counter to a first-time customer rather than holding it back to upgrade a loyal customer.

Often, when a free trip or upgrade is available, members have to pony up double the number of miles they expected to spend to secure it. In some cases, getting free travel may involve a fee. Several carriers now charge to book award travel over the phone rather than on the Web, and some have introduced fees for booking award travel fewer than 14 days in advance.

Henry Harteveldt, an analyst at Forrester Research, says only 26 percent of North Americans who buy their travel online — and most of them do — profess loyalty to one carrier. Harteveldt says that frequent-flier programs have become "golden handcuffs" in which "elite status becomes a disincentive to change rather than an incentive to stay."

Frequent-flier Karen English, a clinical consultant from Jacksonville, complains that Delta Air Lines is watering-down her Platinum Medallion status in its SkyMiles program.

Two years ago, to equalize its program's award levels with those of its new domestic marketing partners, Northwest and Continental, Delta lowered the mileage requirement for Platinum status to 75,000 miles a year, from 100,000 miles. But that created more crowded airport clubs and more competition for seat upgrades.

To thin those crowds, Delta in January plans to eliminate free club memberships for Platinum-level frequent fliers. That upsets English, who for years had been flying more than 100,000 miles and earning her free club membership. She faces the prospect of paying $125 next year or cashing 40,000 miles. Her fee would double in 2008.

The airline's most loyal customers are "being punished for Delta's sorry attempt to attract more business travelers," she says.

Not all frequent fliers are angry or dissatisfied. About 280 million free trips have been awarded over the past 25 years. And an unscientific survey of frequent fliers by USA Today generated slightly more responses of a positive nature than critical responses.

"I'm very satisfied with OnePass," said Chris Meleg of Houston, a project manager at Sysco who flies more than 75,000 miles a year on Continental.

Kurt Stache, president of American's AAdvantage program, says "90 percent of the time people get the destination city they originally intended to book," and more than 70 percent of customers "get roughly the flight times originally requested."

Studies done last year by both Consumer Reports and Petersen's WebFlyer.com substantiate Stache's claim that most frequent fliers get the flight times and destinations they want.

• • •

• • •