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Frequent Buyers and Other Things that Go Bump in the Flight

2014MileCardsMileSatisfactionSurveyRecent research shows that only 54 percent of frequent flyers are satisfied with their carrier’s loyalty program, and I have a firsthand hunch why – the frequent buyers.

I’ve seen them myself. For years I believed that my loyalty earned me a cushy seat in my carrier’s private airport lounge, until I recently heard others nearby say how great it was that the airline let them buy lounge access – not earn it – so they can await their next flight away from the riff raff.

As the guys spending the money, I am sure my lounge mates found nothing wrong with their transaction. But through my eyes, the airline was basically allowing passengers to game the system. And the 2014 Mile Satisfaction Survey, conducted by MileCards.com, backs me up.

This is what Brian Karimzad, director of MileCards.com, told USA Today: “When these programs started over 30 years ago, miles were designed to retain the most frequent business travelers. Now airlines earn billions a year by selling miles, creating the challenge to please both frequent flyers and frequent spenders.”

Here are some other highlights of the survey, which queried 1,600 frequent flyers of American, Delta, Southwest, United and US Airways, making up 90 percent of U.S. frequent flyer memberships:

• Forty-five percent of those surveyed said they earn more miles from credit card and ground-based promotions than from actually flying.

• Twenty-three percent said they do not trust their mile programs to deliver on promises, citing sudden rule changes and hidden fees. This is on par with cable providers (23 percent) and above banks (11 percent) and car insurance firms (9 percent).

• Half of the respondents identified awards that cost more miles or points than expected as their biggest frustration.

As for brand satisfaction, survey respondents rated Southwest’s Rapid Rewards first, with 62 percent of members saying they would recommend the program to other travelers; the lowest satisfaction rating was US Airways, with 43 percent.

Those of us who fly a lot appreciate our loyalty programs for the miles we earn – in part. We also stick with these programs for boarding and seating privileges, the kinds of perks that expedite and improve what can otherwise be a real grind.

When airlines begin making those perks available to anyone with an open checkbook (or credit card), they take away relevant benefits that loyal customers acquired with much of their time. If this continues, do you think that frequent flyers will continue to exhibit loyalty based on their actual flying activity, or will they question the real advantages of trying to optimize a single program?

I welcome your thoughts.

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What do you think?

 
  1. Howard Schneider says:

    Frequent fliers are rightly dissatisfied with legacy programs that limit rewards with blackout dates, capacity controls and ever-increasing numbers of miles required to redeem a free trip.

    Recently, some airlines – including those with the highest satisfaction ratings, such as Virgin America and Southwest – have launched a system (pioneered by Virgin America) of variable earning and redemption levels based on supply and demand. This allows them to do away with restrictions on free flights. The legacy carriers are edging toward more revenue-based systems, but it is not easy to change their entrenched programs without incurring even more customer wrath. Although, if customers really thought about it, they’d see that the programs offered by Southwest and Virgin America are more fair than the current paradigms at American, United and Delta.

    Of course airlines make money from selling their currency to third-parties like banks and retailers; such arrangements also make the programs more valuable to members. And selling access to benefits and perks helps keep customers loyal. After all, my AA Admirals Club membership isn’t much use if I’m taking a flight from the Southwest terminal.

    Finally, the first mileage program, introduced by American in 1981, was never intended to be an ongoing entitlement in exchange for loyalty. The program was designed as an incentive for customers to identify themselves and let their travel be tracked, analyzed and used for targeted marketing. It seems incredible now, but in the early 1980s, airlines did not have the names and contact information for most of their customers; over 90% of flights were booked by travel agents. As time passed and other airlines matched the AAdvantage program, the frequent flier programs developed into the loyalty programs we know today.

    [Full disclosure: my firm, Metzner Schneider Associates, was instrumental in developing the variable earning and redemption model, working with Virgin America.]