LOYALTY

The next bubble? Travel loyalty programs

Lexarts/Shutterstock
Lexarts/Shutterstock

Did anyone pay attention when Robert Shiller warned about the real estate bubble or Nouriel Roubini sounded the alarm bells about the impending global economic crisis? Probably not as much as they should have. So feel free to ignore this one, too: travel loyalty programs — and particularly airline programs — are a bubble. And it may be about to pop.

All the signs are there. Delta Air Lines’ recent, precipitous devaluation of its loyalty program is just the latest. Your hard-earned frequent flier miles now die with you, and can’t be inherited by your next of kin. (Yes, Delta can do that.) This follows a wholesale downgrade of its SkyMiles program. Several hotel chains, including Marriott and Hilton, have also decimated their programs in the last few weeks.
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Warning! Soon, airline loyalty will cost you

delta7Like many frequent travelers, Glenn Haussman recently received an e-mail from Delta Air Lines about an “update” to its SkyMiles loyalty program. It was so understated that some passengers didn’t bother to read it. But Haussman did.

“I was not thrilled,” says Haussman, who works for a hotel industry Web site in New York. “It made me feel less valuable to Delta.”

How can a loyalty program make passengers feel unappreciated? Delta is the first legacy airline to tie the value of its frequent-flier program to the amount of money you spend, as opposed to the number of miles you fly. Beginning Jan. 1, 2014, the airline’s frequent fliers will earn “elite” status, which gives them access to upgrades and other perks, through a combination of miles or segments flown and annual spending on Delta flights.
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Airline loyalty programs’ dirty little secret? They’re not really that loyal to you

Songquan Deng / Shutterstock.com
Songquan Deng / Shutterstock.com

Laura Noell recently discovered a dirty little secret about her airline loyalty program: the “loyalty” only goes one way.

For years, she and her husband, both faithful United Airlines Mileage Plus members, flew United whenever they could. In return, the airline offered them a guaranteed upgrade to United’s “Economy Plus” section, she says, which gave them about the same amount of legroom as they had in coach class before airline deregulation.

The Noells, who live in Bethesda, Md., and often fly to California, believed it was a fair trade: They stuck to United, whether or not another carrier like Virgin America offered a less expensive flight. They put all their purchases on an affinity card that helped them collect miles and maintain their good standing with Mileage Plus.

The Noells thought they were the perfect customers.

But they were wrong.
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What do you do when points vanish into thin air?

What's the point? / Photo by Mitchell Bartlett - Flickr
Question: I’m having an issue with Points.com I thought you might be able to help resolve. I recently traded 6,000 American Airline miles for 6,000 JetBlue miles, with a transaction fee of $100. The interface stated that the estimated processing time was five to eight business days.
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Should you participate in a loyalty program? 7 things to consider

Whether you’re collecting credit card rewards or frequent flier miles, you probably already know that loyalty programs can lead to compulsive buying behavior.

Question is, should you participate – or shouldn’t you?

Full disclosure: I spend a lot of time covering travel-related issues, and for years, I have been a lone voice in the wilderness warning people against diving headfirst into frequent flier and frequent-stayer programs.

Why? Because at the end of the day, they’re better for the company than they are for you. They also force you to engage in what can amount to destructive purchasing behavior, in a pointless effort to gain coveted elite status.
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