Frequent flier program changes you can root for By Christopher Elliott | April 17, 2011 If you’ve ever asked what the fuss over frequent-flier programs is about, then you know that the answer can be complicated. Airlines love them because they’re worth billions of dollars in business. They also mean the world to many passengers, because at a time when airline amenities are evaporating faster than jet fuel spilled on a hot tarmac, perks such as upgrades and preferential treatment are just about the only things that make air travel tolerable. So when two major airlines recently decided to upgrade their loyalty programs, they caught this skeptic’s attention. Delta Air Lines has eliminated the expirations on its frequent-flier miles. And Southwest Airlines has completely revamped its legendary Rapid Rewards, adopting many of the features of competing incentive programs. The response from customers offers fresh insights into the volatile relationship between air travelers and airlines, but it also presents us with new opportunities to fly smarter. “The reaction to Delta’s move is best characterized as polite applause,” says Tim Winship, publisher of Frequentflier.com, who described the non-expiring miles as only a “modest plus” for elite-level frequent fliers and a boon to infrequent customers, who were most at risk of losing their miles. Reaction to Southwest’s new program, on the other hand, has been “decidedly mixed,” he says, and has engendered both winners and losers. The old Rapid Rewards program offered flight credit based on every one-way flight as opposed to the length of the flight or the price of the ticket, and unused credits expired after 24 months. The losers under the new scheme — frequent customers who fly on shorter routes and pay less for their tickets — are incensed that they will be earning fewer free trips in the future. David Kazarian, a frequent Southwest customer based in St. Petersburg, Fla., has a laundry list of grievances about Southwest’s new program, including new limits on mileage redemption, changes to the way mileage is earned, and accompanying service reductions. “I thank them for making me realize that there are other airlines out there on which I can travel,” he says. “It won’t be long before we’ll be paying for bags and change fees on Southwest. After all, they’ve forgotten the reason they became great.” Nicole Madril, who works for an insurance company in Lawrence, Kan., sounds more upbeat about the Southwest changes. She likes the way the airline communicated its plans to customers and is happy that the airline has eliminated blackout dates for redeeming mileage credits. She’s also pleased that her old credits were transferred to the new program. “I think Southwest should be commended for honoring their guests’ old credits in the new program,” she says, “because I for one would be pretty upset if I’d earned all these points and they just went away.” I asked Southwest’s senior director of marketing, Ryan Green, who oversees Rapid Rewards, about the issues. He acknowledged some glitches in implementing the new program but said that overhauling the rewards system would make it fairer, more competitive and more profitable. He bristled at charges that Southwest was becoming just like every other carrier, pointing out several key features that distinguish the airline’s program. Among them: no blackout dates, no fees to redeem points for tickets or change reservations and no arbitrary threshold for redeeming seats. You might think that Delta’s decision to eliminate mileage expirations would be less controversial. But that’s not entirely true. Frequent fliers like Amanda Schuier, who works for a trucking company in Omaha, shrugs off the improvement, because she wasn’t worried about her miles expiring. (Under the old system, miles didn’t disappear as long as you kept flying.) But she does think that it will be good for her parents, who only fly four or five times a year. “I see the benefits to Delta,” she says. “They’re creating more loyalty.” Why did Delta change its program, particularly when airlines are known to have billions of unredeemed miles in the wild? I asked Mike Henny, the general manager of Delta’s SkyMiles Medallion program. He said that it came down to one thing: The benefits of allowing miles to expire no longer outweighed the inconvenience to passengers. “After discussions with our customers through surveys and focus groups, it was apparent that they view their miles as a form of currency,” he says. “The breakage of these miles was of minimal gain to Delta, but eliminating expiration was a big win for customers.” In other words, Delta is hoping that its no-expiration rule will set it apart from the competition and drive more customers — and more dollars — its way. Obviously, neither Delta nor Southwest are being charitable with their changes. Maybe some customers like the new rules, but at the end of the day, the airlines are making the changes because they’ll make more money. There’s nothing wrong with that, of course. But unexpected program changes like this give you an occasion to question your loyalty. Have you read your program member agreement lately? Do you realize that your airline can change the terms of its agreement anytime, for any reason, with no required notification? Did you know that under most program rules, your mileage and your elite status technically don’t even belong to you and can be revoked at any time? That’s right: Your airline could one day decide to end its loyalty program, and you wouldn’t be able to do a thing about it. Scratch the surface of these recent changes, and it’s clear that they haven’t really been made because airlines want to reward you for your loyalty. They’ve been made because they want to be rewarded with your loyalty. Maybe I’m just being a contrarian, but the way I see it, we’re really fortunate. I actually like the program changes to both Rapid Rewards and SkyMiles. We may not be so lucky next time. Christopher ElliottChristopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or contact him at firstname.lastname@example.org. Got a question or comment? You can post it on the new forum.More Posts - Website - Twitter - Facebook - LinkedIn - Google PlusFacebookTwitterLinkedInGooglePinterestReddit Related http://elliott.org Christopher Elliott @cjr, that’s what I’m afraid of, too. Given United’s changes (which I found out after I filed this story) I think it’s a legitimate question. When do loyalty programs become completely useless? GH I agree…United’s changes have made it virtually useless to be loyal to one program. E.g., it charges an expensive surcharge to use miles for upgrades, making it virtually not worth your while. http://backseatflying.blogspot.com/ Gary Kung Gary (From Boarding Area) is here…Great… One thing I want to point out that people call Delta program as SkyPeso, summarizing the difficulty of redeeming miles for travel. Delta eliminates the deadline is simply a good gesture to retain customers (as why will you choose an airline where the reward you earn is useless). Steve R I like both of the changes, though neither of them impact me greatly. I’m strongly in favor of Delta’s elimination of expiration simply because it’s common sense – someone who earns so few miles that they have to worry about them expiring due to inactivity isn’t going to be costing the airline much, if any, money in free flights. But the negative vibes (and sometimes, publicity, when a consumer who loses miles contacts Chris or another mediator for help) from making miles expire hurt the airline. Personally, I have <10k Delta miles, and at the rate I'm going, it'll be quite some time before I have enough for a free flight. It's nice to know that those miles aren't going anywhere should I not fly Delta at all for a couple years, though. As for Southwest, I can see why people who've benefited from the old program aren't thrilled about it changing. But the old program was useless to anyone who didn't fly at least 8 round-trips every 2 years on SW…even if you were a semi-frequent flier whose rewards would never have expired if activity was enough to keep them active. Again, as with Delta, I'm not sure how much it'll ever benefit me (I average 1-2 SW flights a year), but the old value of the rewards program for me was $0, so this can't be worse. Palmeridj Why I am I not surprised….I would have printed off this ticket info as evidence under these circumstances. This is also why I never deal with something like this at the bottom level $10/hr clerk level. Why because they look at a screen and see they flew under the more expensive ticked but not the prior ticket so refund the unused and then check and done and move on to the next one. John Knoxville DL’s change will just mean less award availability for those of us who have cared about our miles in the past… longhorns I saw a calculation by a Southwest customer. He flies round trip on SW Dallas-Houston every week. Under the old system, he got a free ticket award after 8 weeks. Under the new system, he will have to make 45 trips to get a free ticket. MCGJr. I have never been concerned about losing my miles on Delta, because I fly often enough. OTOH, I think Hilton’s HHonors could learn a lesson from Delta. Frist, for the fast majority of my hotel stays, I have no real choice about where I stay. Almost all such trips are to conferences where the hotel is determined by the organization. I recently attempted to use my HHonors account and not only were my points gone, but they had disabled my account so I could not even logon to make a reservation. A call to their help desk resulted in: “Reregister and, if you want your points back, there will be a fee.” My response: Fine! I will make my reservation at a different hotel chain that just happens to be right across the street from the Hilton. I guess they were not ready for such a reaction, because they offered to ‘investigate and call [me] back.” The call back: Reset the account, and said that, after I completed the planned stay, they would return my six-digit points balance. Net: I could have just said, “Who needs you and your points. I’ll go elsewhere, where the policy is more friendly.” But, “my policy” about complaining is that I don’t complain to all vendors; only to those that I really want to patronize.. These I do a full-court press. Others, I just go elsewhere, after telling them of my decision. It has worked very well for years! Eileen I have to say, I usually fly Southwest almost exclusively due to 1) the no baggage fees thing; 2) the affordability of the fares; 3) the closeness to my travel location; 4) the ease of their rapid rewards program; and 5) Their “no muss, no complications” approach to dealing with purchasing customers. With that in mind, I’m concerned about the direction I see Southwest heading in. Their price point for my most frequent trip (MDW to ISP) is no longer the cheaper flight in town, and I am honestly having to start looking at United and other carriers into LGA or JFK because SWA’s flight is just not as competitive as it used to be (and I hate landing at LGA with the fire of a thousand suns). Additionally, when I looked at what my trips would be giving me Rapid Rewards-wise, I was nonplussed. It will take me even longer now to amass a ticket, and for the life of me I cannot figure out the math they are using to decide what my purchased ticket is worth to them in terms of Rapid Rewards membership. So what am I getting out of this “fabulous new Rapid Rewards” program? I just don’t see the benefit in it for me. What concerns me is I’m watching SWA inch ever so closely to being “just another big carrier” a la United, Delta, or American. I’m concerned that in five years I’ll be paying to check my bag, being charged $150 when there’s a typo on my ticket, and losing my miles (oh, excuse me, points) when I don’t use them fast enough or frequently enough for SWA’s satisfaction. I know they are not there yet, but this loyal SWA traveler is concerned. welltravelled123 Southwest has been heavily running new commercials ‘touting’ their (new) Rapid Rewards program as something really simple and special as compared to the other carriers. Huge ball of red tape, etc. they rescue a guy (or family) from. But with these changes the SW program becomes unnecessarily more complicated with more restrictions and lower earnings levels. I don’t see any real improvement here with the exception that the points now don’t expire in 24 months. Changing to earning based on mileage/fare may be good for the airline but not for customers. SW could have hit a “home run” by simply extending the point expiration or — like Delta — eliminating it. As others have commented, SW is looking more and more like the other airlines. And as to cost, most times I price a trip (and I’m a top level flyer with a major), SW is not significantly cheaper and more often than I expected is MORE expensive. I applaud Delta for the mileage change in that expiration is gone. Good move! Dave The Southwest change seems to point up the most absurd feature of frequent flyer programs: the miles you fly have absolutely nothing to do with anything! Loyalty should be determined by the number of trips (who’s more loyal: the once-a-year overseas flyer, or the weekly commuter?). I don’t want to get too off track here, but someday (probably when pigs fly) I’ll get around to publishing my ideal loyalty program, one which benefits both the airline and the passenger. If I ever do, I’ll let Chris know. Dkazarian You already are paying for your bags. A friend and I checked a trip to Vegas. USAir’s price was 100 dollars LESS than Southwest, but, you have to pay for bags,,,, Hummmm, lets see,,,, 100 dollars round trip, 50 dollars each way. I guess SouthWest has added the bag fee to the cost of their ticket. Actually, that’s probably a better way to do it, but they are advertising they don’t charge bag fees when they actually do, they just hide it. Dkazarian I understand your point, but LOYALTY is for people who fly alot (I would think) so what they (southwest) is doing is actually favoring the people who don’t fly a lot (but not favoring them much) I just looked at my account, and while I don’t fly southwest as much as I had in the past due to their recent changes, my point balance is not enough to get even one ticket (when I would have had 2 round trip tickets under the old program) They’ve made other changes too that make me pause before I buy a ticket now! I flew my first Jet Blue flight recently because of southwest changes, and I just booked a USAir flight for my wife that would have been Southwest in the old days! Ah but Southwest improved their program, sure they did! Juan I commend Delta for the no-expiry decision. I rarely use them but will now try to earn their miles in other ways until I have enough for a flight. Linda Delta’s just giving with one hand and taking away with the other. Has anyone tried getting award travel ANYWHERE at the 25k level lately? And their website for booking award travel is seriously broken, forcing you to pay a fee to book it over the phone. Also, their new feature for “paying with miles” seems sort of nice, meaning you can use them for partial payment – until you realize that if you do so, you won’t earn miles for flying for that entire trip.