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.