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Let’s get crazy for a minute
Since 2015 we have seen US Airlines erode and erode and erode their loyalty programs. Delta was the first, United followed suit, and American brought up the tail end of revenue based mileage accrual. Award charts have been decimated then destroyed, and here we are, on the brink of recession, with a global pandemic obliterating travel, and airline stocks nearly half off last month’s price. Something clearly needs to be done.
As a percentage of profit, airlines hardly make anything from their operations, profiting almost entirely from their loyalty schemes. By en large, Airlines make the bulk of that profit from selling miles to banks for a higher price than the average person redeems them. So what have they done to those profitable business units? Gutted redemption values each and every year along with devaluing the leisure traveler’s ability to earn them purely from flying butt in seat miles. You gotta spend big kid!
And now we have a major crisis. Airlines are empty. Prices are bargain basement. And what is actually going to turn it around? The best hope right now is that COVID is seasonal and higher temps will kill it off. Let’s say that is true. If a vaccine/effective treatment isn’t found by the time flu season comes back in November…do you really think anyone is going to be flying again? We’re back in the same situation and travel will be narrowed.
So what should airlines do….at least temporarily?
One mile flown, one mile earned through 2021 EQM and RDM
Turn back the clock. You don’t have to do it forever, but make your programs valuable again. Encourage and reward travelers who get out and take flights. Airlines have been selling roundtrip East Coast to Europe for under $200. You’d hardly earn a 1000 miles on any airline with that.
Turn it back on Elite miles. Every single mile you fly you should earn at least 1 Elite mile. Make it simple and enticing not complex and based on ticket price excluding taxes, etc. Most everyone is going to have problems meeting EQD when fares are rock bottom and you aren’t traveling for 1/4 of the year.
Don’t want to do that outright…give passengers the option until the end of 2021. If you’re a big spending business client…fine earn on dollars. If you’re a leisure traveler, great – earn on miles flown. Regardless…make it super passenger friendly to entice business, and provide choice and transparency.
I used System Wide Upgrades to fly International Business Class in 2016 when I was an AA Executive Platinum. I status matched to Alaska in 2017 and haven’t turned back.
No more revenue requirements or EQD/EQM waiver for status
Wipe them out or you can choose. If you’re a big spender..fine. You can still have status, but if you’re not and qualify on miles alone…here’s your elite status. Enjoy. You were loyal when flying was hardest. Fly 50k miles…enjoy this great lounge when you travel internationally
End Basic Economy Seats through 2021
Basic Economy is a pariah on air travel. No one likes it, most people don’t even know it exists, and it leaves a bad taste in any passengers mouth if they purchased it without knowing. Nuff said.
Bring back award charts pre 2015 – rich awards = higher cc spend
This was the year that everything changed for the worse. Delta pulled award charts, and a few years later the entire industry is opaque when it comes to pricing. If you want to keep web specials, fine. But make saver awards cheap and easy and award charts very appealing for redemption. To me…2015 was fantastic. In case you needed a little refresher…here was AA’s in 2015 out of the States.
Banks have their own award currencies now, and they blow most airline cc out of the water. But if you made redemptions more attractive…you could entice spending on those cards = more mileage sales at high prices and redemptions at lower prices.
Also…I remember reading one time that a Cathay First Class ticket , which on this chart would be just 67.5k AA miles, used to cost AA roughly $150 paid to CX.
AA specifically would go head to head on earning with Alaska
This would create some semblance of parity between the airlines, but it would benefit AA more because of its superior route network. In reality, the only reason someone would outright choose to fly Alaska vs AA on a route operated by both is because earning Alaska miles are superior to AA miles. By en large AA has a much more state of the art fleet. If they improved their redemption chart and allowed the option to earn miles based on mileage flown…it’s a different ballgame.
Overall – will this happen?
Doubtful. My money is we see at least one big carrier go bankrupt if this rout goes on much longer and find some reason to gut the program even more. Who knows… in chapter 11 they may even “reinvent” the loyalty program so they don’t have all those miles on their accounts payable. Even more reason to keep your points in flexible currencies.
My hope is this doesn’t happen. Obviously.
This should be is a big wake up call to the Industry that the consumer can very easily go away, that travel is privilege, and if the vast majority of your profit comes from one unit of your business…maybe in a time of crises you sweeten that unit to make it more appealing than your competitors. Who knows…what if rolling back the clock actually made a loyalty program more valuable? Afterall…if you have more loyalty, you have more sales.
One of my favorite Delta redemptions is China Air biz…
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