New and Improved Frequent Flyer Programs
The airlines have long recognized the inherent liabilities of their frequent flyer programs. There is – or was – an enormous legacy of free flights waiting to be redeemed by frequent travelers who planned to take their families on vacations or use their nest egg of points for retirement travel. The airlines, however, are working diligently to undermine the value of these nest eggs and avoid having to pay off on their promises.
Their plans have three components. First, constantly increase the number of points needed for free flights from 25,000 to 50,000 to 100,000 or more. Second, make the flights available for free flights overwhelming onerous. For example, the free flight from Atlanta to Boston stops in Dallas-Fort Worth, Salt Lake City, and Detroit on the way to Boston, turning a 2-3 hour flight into 16 hours.
Third, charge for redemption of points. If you use points for Atlanta to Boston, it costs $1,000 to redeem the needed points. Or, you can buy a ticket for $400-500. Thus, the frequent flyer points are not just worthless. They have negative value. The millions of miles flown on the major airlines are now a liability for passengers, at least if they do not understand the airlines’ games.
Our investigators interviewed several airline executives to more fully understand their strategies and how they are creatively avoiding the legacy of frequent flyer programs. All of these executives spoke anonymously, fearing retribution from their employers. Their stories are eerily similar, despite their being no evidence of conspiracy.
They spoke to us because they are also frustrated. One said, “We used to be loved by business flyers. They said things like, ‘I already feel at home when I relax in my seat on the homeward leg of my trip.’ Now, they ridicule us and clearly hate us. But it seems that is where the business is headed.”
Another executive told us, “It is important to understand that, despite slick marketing programs and promotions, airlines have absolutely no interest in the welfare or satisfaction of passengers. All the nice words are just a front. The intent is to squeeze as much revenue from passengers as possible while providing as little value as possible.”
Another executive put it differently, “We would really rather just carry freight. It is difficult to damage and does not complain. People expect us to care about them. Why should we? They are lucky to get from point A to point B so cheaply. But they also want peanuts, pretzels, drinks, toys for the kids, and space for service animals. Beyond all that they want airfares as cheap as possible.”
“Why don’t you charge more for your services rather than doing everything possible to fill every seat?” we asked. They responded, “With the right pricing, we can fill every seat. In fact, we continually tighten up spacing to allow more seats, all of which we fill with the right prices at the right time.”
“Most people choose airlines based solely on ticket price. An empty seat generates no revenue. So we constantly adjust prices to fill seats, while we also increase fees and degrade services. We are continually surprised with what people will endure for a $199 seat, even though various fees can easily double this price. It almost becomes a game to see how little value we can provide.”
“But you have turned airline travel into a very negative experience.” The immediate answer was, “People will put up with high prices and horrible service because they have no choice. They can complain all they want – we delete their complaints as fast as they submit them. We don’t care in the least what they think and feel.”
“Won’t this backfire at some point?” The quick reaction was, “Do the chickens protest the hen coops? Do the cattle protest the feedlots? No, they have no choice. Passengers are just revenue sources and can be treated like chickens or cattle. We don’t care if they are frustrated and angry. We don’t care if they seek transportation services elsewhere.”
“What do you care about?” After a perplexed look, one executive said, “Isn’t it obvious. Profits, share prices, and executive compensation. That’s the overarching purpose of an airline. How could it be anything else?”
