The Wall Street journal reports the findings of a Forrester study suggesting that travelers have become less loyal to airlines over the past couple of years. The study found that “the percentage of online buyers who say they are loyal to particular travel companies fell to 25% this year from 31% in 2006,” and the article takes off from there saying that airlines have screwed themselves by devaluing miles.
There is a nice chunk of nonsense in the article, starting with that initial data point: a 6% swing in a survey is well within the margin of error, suggesting that the reported 6% drop may not be a drop at all.
Secondly, the article quotes the Forrester analyst saying, “Airlines are shooting themselves in the foot” by devaluing the miles. But this misses the point: the airlines are a mess (really???), and with far fewer seats being flown they had two options: make fewer free seats available (bad option #1) or raise the price of seats (somewhat less bad option #2). Given the fuel prices of last summer and the massive economic collapse, tweaking frequent flyer rules is not what’s driving the problems in the business.
Virgin America’s CEO sums up the situation correctly, “”Airlines have zero motivation to go in and refresh as long as banks are buying billions of dollars worth of miles.” And there’s the point – they’re making money off the programs, so there is no reason to make them more customer-friendly.
I have no problem with that. There are myriad opportunities to use your miles for high-value tickets, especially for premium class international travel. And one other thing to remember: airline programs are one of the few loyalty programs where its members are, in large part, not spending their own cash to earn the rewards. It’s a bit crazy that after spending $25,000 of company money to earn 100,000 miles, that people complain that they’re not getting value out of that arrangement.