The travelblogeteria(tm) is chock full o’ complainin’ today about the admittedly annoying changes US Airways and American made to their programs yesterday, with much of the complaining focused on how it isn’t “fair” for the airlines to do this, and that airlines need to be more “respectful” of their program members.
That is absolutely hilarious.
A few thoughts here:
- These are public companies, and their first responsibility is to their shareholders. Sure, some companies will tell you that without happy customers they can’t run a profitable business. That has not been the case for airlines. Southwest Airlines has very happy customers and from May 2011 to this month, their stock when from roughly $12 to roughly $24. Spirit’s stock went from $11 to $60 during that period (they IPO’d in May 2011). Delta, who has had the industry-worst frequent flyer program, saw its stock triple during that period. You can love (or LUV) your customers, or you can get great stock returns. You pick.
- I know everyone in frequent flyer programs are referred to as “members” but we are not “members” – we are people who are hoarding a highly speculative currency. As I wrote last year:
First, they are not loyalty programs. A loyalty program would reward loyalty. Airline and hotel points programs do not reward loyalty; they issue a currency…and, like all currencies, they can be devalued (or overvalued) over time. We are always surprised, shocked, and offended when airlines and hotels change the value of the currency, and on some level I blame them for it — if these are loyalty programs, is our loyalty now less valuable? Well, no – because they’re just issuing currency, not rewarding loyalty. Starwood is basically the Central Bank of the Republic of Starwood.
Airlines have printed points like, as I’ve said before, they’re Zimbabwe’s finance minister…we cannot possibly expect their value to hold when points are so readily available. And there’s literally nothing keeping airlines from devaluing the points, changing the rules for the points, or adding fees to using the points. It’s in the fine print, but it’s in there. I’m not sure why this is surprising – we have been kidding ourselves if we think that we have all been good soldiers and we can’t believe that we are being betrayed. Please. You think there’s no cost to Vanilla Reloads and credit card churns? THIS is the cost.
- How many people complaining about this have earned these miles through credit card churn, and not through airline loyalty, by the way?
- Fly coach…there are no changes there.
- I was actually serious yesterday when I wrote that you should buy shares in the airlines you fly as a hedge against these moves. Sure it’s annoying when airlines change their rules, but if they’re doing it to boost their bottom line, why wouldn’t you take advantage of the upside there? Airline stocks have been gangbusters over the past couple of years now that they’re actually running good businesses and charging fees where they can. I know that’s annoying as a traveler; but I’ve hedged that by buying shares in US Airways & Spirit Airlines. Suddenly that $3 water on Spirit isn’t so annoying. Plus, if hoarding points IS currency speculation (which I argue it is) then I SHOULD have a hedge against it. Which I’ve done.
- And perhaps, then, shame on all of us who write about miles for not stressing more clearly that miles have no value until used. I’ve danced around that idea (as I appear to be the only person telling people not to take advantage of the US Airways mileage sale the other day), but speculatively buying points always seemed crazy to me. Yesterday I was reminded why that is.
- And finally…for all of the virtual ink that was shed on this and how unfair it is and how badly we’re treated, I just wanted to remind everyone that the CEO of General Motors has been in front of Congress trying to explain why they didn’t bother recalling cars that they knew had caused the deaths of 12 of their customers. Eliminating a free stopover and charging for upgrades seems like a petty complaint in comparison.