Let me repeat that – loyalty programs were not meant to be good for you. They were meant to be good for the airlines, hotels, and whoever else has started one since the Green Stamp days. Perceived benefits aside, they were (and still are) meant to enhance the bottom line of the companies that control them. Back in the days of 60 percent load factors being a banner year, your run of the mill “frequent flyer” program made perfect sense. The spread between top and bottom fare was lower. The internet as we know it did not exist. Tossing a seat to a program member that was otherwise empty anyway was easy. All was well.
The scene shifts to the current reality. Load factors are routinely north of 80 percent. You, me, and our mothers are minting miles like candy, but excess inventory for redemption is like finding a knitting needle in a smallish stack of hay – not impossible, but not all that easy either. Worry abounds, but that hasn’t stopped our friends at the programs from selling miles to card companies and flower shops, nor us from finding ways to earn as many as possible. Enter the “revenue-based” loyalty program.
While I’m not as in love with the new reality as many think, that doesn’t mean I can’t see what’s going on around me. Ballooning mileage balances vs. shrinking redemption opportunities. We’re all addicted – the airlines to the quick sale of a point, us to the high of making a point out of thin air. The companies have the upper hand now. I don’t know if it will last forever, but I do think it will last long enough for American AAdvantage to join the rest of the domestic US industry with a revenue based program. All the crying in the world won’t stop it, but I’m almost certain there’ll be another game to play. Things change, just stay informed. If the new reality results in more rational economic decision-making for the majority of us, I’m all for it.
-MJ, September 29, 2014