Are airlines right to change their miles programs?
Christopher Elliott , Special for USA TODAY
March 3, 2014
If you're unhappy with your loyalty program, join the club. So is William Beeman, a Delta Air Lines frequent flier who's been trying to score an upgrade from San Francisco to Geneva after surgery to reattach his quadriceps at the knee.
Trying and failing.
For him, the process feels like a bait-and-switch. To avoid being wedged into a Lilliputian economy-class seat for 14 hours, Beeman says he worked hard to earn elite status on Delta. But when he tried to redeem his miles for an upgrade, the airline wanted even more.
To get wait-listed for a business-class seat, Beeman would have to pay double the price for an "upgradable" economy-class ticket. That's right, just to be considered for more legroom.
"I can't interpret this any other way than that it is a scam," says Beeman, an anthropology professor from Minnesota.
Welcome to the brave new world of airline loyalty programs, where what you pay matters more than how much you fly. Delta surprised many frequent fliers last week by announcing it will become the first legacy airline to move to a system that bases your rewards on how much you pay, not how many miles you fly.
Other carriers, such as United, switched to a hybrid that rewards you based on a combination of miles and money spent. More airlines are expected to follow.
Are the new programs fair to rank-and-file travelers?
You might be surprised by the answer. Loyalty programs were never meant to be "fair," but what we have today is, in some respects, fairer than before. Now more than ever, it also offers a fair warning about the true nature of these addictive programs.
Delta says its program is equitable. It changed some of its upgrade availability at the beginning of the year after receiving "extensive feedback from our customers," says airline spokesman Paul Skrbec.
But a survey suggests many passengers feel the revamped loyalty programs are disloyal to them. Air travelers don't trust airline programs to deliver on their promises, according to research by MileCards.com. The programs are deemed less trustworthy than banks, cable and telephone companies. In fact, passengers singled out Delta's website as the toughest for redeeming miles.
Rewards programs are revenue pools for companies, generating billions of dollars a year as they sell miles to banks and other partners, says Brian Karimzad, director of MileCards. "Consumers indirectly buy these miles via their choices to earn them over other rewards," he says.
I asked Peter Shankman, who wrote Nice Companies Finish First — a book about fairness in business — to explain what's happening.
"Fairness," he explains, "is really in the eye of the beholder."
Could airlines have done a better job explaining why they needed to make these unpopular changes? Sure, he says. But they had to fix these incentives because they weren't really rewarding their best customers. Plus, the programs were too easily manipulated. Some travelers reaped first-class perks from buying pudding boxes or U.S. Mint coins while actually paying as little as possible for their seats. That's no way to run a program.
"You have to ask: Is it the airlines not playing fair — or is it a small number of customers who are not playing fair?" adds Shankman.
Still, it's hard to shake this feeling that the deck is stacked against the little guy. "There's a clear disconnect between the passenger customer and airline," says David Carmell, who runs business consultancy CSuite Advantage. But the latest survey is a symptom of a bigger problem, which is that airlines have historically been perceived as unfair, even by their own employees. That makes airlines the automatic loser in this debate.
They shouldn't be. Loyalty programs weren't rewarding the right passengers, anyway — too many beneficiaries were insiders who "hacked" the system. That hurt everyone. The fixes are justified to correct that problem.
So I'm siding with the airlines on this. Yes, the new, revenue-based programs are better than the old ones they replaced, but not by much. Airline loyalty programs aren't really designed to reward you, but to extract more money from you and your employer. They're just cynical marketing programs masquerading as corporate good will.
That sure feels like a scam to a lot of the good people sitting in the back of the plane. It's something to remember the next time a crewmember or blogger waves one of those affinity credit cards in front of you offering you a "free" ticket — or you're tempted to book a flight for the miles.
PLAYING TO 'WIN' SUFFICIENT MILES
- • With new program changes, here's how you can "win" the mileage game:
• Play if you can afford it. Generally, the newest programs are designed to reward the biggest spenders, not the most frequent travelers. If you book a lot of expensive tickets, you should consider actively participating in a program.
• Focus on one program. The latest changes don't reward disloyal fliers, so be ready to give one of the airlines most, if not all, of your business.
• Work twice as hard. Airlines are on to you, and they are quickly closing many of the loopholes that allowed point collectors to "hack" the system. It may not be worth the effort.