Tweet
Airlines' new cash cow: Frequent flier programs
By Susan Stellin
Tuesday, April 1, 2008
Travelers have lately been complaining more often about frequent-flier programs, namely the lack of award seats on desirable flights, escalating fees for ostensibly free tickets and quicker expiration dates for miles.
Airlines counter that they are giving away more awards than ever, despite generally fuller planes, and that most programs allow members to book any open seat on any flight, albeit in exchange for more miles.
In a sense, both sides are right. But the debate misses a fundamental change that has occurred in the economics of frequent-flier programs in the past decade. What began 27 years ago as a way to win the loyalty of travelers has turned into a lucrative business for the airlines.
Many airlines around the world earn hundreds of millions of dollars a year by selling miles to partners like credit card companies and hotel chains. Those companies, in turn, give the miles to customers as sign-up bonuses or rewards for hotel stays. That revenue is critical for the airlines in an era of escalating fuel prices, but it has also changed frequent-flier programs into more complex businesses, where fliers are just one of the constituencies carriers are trying to please.
http://www.iht.com/bin/printfriendly.php?id=11578282
By Susan Stellin
Tuesday, April 1, 2008
Travelers have lately been complaining more often about frequent-flier programs, namely the lack of award seats on desirable flights, escalating fees for ostensibly free tickets and quicker expiration dates for miles.
Airlines counter that they are giving away more awards than ever, despite generally fuller planes, and that most programs allow members to book any open seat on any flight, albeit in exchange for more miles.
In a sense, both sides are right. But the debate misses a fundamental change that has occurred in the economics of frequent-flier programs in the past decade. What began 27 years ago as a way to win the loyalty of travelers has turned into a lucrative business for the airlines.
Many airlines around the world earn hundreds of millions of dollars a year by selling miles to partners like credit card companies and hotel chains. Those companies, in turn, give the miles to customers as sign-up bonuses or rewards for hotel stays. That revenue is critical for the airlines in an era of escalating fuel prices, but it has also changed frequent-flier programs into more complex businesses, where fliers are just one of the constituencies carriers are trying to please.
http://www.iht.com/bin/printfriendly.php?id=11578282
Comment