TRAVEL / FREQUENT FLYER TIPS

The answer is “probably” if you follow a recent post on FlyerTalk that’s gotten over 16,000 views in just one day.

The jist of it is that it would become a revenue-based program (as opposed to the miles-based programs that are the norm). To see an example of a revenue based FF program, you can check out the likes of Virgin America’s Elevate. You earn based on what you spend, not on how far you travel.

Why is this bad for all but the highest spending business travelers?

Because tying everything to spend just takes the “game” out of it. Right now, a Delta Platinum elite could fly one round trip New York to Tokyo and earn 28,000 miles. 4 such round trips would set that traveler up for a free business class trip to Europe or, with just a few more miles, a free business class trip to Asia or the Middle East. Let’s say each round trip to Tokyo in coach cost $1,500. So after $6,000 in spend, they now have a free round trip in Business Class probably valued at about $6,000.

This is just one reason the legacy carriers hate the miles based programs. Other reasons include “mileage runners” that seek low fares on long routes with multiple stops just to collect miles.

OK, so we see why the airlines might want to move to the RBP (revenue based program).

But what are some arguments against it?

Only the highest spenders will get any real reward from such a program. If you are a HVC (high value customer), you will probably be one of the few to like this as less people compete for ward travel. So while an airline definitely wants its HVCs happy, what about the collective of EVERYONE ELSE?

Will the customer that spends $5,000 to $10,000 a year that used to get maybe a free J class ticket a year and will now get basically nothing continue to stay loyal to any particular airline? Will these customers even bother with using a frequent flyer program at all? (thus depriving the airline of valuable marketing data). I think it’s fine for the small carriers like Virgin America with limited routes, but the mileage based program is the norm worldwide and all the airlines are in alliances where members can earn and redeem miles across the network. (The three alliances are OneWorld, SkyTeam, and Star Alliance.)

It remains to be seen how Delta using a different method would mesh into its SkyTeam network – and if other US airlines would follow (essentially killing the great premium class redemptions we’ve all gotten used to aspiring to).

How do you feel about this potential change? How would it affect your flying habits? Would you just go for the cheapest carrier and forget about the frequent flyer programs altogether?