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The end of loyalty in the airline industry

Airlines no longer care about customer loyalty. Rather they care about revenues and profits in the short run. Most of the current frequent flyer programs do not reward clients anymore on the basis of the miles flown, but on what flyers paid for their tickets.

A rare exception is Alaska Airlines that still rewards its frequent flyers on the basis of the miles flown. This explains why this carrier is so popular among travelers.

On April 1, 2018 Air France/KLM changed its Flying Blue program such that few travelers still understand it, but what they do understand is that they will earn considerably fewer miles than they used to earn. Level miles - that determine your status - have been replaced with Experience Points.

We are still waiting for the first reader with a positive opinion about the new Flying Blue. So far, we only received unfavorable reactions to the program changes. Travelers consider it far from transparent, but one thing is clear: they will earn fewer miles, except those who buy the most expensive tickets.

Flying Blue is just following the market. Lufthansa’s Miles & More program already switched earlier from a distance based to a spending based program that is now also quite complicated. We have received similar complaints about Miles & More as about Flying Blue.

US airlines were front runners in moving from distance based to spending based frequent flyer programs. The switch did not make them more popular.

Given the program changes it makes less sense than ever for passengers to care at all about membership of a frequent flyer program (with the exception of Alaska Airlines). Initially, frequent flyer programs aimed at fostering customer loyalty.

Today, however, those programs aim at making profits. Carriers boost their revenues by selling millions of frequent flyer miles to hotels and other businesses.

Hilton, however, ends its Points & Miles program as of April 2, 2018, which means that guests can only earn points and no miles. Thus, the airlines will miss the revenues from selling miles to Hilton.

Currently, frequent flyer programs offer only few benefits to travelers. Upgrades are the most valued benefit, but are fairly rare. What’s more, you often need to buy a ticket that is up to double or triple the price of the cheapest ticket just to have the right to upgrade, whereas the odds are that it is in vain because no upgrade is available.

For in practice, the availability of upgrades is limited, not in the least because more and more airlines prefer to auction upgrades for money rather than selling them for miles to their best customers.

Just going for a ticket at a price you consider reasonable regardless the airline is now the most rational strategy for passengers. Carriers are not loyal to their customers, so why would flyers be loyal to airlines?

Tags: frequent flyer programs, Alaska Airlines, Flying Blue, Miles & More

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