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Airlines are Wrong to Devalue Frequent Flyer Programs

US Airways stopped awarding a minimum of 500 miles on short flights in May.  United starts today.  Most of the airlines recently added, or are adding, new fees for booking award tickets.  US Airways shocked their elites a few weeks ago by announcing the end of the elite mileage bonuses that gave very frequent flyers double miles for all flights.

The airlines are making a mistake devaluing their loyalty programs.

Instead of alienating their frequent and loyal customers by removing benefits and resorting to nickel and diming the airlines should be using their frequent flyer programs to create new, and maximize existing, customer loyalty.

We all know the airlines are in trouble.  Their previous business plans do not work with $130+ oil.  Oil now costs more than most leisure travelers are used to spending for their entire tickets.  And don’t forget labor and overhead.  The airlines are bleeding to death with costs far exceeding their revenue.  They can not survive without change. 

Ticket prices need to go up, way up.  Route frequencies and capacity need to drop. 

Make people feel like they are getting more for their money through increased frequent flyer program benefits and the higher fares and reduced routes will be easier to swallow.  Keep cutting frequent flyer benefits and customers will not be able to continue justify paying a premium to stay loyal to their primary airline.

Delta's New Award Fuel Surcharge Doesn't Make Sense

View from the Wing points out that Delta just introduced fuel surcharges on award tickets originating from the US and Canada.

From Delta's press release:

Effective Aug. 15, 2008, the SkyMiles program will add:

• A $25 surcharge for Award Travel between the 50 states and Canada
• A $50 surcharge for Award Travel between the 50 states/Canada and all international destinations, including the Caribbean, Latin America, Puerto Rico, the US Virgin Islands, Trans-Atlantic and Trans-Pacific.

This fuel surcharge will not impact existing ticketed award itineraries or award tickets issued prior to Aug. 15, 2008, regardless of the date of travel.

One Mile at a Time thinks this isn't such a bad move by Delta:

I know some might think I’m crazy for saying this, but I think this is a good thing. No, I hate to see new fees, but I’m relieved that it’s “only” a maximum of $50. Many (including me) have long been predicting award fuel surcharges for US carriers, and let me tell you, I’m damn relieved that it’s only $50!

Some may think $50 is a lot, but try redeeming with any non-US FFP. For example, a recent award from EWR-FRA-MLA-FRA-EWR cost $350 in fees, taxes, and surcharges, and that’s on the low side.

I get what One Mile at a Time is saying that with Delta setting the bar at $50 it is unlikely that the other USA carriers are going to set a higher fee and that it is means consumers in the USA will pay less compared to other international airlines.  But is it really in everyones best interest to only charge $50?

I'm not opposed to airlines raising their fares and covering their costs.  They are crazy not to with fuel skyrocketing.

What I don't like about this fee - and many other fees by the airlines recently - is that they aren't actually tied to the airlines increased costs.  It is just an arbitrary fee.

When the airlines create fees that aren't rationally related to the services they are providing it feels like the airlines are trying to trick us by hiding the true cost of their services in a multilayer fee scheme.

If this new fee by Delta is actually a fuel surcharge shouldn't it be proportional to the amount of fuel consumed by the flights covered by the ticket? 

A flight from Atlanta to San Juan, Puerto Rico uses a fraction of the fuel that a flight from Atlanta to Dubai uses yet both have the same $50 fuel surcharge.

I know most of you would hate to see a fuel surcharge based on the cost of fuel related to number of miles you fly because it would likely be more than $50 per award but doesn't that make more sense? 

Of course that only works if the fuel surcharge actually fluctuates with the cost of fuel.  When fuel goes up the surcharge goes up.  But just as quickly when fuel goes down the surcharge goes down. 

I think that sort of plan makes sense for award tickets where you don't want the number of miles that people are aiming for to be constantly changing but the airlines need to cover their constantly fluctuating costs.

There is an argument to be made that award tickets shouldn't have a fuel surcharge or any other fees associated with them because award tickets are filling seats that would otherwise go unsold (and the impact on fuel burn by one person isn't significant). 

That might have made sense last year.  But this year capacity is getting slashed.  And for those of you who toiled to find award seats last year it is going to get worse.  A lot worse. 

But how worse does it have to get?  Reasonable fuel surcharges on awards might reduce the need to drastically cut capacity on award availability.  If airlines know that their award seats will at least cover rising fuel costs with a variable fuel surcharge, in combination with an appropriate number of miles redeemed for the flight, the airlines should be able to keep more award seats available for redemption than they otherwise would with capacity dropping.

 

What You Don't Want to Happen in Hawaii - Daily Travel Photo

My brother is getting married today.  Tomorrow they fly to Hawaii for their honeymoon.  The last time he went to Hawaii was with me in 2006.  This is what we found at the beaches along the North Shore of Oahu.  Hopefully this will be the only place he sees this sign for the next two weeks.

Skywest Flight Attendants Rock

Skywest is my favorite regional carrier.  They provide regional service for United, Delta, and Midwest.  Their flight attendants consistently provide friendly and helpful service. I'm not saying every Skywest flight exceeds my expectations.  But they usually provide good to great service.  And sometimes they blow me away.  Like on two of my Skywest flights this last week:

1. On a completely full PHX-LAX flight (~1 hour) last week the flight attendant did two full drink cart runs in addition to a coffee run. 

2. On a 15 minute LAX-OXR flight the flight attendant announced:

"This is not a scheduled drink service flight but because there are only 6 of you I will be happy to offer you the beverage of your choice before we start our descent."

So I got a diet coke during the 3-4 minutes between the climb out of LAX and the descent to Oxnard:

Frequent News Updates At The Flying Critic News

This is a reminder to check The Flying Critic News - http://www.flyingcritic.com/news/ for lots of quick links to news relating to airlines and the travel industry.

Daily Travel Photo: Standing in front of the Great Pyramid of Giza

I didn't take this picture.  But I'm in it.  That's me standing in front of the Great Pyramid of Giza.

Freddies wrap up

It was a pleasure to meet some of you at the Freddies last night.  I even met The Pudding Guy.

The programs of the year (ie.the big winners) were: 

Americas Airline: Alaska Airlines Mileage Plan
Europe/Middle East/Africa Airline: Etihad Airways Etihad Guest
Asia/Pacific Airline: Jet Airways JetPrivilege
Americas Hotel: Marriott Rewards
Europe/Middle East/Africa Hotel: Starwood Preferred Guest
Asia/Pacific Hotel: Starwood Preferred Guest

A full list of all the winners is available at the Freddies Press page.

I don't understand why Marriott's program is tops.  It just doesn't seem like they offer many great perks compared to the other programs.  I'd love to hear why people think Marriott is the best hotel program.

See you at the Freddie Awards

Tomorrow, I will be at the Freddie Awards - the most recognized awards for frequent traveler programs.  I hope to see you there.

Get your airline or travel question answered

Do you have an airline or travel question?  If so, e-mail it to flyingcritic@gmail.com and it might be featured on The Flying Critic. 

You will get a personal response regardless of if it makes it on the blog.

Announcing The Flying Critic News: Quick links to airline and travel news.

Keeping track of the latest airline and travel industry news is fun.  There's lots going on every day.  And I think many readers want an easy and quick way to catch up on what's going on.  I want to provide this to you. 

But putting so much news on The Flying Critic's main page is distracting.  The main blog and RSS feed needs to be for The Flying Critic's substantive content.  I hope you agree. 

So I've added a new sister blog where you can find quick links to airline and travel news: The Flying Critic News.  http://www.flyingcritic.com/news/

Moving the short and quick news links to The Flying Critic News will allow The Flying Critic to stay focused.  There will still be the occasional links to big news here and any news stories with substantial commentary will also be located here.  But for quick news and blog links you should consider bookmarking The Flying Critic News.

Added: A special thanks to reader D.B. for suggesting some changes to the color scheme of the links and some text on the site.  Things are looking even better!  Thanks D.B.!

Welcome to The Flying Critic

I am a very frequent flyer – flying around 200,000 miles per year for the last couple years. During my travels I experience the best and worst of the travel industry and try to learn tips and tricks to make travel fun.  I am The Flying Critic. Thank you for joining me as I share insights on the airline and travel industry with you.