Over the last few weeks, I have been asked the same question by a multitude of clients, friends, colleagues and fellow students at a two-day sales management training. That question, surprisingly to me was, “…with all the airlines merging, will they stop frequent flyer programs?” Having worked for major airlines and travel management companies, I am used to and enjoy talking about travel. In my friends’ minds, the four major airlines, post mergers, would have no reason to offer traveler incentives. I foresee the exact opposite. Not only will frequent flyer programs at Delta, United, Southwest and the new America continue, they will be enhanced. Here’s my reasoning:
Frequent flyer programs continue to drive loyalty and incremental revenue;
- Frequent flyer programs generate revenue as airlines sell miles to charge card companies, retailers and restaurants;
- Frequent flyer programs provide airlines much needed leverage to keep credit card merchant fees in check.
Frequent flyer programs can be so profitable that airlines have created profit centers and, in some cases, spun off/sold these divisions. What I am seeing is:
- Changes to point credits favoring travelers who purchase higher priced tickets over higher mileage
- Adjustments in redemption rates for awards
- More difficulty in redeeming miles/points for travel
In summary, I think the future of frequent flyer programs is far from what my questioners have imagined – a future of growth, as opposed to elimination.