Frequent Flier Programs Are Now More About Raking In Revenue Than Pleasing Top Customers

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Photo Taken In New York City, United States

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If you want to be completely satisfied with the way your preferred airline treats you as a high mileage member of their frequent flier/customer loyalty program, you probably should avoid the Big Three U.S. carriers: American, Delta and United.

That’s easier said than done since the Big Three dominate travel at most of the nation’s busiest airports. Still, that’s the most obvious – and maybe the snarkiest - conclusion to be drawn from the 2019 rankings of big U.S. airlines’ customer loyalty programs from the marketing research firm J.D. Power.

Top Ten lists are so common these days – and often so baseless or frivolous – that they’re often ignored. But when J.D. Power, the biggest name in customer satisfaction research, speaks, many still pay some attention. And now we’re being told that the big U.S. airlines have altered the way their frequent flier programs work so much that nearly half of all consumers don’t fully understand how to redeem their mileage points in ways that ways that yield the most satisfying results.

The J.D. Power 2019 Airline Loyalty Program Satisfaction Study reports that 45% of the members of U.S. carriers’ loyalty programs say their satisfaction with the airlines and those programs is significantly diminished by complexity encountered when they try to redeem their mileage points for free flights or other benefits.

"This is the third year in a row that we’ve seen airline loyalty program customer satisfaction hampered by a widespread lack of understanding of how to extract the most value from the programs," said Michael Taylor, who lead’s J.D. Power’s travel intelligence group. "Many airlines are evaluating the success of their loyalty programs based on dollars spent by travelers rather than on miles flown. That’s a significant shift away from rewarding frequent travelers and toward rewarding high spenders."

Thus, it shouldn’t be much of a surprise, in that context, that American AAdvantage and United’s Mileage Plus programs finished in a tie for last place in the J.D. Power rankings with matching scores of 764 on an indexed scale of 1,000 in terms of customer satisfaction with their loyalty programs. They were the only two carriers to score below the industry average of 789.  Delta’s SkyMiles program scored slightly better than it’s two biggest competitors, but it’s score of 791 was only two points better than the industry average.

At the very top of the industry group was JetBlue, whose much smaller TrueBlue loyalty program earned a customer satisfaction score of 821.

Southwest Airlines, which actually carriers more domestic passengers than any other airline (though it  offers only minimal international service) placed second in the category. Its Rapid Rewards loyalty program had an index score of 812. And Alaska Airlines’ Mileage Plan program was close behind with a loyalty program satisfaction index score of 810.

JetBlue was the only U.S. carrier ranked by J.D. Power as being “among the best,” while Southwest and Alaska were included in the “better than most” grouping. By ranking 2 points above the industry average Delta qualified as “about average.” But American and United fell into a grouping that J.D. Power disdainfully named “the rest.”

Apart from the horse race-style results of how each carrier’s frequent flier program ranked, there were some potentially meaningful insights that air travel consumers can glean from this year’s J.D. Power report. They include:

  • Thanks to the global reach of their route networks the big U.S.-based global carriers have such large customer bases and loyalty programs that they apparently feel they don’t have to provide unique or extra services or benefits to their frequent fliers, or to deliver services with a special flair in order to retain their frequent fliers’ loyalty. Smaller carriers, or those like Southwest which are large in terms of numbers of passengers carried but somewhat limited in the scope of their operations, have to provide more or unique services – or, as with Southwest, make earning free flight benefits somewhat easier to achieve – to attract frequent fliers away from the big global carriers.
  • Frequent fliers don’t like change or complexity, at least in relation to their preferred carrier’s program. Beginning around 2015 the Big Three began shifting the basis on which their frequent flier programs were built from the total number of miles flown to the amount of money spent by the frequent fliers. In general, all three now offer more mileage points to those who buy more expensive tickets. That, in turn, makes it possible for high revenue-producing passengers to earn benefits more quickly, and to book free flights more readily. But less prolific and less profligate travelers can’t qualify for free flights as quickly and can’t claim free seats on future flights as easily as the big spenders. As a result the changes, though now well-established, still have lots of frequent fliers confused and, perhaps, a bit angered.
  • The Big Three see their frequent flier programs more these days as major sources of incremental revenue than as tools for retaining customers’ loyalty. For example, American takes in nearly $2.5 billion from the sale of frequent flier mileage points to third parties such as banks and retailers, who in turn award those points to their own customers for using the bank’s credit cards or shopping at their stores or websites. But since around 18% of its seats annually fly empty, giving away 6% of those otherwise empty seats costs the airline virtually nothing. So, in addition to helping retain the loyalty of customers, American’s frequent flier program, like those of its competitors, has become an enormous source of profits.
  • Satisfaction scores increase 102 points when airline staff address frequent fliers by their names, but even though this is by now a well-known factor in customer satisfaction it actually happens only about 35% of the time. Similarly, satisfaction scores climbs 68 points when airline staffers recognizes a loyalty program member’s status during the booking, check-in, departure or flight, but that, too, only happens about 53% of the time.
  • Some frequent flier perks generate more customer satisfaction than others. Discounts on airport and limousine services drive the most significant increase in overall satisfaction. The next most powerful benefit in terms of increasing an airline’s loyalty program satisfaction score is the waiving of a ticket change fee for making such a change on the same day as travel.
  • Frequent fliers are big users of mobile travel management technology and they find it pretty satisfying when an airline has a good app available to them. Mobile app usage among loyalty program members increased 10% in the past year, according to the report. Now about 56% of program members report that they have a mobile app on their smartphone or tablet. And they, as a group, satisfied overall than loyalty program members who don’t use or don’t have such an app.

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If you want to be completely satisfied with the way your preferred airline treats you as a high mileage member of their frequent flier/customer loyalty program, you probably should avoid the Big Three U.S. carriers: American, Delta and United.

That’s easier said than done since the Big Three dominate travel at most of the nation’s busiest airports. Still, that’s the most obvious – and maybe the snarkiest - conclusion to be drawn from the 2019 rankings of big U.S. airlines’ customer loyalty programs from the marketing research firm J.D. Power.

Top Ten lists are so common these days – and often so baseless or frivolous – that they’re often ignored. But when J.D. Power, the biggest name in customer satisfaction research, speaks, many still pay some attention. And now we’re being told that the big U.S. airlines have altered the way their frequent flier programs work so much that nearly half of all consumers don’t fully understand how to redeem their mileage points in ways that ways that yield the most satisfying results.

The J.D. Power 2019 Airline Loyalty Program Satisfaction Study reports that 45% of the members of U.S. carriers’ loyalty programs say their satisfaction with the airlines and those programs is significantly diminished by complexity encountered when they try to redeem their mileage points for free flights or other benefits.

"This is the third year in a row that we’ve seen airline loyalty program customer satisfaction hampered by a widespread lack of understanding of how to extract the most value from the programs," said Michael Taylor, who lead’s J.D. Power’s travel intelligence group. "Many airlines are evaluating the success of their loyalty programs based on dollars spent by travelers rather than on miles flown. That’s a significant shift away from rewarding frequent travelers and toward rewarding high spenders."

Thus, it shouldn’t be much of a surprise, in that context, that American AAdvantage and United’s Mileage Plus programs finished in a tie for last place in the J.D. Power rankings with matching scores of 764 on an indexed scale of 1,000 in terms of customer satisfaction with their loyalty programs. They were the only two carriers to score below the industry average of 789.  Delta’s SkyMiles program scored slightly better than it’s two biggest competitors, but it’s score of 791 was only two points better than the industry average.

At the very top of the industry group was JetBlue, whose much smaller TrueBlue loyalty program earned a customer satisfaction score of 821.

Southwest Airlines, which actually carriers more domestic passengers than any other airline (though it  offers only minimal international service) placed second in the category. Its Rapid Rewards loyalty program had an index score of 812. And Alaska Airlines’ Mileage Plan program was close behind with a loyalty program satisfaction index score of 810.

JetBlue was the only U.S. carrier ranked by J.D. Power as being “among the best,” while Southwest and Alaska were included in the “better than most” grouping. By ranking 2 points above the industry average Delta qualified as “about average.” But American and United fell into a grouping that J.D. Power disdainfully named “the rest.”

Apart from the horse race-style results of how each carrier’s frequent flier program ranked, there were some potentially meaningful insights that air travel consumers can glean from this year’s J.D. Power report. They include:

  • Thanks to the global reach of their route networks the big U.S.-based global carriers have such large customer bases and loyalty programs that they apparently feel they don’t have to provide unique or extra services or benefits to their frequent fliers, or to deliver services with a special flair in order to retain their frequent fliers’ loyalty. Smaller carriers, or those like Southwest which are large in terms of numbers of passengers carried but somewhat limited in the scope of their operations, have to provide more or unique services – or, as with Southwest, make earning free flight benefits somewhat easier to achieve – to attract frequent fliers away from the big global carriers.
  • Frequent fliers don’t like change or complexity, at least in relation to their preferred carrier’s program. Beginning around 2015 the Big Three began shifting the basis on which their frequent flier programs were built from the total number of miles flown to the amount of money spent by the frequent fliers. In general, all three now offer more mileage points to those who buy more expensive tickets. That, in turn, makes it possible for high revenue-producing passengers to earn benefits more quickly, and to book free flights more readily. But less prolific and less profligate travelers can’t qualify for free flights as quickly and can’t claim free seats on future flights as easily as the big spenders. As a result the changes, though now well-established, still have lots of frequent fliers confused and, perhaps, a bit angered.
  • The Big Three see their frequent flier programs more these days as major sources of incremental revenue than as tools for retaining customers’ loyalty. For example, American takes in nearly $2.5 billion from the sale of frequent flier mileage points to third parties such as banks and retailers, who in turn award those points to their own customers for using the bank’s credit cards or shopping at their stores or websites. But since around 18% of its seats annually fly empty, giving away 6% of those otherwise empty seats costs the airline virtually nothing. So, in addition to helping retain the loyalty of customers, American’s frequent flier program, like those of its competitors, has become an enormous source of profits.
  • Satisfaction scores increase 102 points when airline staff address frequent fliers by their names, but even though this is by now a well-known factor in customer satisfaction it actually happens only about 35% of the time. Similarly, satisfaction scores climbs 68 points when airline staffers recognizes a loyalty program member’s status during the booking, check-in, departure or flight, but that, too, only happens about 53% of the time.
  • Some frequent flier perks generate more customer satisfaction than others. Discounts on airport and limousine services drive the most significant increase in overall satisfaction. The next most powerful benefit in terms of increasing an airline’s loyalty program satisfaction score is the waiving of a ticket change fee for making such a change on the same day as travel.
  • Frequent fliers are big users of mobile travel management technology and they find it pretty satisfying when an airline has a good app available to them. Mobile app usage among loyalty program members increased 10% in the past year, according to the report. Now about 56% of program members report that they have a mobile app on their smartphone or tablet. And they, as a group, satisfied overall than loyalty program members who don’t use or don’t have such an app.

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I wrote my first airline-related news story in May 1982 – about the first bankruptcy filing of Braniff International Airways. That led to 26 years covering airlines and

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