Saturday, May 16, 2009

Frequent flier programs as profit centers?

Frequent flier programs haven't always gotten the best press. Example:

The number of people bumped in 2007 reached an 11-year high. You know what that means?

Not only are the planes overselling, which the airlines have been doing for years, but there’s a reason why you can’t redeem your frequent-flier miles.

Guess what? They don’t ever want to displace revenue passengers, therefore they overbook every flight by 30 percent, they bump people, and here you are with your hard-earned 25,000 miles and you can’t get on the plane.

I am an American Airlines frequent flier member, and therefore received the announcement of the new capability to use your points to obtain one-way flights. However, I missed the STRATEGIC IMPORT of this, apparently. This is what BusinessWeek said:

American Airlines' (AMR) recent decision to allow members of its AAdvantage loyalty program to redeem their miles for one-way tickets—and for just half the miles of a round-trip flight—may have marked a turning point in how the major carriers treat their best customers. American's move shows the extent to which airlines now realize that these loyalty programs have become more than just a cheap-and-easy way to reward their best customers, but are now arguably their biggest profit centers—and may be critical to their survival. And after years of milking these programs, airlines may start taking more steps to ensure that travelers don't become jaded and drop out.

Including reducing the amount of overbooking on flights? Nah....
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