with Lorelle and Brent VanFossen

A Interesting Look at Today’s Frequent Flier Air Mileage Programs

Yahoo News offers “Frequent flier programs change course”, a interesting current look at what is going on with the Frequent flier programs.

The first frequent flier program began in 1981 with American Airlines’ AAdvantage as a way to keep profitable business travelers flying the same airline. Other major airlines like Delta quickly followed.

Twenty-five years later, travelers and industry experts say the programs have flown far off course from their original purpose. Yet it’s doubtful the airlines will ever change from their present direction because the programs have turned into huge revenue producers on their own, a $4 billion industry that’s even been listed by airlines as assets in bankruptcy and merger and acquisitions negotiations. Airlines have created a big business out of selling frequent flier miles to outside companies that in turn use miles to woo their own customers…

Frequent flier programs have grown — to the tune of nearly 430 million members worldwide, said Randy Petersen, editor of Inside Flyer magazine. More than 14.2 trillion frequent flier miles are still in circulation worldwide, for an average of 33,035 per program member — typically enough for one free domestic round-trip ticket in the United States.

…When American started its program, it looked to the S&H Green Stamps loyalty program as a blueprint. That program allowed grocery shoppers to collect green stamps for purchases that later could be traded in for prizes ranging from toasters to mopeds…

…United, American and Delta each rake in an estimated $1 billion a year from the partnerships between airlines and credit cards, restaurants and other companies that pay cash to purchase frequent flier miles. The companies then give them to their customers, Robertson said.

The article goes on to claim that “Ninety percent of the time somebody asks for a flight, they’re able to get the flight they want. Eighty percent at the time they wanted”. I have American Airlines, Continental, and several other frequent flyer programs, and several of our credit cards also work towards airline mileages, and only once in over ten years have we been able to get a free flight even though we’ve earned and qualified for many.

First, they put limits on how long you could accrue air mileage. If they weren’t used up within a specific time, you lost them. Then they changed that, and soon after doubled the number of miles required for a flight. That cut the value of our accumulated mileage in half. Then they got particular about overseas mileage, a pain when we lived overseas. And then they got all weird about code-sharing and using mileage across their buddy airlines. I’ve tried four times in the past six months to use our airline mileages for different trips and each time it ended up either “sold out” (no seats available even though our schedule was incredibly flexible) or costing us more than the mileage was worth between losing out on the value of the mileage and having to pay taxes, airport fees, and other costs on top of just getting the free tickets.

I don’t know if you have found frequent flyer programs working for you or not, and I’d love to hear your stories, but for us, it’s been a bust. Maybe we don’t know the tricks, or maybe we have higher expectations, but for us, frequent flyer programs have not been successful. What about you?

And if airlines are making so much money on airline frequent flyer programs, then why are they near bankruptcy? There’s some fishy business going on with the airline business and I’d sure love some answers to the many questions I have about it, wouldn’t you?

One Comment

  • Posted August 1, 2006 at 2:11 | Permalink

    Personally I’ve found that most times I just don’t bother with Frequent Flier points. Most flights that I take (usually, national flights), don’t actually offer points. I would have to pay more to get an airline that offers points, so I just don’t bother.
    I also feel a little lost in front of the huge number of companies actually offering frequent flier programs, I wish they would all get together and offer a single, comprehensive, program :-)

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