THE NUMBERS GAME

Airline loyalty programmes are changing the ways in which they reward frequent flyers

Change is in the air. In the past couple of years, several airlines have instigated major overhauls of their frequent flyer programmes (FFPs), with a clear trend emerging towards a revenue-based model in preference to the traditional miles-based formula.

Essentially, this means carriers are starting to give greater rewards to those who spend more cash, as opposed to the original format that favoured those who racked up the longest distances or travelled the most frequently. Or, to put it another way, airlines are starting to change the definition of what a “loyal” customer is – much to the ire of many frequent flyers.

“Something that has started to irk me is that my historic loyalty isn’t recognised. In some cases it’s exactly the opposite and I’m treated like a leper for daring to drop a tier level!” said one Business Traveller Forum user.

The effects of the revenue-based FFPs have perhaps been felt most in the North American market, with all “Big Three” US carriers adopting the new rewards model. Take United’s Mileage Plus, for instance: Table 1 shows a rough calculation of the miles economy passengers will earn for a flight between San Francisco and Hong Kong under the airline’s revamped system, compared to the old miles-based structure, which clearly produced a higher return.

This has led to the term “devaluation” being used online by angry frequent flyers, with many complaining that the new changes heavily favour big spenders ahead of loyal customers. This complaint is not unfounded: as Table 2 reveals, passengers in Global First (first class) are now earning substantially more miles than they did before.

But while economy passengers are losing out, there is clear logic involved. After all, an individual who forks out US$47,250 to fly long haul three times a year with United in Global First is more valuable to the airline than someone who spends just US$15,000 flying the same route up to ten times a year on economy.

Under the previous earning scheme the economy traveller would have earned around 100,000 points – enough to attain Premier 1K status. The first class-paying passenger, meanwhile, although spending almost three times as much, would have only gained about 30,000 points – leaving him/her stuck at Premier Silver.

So, if you are paying a much heftier sum than your fellow traveller, why shouldn’t you expect to be rewarded accordingly?

Cathay Pacific is the latest carrier to jump on the bandwagon; changes to the Marco Polo Club came into effect last month that also now remunerate its top-spending flyers ahead of those who might fly more regularly in coach.

Silver tier was once attainable to anyone who had accumulated 30,000 miles or flown 20 sectors with either Cathay Pacific or its fellow Oneworld and airline partners. This meant that an economy passenger who flew between Hong Kong and Taiwan ten times a year (for as low as HK$1,500/US$192 per return fare) could easily achieve the premium status.