LOYALTY PROGRAMMES AND HOW THEY DISTORT TRAVELLER BEHAVIOUR

Good piece on in our sister magazine Buying Business Travel looking at how loyalty programmes distort traveller behaviour – from the travel buyer perspective: loyalty programmes and how they distort traveller behaviour.

The biggest bugbear for managers is that loyalty programmes can lead to executives booking higher priced air tickets and room nights. The fact is the cheap seats don’t cut it when it comes to points – and more points mean more prizes.

“This can lead to travellers gaming the system whereby they book late to ensure they end up with the last seats at the higher prices and more points. Believe me, this does happen,” says Knights.“I believe this is akin to fiddling your expenses; you are actively doing something to cheat your company. It’s as serious as that.”

Well of course thats the purpose to the company. Look at any airline/hotel programme and they’re persuasive since many bookings can’t use their offers.

All US majors and QF and probably EU airlines get a substantial income from their loyalty programmes.

Sometimes an airline sells their loyalty programme and its usually worth in excess of a billion dollars!

Makes sense however what are the incremental expenses if there is no hotel lounge for breakfast, snacks and drinks? Buying on board versus free? pay for luggage versus included? Airline lounges versus airport purchased food? Early flight booking versus cost of change. These should be accounted for I believe.

Corporate travel would sometimes try to put you on a cheap flight from Stansted even though it would cost you £80 (`7,241) extra to get there (+time). They would also put you in a cheaper hotel that requires a taxi ride to and from the office rather than a short walk.

Until corporate travel understands the end to end dynamics of business travel, both from a time constraint and total costs perspective, this will continue to be a challenge.

Deep analytics on travel purchase/ expenses behaviours could potentially help companies negotiate better contracts based on staff behaviour and balance the books whilst making staff happy.

Both the loyalty schemes and employer own the traveller, for different reasons. As the article suggests, getting the loyalty schemes and employers aligned is no easy task – with cost and loyalty colliding. From experience, the employer rarely wins in the end.

I had this discussion recently with a friend who has an interest in the matter as he’s an accountant. The challenge is to attribute a value to the ‘miles’ since there are so many variables depending on how and when they are redeemed. It’s the old ‘how long is a piece of string’ story.

I must be one of the few people in my company that never, ever expenses for ‘meals and drinks’ at airports. BA Gold, so I avail myself of the lounges. I reckon the company benefits there, and I’d be severely miffed if the points went to the company, considering the sheer bloody angst I occasionally suffer with delayed or cancelled flights. In any case, if I can score a decent deal in J, I’m happy to pay the extra myself because I’ve done the maths, and it’s worth it, over a year.

So how would you divvy up the frequent flyer miles in a case like that?