Why is the value of airline loyalty decreasing?

client loyalty

To the airlines was a useful thing: the points or weather miles that the flights have repeatedly acquired on the airlines themselves will gain free passengers for passengers with this carrier, while buying seats through the balance. However, a study conducted Ideaworkscompany It has shown that since 2019, the average loyalty seat price has increased on six main airlines, which makes it less and less worthy of flying on one flight exclusively.

It is always refreshing to see politicians do what they have been appointed to do. The former Minister of Transport, Beit Boujejj, sent a letter to the four largest American airlines requesting reports on loyalty, practices and policies programs.

The latest investigation into the frequent traveler programs

The Ministry of Transport (DOT) said that its achievement will focus on how the frequent traveler programs are affected by the practices of airlines, such as reducing the value of miles, hidden and dynamic pricing, additional fees, and reduce competition and selection. Buttgieg sent a letter to Big Four, including a prolonged questionnaire asking them to provide records and reports on their loyalty programs, practices and policies.

The questionnaire is designed for each airline to obtain related information about the real value provided by their loyalty programs. For example, one of the questions asks the airline to separate every change to each airline for its loyalty programs since 2018, and asks for how the value of the dollar has changed for a tendency in the past six years. Airlines that received such questionnaires listed below:

Read here To find out any Delta Sky Miles Credit Card is the best to reach the situation.

This investigation, which was launched, shows that the point no longer believes that it can trust in the airlines concerned to be able to determine the value of their rewards. For customers who raised their reserved or miles and preserved for a long time, it could be a dirty trick for the airline to change the value after the truth, which was previously commented by Buttigieg.

“These programs bring a real value to consumers, with families that often depend on the bonuses of airlines to finance leave or pay the price of a trip to visit their loved ones, but in contrast to the traditional savings account, these rewards are controlled by a company that can change their value unilaterally.”

Dot also expressed concern that the incorporation inside the industry had led to a least competition and selection among the loyalty program customers. They have expanded in this matter, explaining that when airlines merge, the joint loyalty program can create problems for customers if you lose rewards, value or status. As a result, there is no little asylum, and the customer must adhere to the new policies of the new airline.

Who benefits from loyalty programs?

Ordinary customers airlines have already been rewarded by allowing access to exclusive benefits, such as the ability to overcome waiting lists, access to exclusive halls, and cheap promotions to the first degree. It took advantage of this from airlines as well as passengers, because they can experience luxury at a lower cost, while the airline managed to make profitable deals with credit card companies and luxury brands, and it works as advertisements and motivating customers to use their services.

For example, Delta received $ 1.9 billion in the second quarter of a deal with American Express, which includes a shared credit card. This deal may be responsible for up to eight percent of the airline’s revenues during this quarter. Airlines for America It is estimated that about 16 million people in the United States are reserving local travel with points of aviation credit cards. Moreover, there is an estimated 31 million card holders, with 63 % of repeated traveler miles by spending credit card.

The airlines of America pressure the Durbin-Marshall Acts, which aims to dismantle monopoly to process electronic credit transactions by large companies such as VISA and MasterCard. According to Institute of Banking PolicyThese credit companies are strongly opposed to this law, on the pretext that it will reduce the value of reward programs.

“Millions of people have part of the different loyalty programs, which allow them to collect rewards to advance towards travel or other advantages,” A4A said in a statement. “American transport companies are transparent about these programs, and policy makers must ensure that consumers continue to provide these important benefits.”

Although it may be good to be transparent about the value of loyalty to loyalty programs, it does not do the customer well when this value changes, leaving the customer of the benefits that he had previously qualified.

How has the value decreased in recent years?

Customer loyalty program business model stimulates to give up cheaper or more suitable flights than other airlines so that they can earn points and privileges with their favorite brand. The commercial aviation industry contains small margins, often about five to seven percent, and increasing traffic due to the frequent flyers that choose a specific airline can swing from losing to profit, not to mention the money that the airline can earn through credit deals and other brand loyalty.

The change that has occurred in recent years is that many airlines have changed how to gain benefits. Previously, a system based on the sector has been used, where Air Miles Flying Miles raises a balance, which can then be used to get more flights. Many airlines have moved to a spending system that gives interest based on the amount of money spent. This benefits the higher newborn, which makes it difficult for the medium traveler to achieve.

In addition, it was just having a loyalty program card that was sufficient to qualify customers to reach halls and other advantages, but increasingly, airlines restrict the benefits at higher levels of loyalty programs, and raise cash requirements to achieve this situation.

When they are combined with practices such as dynamic pricing, which means that airlines can change the cost of the seat in a moment to benefit themselves, loyalty programs begin to look less and less realistic as a way to earn rewards. according to Business InsiderAmerica turned into a dynamic pricing of loyalty programs in 2023.

For BOTTGIEG, who led the investigation of airlines in this regard, reducing the value of the currency and hidden costs is more things in the long list of elements that cause anxiety, according to Business Insider.

“One of the biggest concerns is to reduce the value of the currency,” Potter “Another is some hidden prices where the value of bonuses cannot be predicted.”

Loyalty clients have become increasingly satisfied

A special reaction came from Sean Brown, a 46 -year -old IT official who has recorded nearly two million miles in Delta Skymil.

“Unfortunately, there was a large conversion to the industry. This is in fact not sitting with me well. I will only tell you, the feeling of the plane – it does not matter where you sit if you are in the front, middle or back,” Brown said, “Everyone is very angry at the fact that they get the left and right.”

according to CNNDelta turned into a spending system in 2023, making it difficult to earn the situation and reduce access to a credit card holder. The man also informed the points The transportation company removed its loyalty program prizes from its website in 2015, making it difficult for travelers to plan for future purchases using their feedback. However, this step, in turn, made it easy for the airline to change the prices as it is pleased.

After the change in 2023, there was anger that CEO Ed Bastian admitted that they were “Maybe he went too far.” Then reduced the proposed thresholds required to achieve the condition by about 16-20 %. However, the levels remained much higher than it was in the past. Thanks to the dynamic pricing, the trip may cost 500,000 points in some days and 50,000 points for others, depending on demand and timing. However, in general, prices rise.

Another example was British Airways

Which turned from a sector to spending the reward program this year. Despite the use of incentives such as double air promotions, frequent repetitions had to push a lot to achieve the silver and gold condition with the program, as shown below:

It should be noted that the American aavadantate program provides a better value. According to IDEAWORKSCOMPANY, the cost of the seat obtained by the bonuses has decreased by 21 % on average since 2019. For medium value, Fort Worths in Texas is currently outperforming its competitors, Alaska Airlines, Delta, Jetblue Airways, Southwest and United.