One of the most widely held views of my readers is that frequent flyer programs have become less generous because of airline mergers — there’s less competition.
It’s an interesting view, although I’m not sure that it’s a correct one. We very much still have competition from:
- Delta/American/United/Southwest (4 huge domestic players)
- Alaska/Virgin America/JetBlue/Frontier/Spirit/etc (real domestic competitive role players)
Most customers at most airports have real choice in whom to fly. There are hub captives, for sure (which is to say, one airline offering the most service and the most non-stop options so consumers spending other peoples’ money make purchase decisions based on convenience) and there’s not much serious competition for hubs — outside of New York (Delta and United, and to a lesser extent American and JetBlue), Chicago (American and United), Los Angeles (Delta, Southwest, United, American), Seattle (Alaska, Delta), San Francisco (United and Virgin America). Actually that’s quite a lot!
I believe the drivers of less generous frequent flyer benefits are:
- Full flights, airlines don’t need to spend marketing dollars to fill marginal seats when there really aren’t many marginal seats left over
- Capacity discipline, fairly unprecedented in US aviation history, airlines just haven’t been making big investments to grow their fleets, they’ve grown via acquisition and not throwing new capacity into markets.
So it makes sense for airlines to be less generous rewarding flying, and make no mistake revenue-based programs are less generous overall even if there’s a small minority of flyers who come out ahead. Even a large portion of business fare travelers come out behind when you do the accrual math.
When the underlying state of the game changes, the economy heads south and with it business travel, or an airline starts throwing capacity into markets again this could all change again!
In the meantime, not all programs have become equally less generous.
I know where my accrual focuses.