That’s because — as the title of one of their slides at this week’s Investor Day made clear — Industry transition to a revenue-based loyalty prorgram provides opportunity in the near term for Alaska.
Alaska has looked at the numbers, and shared them in a chart, to explain why customers are much better off with a traditional mileage program than a revenue-based one.
Here’s what’s changing with Alaska Airlines Mileage Plan earning (for Alaska flights):
Interestingly, United has historically been Alaska’s major competitor along the West Coast (remember, they partner with every full service airline but United, more or less) and Delta has been their major competitor – directly in Seattle – most recently.
The simple fact that break-even for revenue-based earning at Delta (and at United) is set at 20 cents per mile, but both airlines’ average revenue per seat mile is substantially lower than that, suggests fewer miles will be earned under the new system. (And the highest priced tickets don’t benefit proportionally because mileage earning the capped.)
So what do Alaska’s numbers look like?
- Alaska believes only 5% of flyers would earn more miles under a revenue-based program.
- 79% of flyers do better under their mileage-based system. In other words, 79% would do worse with revenue-based.
Now, they’ve run the numbers on their customer base. So their numbers probably aren’t off by a lot.
And each airline’s numbers are different (which is why it’s so strange that United directly ape’s Delta’s mileage-aerning rates and minimum revenue requirements for elite status).
But Alaska’s numbers publicly make the case pretty strongly that flyers are worse off with revenue-bsaed earning than mileage-based earning.
That doesn’t mean revenue-based is worse for an airline. I’ve argued that revenue-based programs are precisely about spending less on marketing to fill seats when seats are mostly full. Being less rewarding for travelers, for Delta, appears to be a feature not a bug.
Nonetheless, this is pretty strongly persuasive that revenue-based programs aren’t ‘rewarding the right customers’ and better for customers as a whole or for most customers.
(HT: Joe B.)