Back in April of last year, I wrote Five Times Consumers Won Against Frequent Flyer Program Changes.
In the aftermath of American’s elimination of stopovers on international awards at the international gateway city and elimination of distance-based awards, I wrote about when consumer uproar caused American to never implement an announced $5 award redemption fee. American’s $5 online award booking fee simply went quietly into that good night.
There are plenty more examples of where consumer outrage has led programs to roll back unpopular changes. Here are five:
- United required a Saturday stay on a roundtrip ticket in order to redeem a saver award. They rolled back the change amidst consumer backlash (while Northwest slipped in their own version of the change – which stuck for many years).
- United made systemwide upgrades redeemable only on nearly full fare (H and above) tickets in 2003. There was enough of an uproar that they even issued additional sweet spot certificates valid on nearly any fare for the same year, and had less restrictive international upgrades the following year (that still excluded the cheapest fares). That policy remains in force today.
- US Airways planned to count only full fare tickets towards elite status. The public face of the airline explaining this change is now the CEO of Spirit Airlines. At the time he described customers buying the inexpensive tickets they offered as not having the kind of loyalty they were interested in. Ironically Baldanza only wanted the highest fare passengers, and now he only wants the highest fee ones!
- US Airways announced the end to flight bonuses for elite members in 2008 and reversed course. And they even did so retroactively. At the end of 2008 elites all received the flight bonuses they would have earned while the change was in place (May 1 – November 19).
- In December 2002 Delta announced they would stop giving full elite credit to discount fares. Two years later they rolled back the change and also rolled back award fee increases.
Several folks told me at the time: what’s different now is that there are only three major legacy airlines left in the U.S., so there’s no competition.
In fact, the airline industry is intensely competitive. Most routes have at least three options or more on a one-stop basis in the United States. Airline prices tend to converge with each other precisely because there’s no monopoly pricing power.
Nonetheless, we don’t see big consumer wins in these examples since 2008. Here’s why.
- Consumers win when pushing back against changes when their position is strong relative to the company they’re pushing back on. The wins were happening around 2002, during a recession, and 2008 as the Great Recession starting coming upon us.
- We didn’t see wins like this 2009 – 2012 is because companies weren’t making as many of these changes then. And those that did simply lost business, consumers moved over to competitors who were being much more generous.
- What’s different now isn’t mergers, it’s the economy. Hotels are full, planes are full, companies don’t feel they need marginal consumers now.
- When the economy turns, consumer action will matter more than it does now.
Although I hold out quite a bit of hope that when a change a program makes offends the sensibilities beyond the frequent flyer core — when programs do something that strikes the public as fundamentally unfair — members will be in a stronger position to voice their objections and convince programs to change… because the negative effects of the change on the company will be felt in their bottom line.
Competitive pressures do remain. United feels competitive pressure to do whatever Delta does, because MileagePlus lacks better ideas – or the confidence of those ideas – itself. American will merge its AAdvantage program with Dividend Miles, and evaluate what’s working in its program versus how well the competition is doing with different programs. Alaska sees a competitive advantage in not upending its frequent flyer program.
At some point economic fundamentals will change and an airline’s customers will matter (as Alaska suggests they do today), and at that it will be in the carrier’s interest to listen.