Tag Archives for frequent flyer.
The JetPrivilege program has value. Last summer investment group Blackstone looked at buying it outright.
Indeed the frequent flyer program has been preparing to operate independently of Jet Airways.
StarLux airlines, wants help naming its frequent flyer program and elite status levels.
The Taiwanese startup is planning to commence operations early next year, and is being launched by the former Chairman of Star Alliance carrier EVA Air who was the victim of an estate squabble stemming from plural marriage.
I stumbled upon a treasure trove of current data on frequent flyer programs published at the beginning of the year. Some airlines have disclosed newer data in investor filings over the past three months since this was published, however it’s still largely current.
How many members do frequent flyer programs have? When will miles be redeemed? How many miles will never be redeemed? How much will redemptions cost the airlines?
Air Canada, along with Aeroplan’s banking partners CIBC, TD, and Visa, completed their agreement to buy Aeroplan from Aimia.
That gives Air Canada its members to market to right away, and it eliminates expected new major competition between the two from the marketplace before it even begins.
Programs issue too many miles. There aren’t enough award seats, especially with planes flying full. They need to either increase the number of award seats or increase the cost of each seat, otherwise you just have frustrated members who can’t redeem.
At the same time programs don’t need to spend as much marketing to fill planes when planes are already full. But that’s an argument for reduced earning, not for changing redemption prices.
Programs with set award prices (award charts) usually devalue in a predictable way.
Two years ago I wrote about husbands who fly business class while their wives fly coach.
Now from the Washington Post‘s dating column…
While both Etihad and Jet Airways would retain stakes in the program after a deal with Blackstone it’s not clear the relative shares each party would give up. For Etihad even a partial sale would them out of their worldwide expansion, which they’ve retrenched from after losing their shirts in Alitalia and air berlin. For Jet Airways it would provide them desperately-needed cash.
Reportedly the deal would value the program at $429 – $569 billion, which is 43% – 90% higher than in 2013. At the same time though membership in the program has grown 220% during that period so its value would be lower on a per-member basis.
Frequent flyer programs create tremendous value for airlines. They’re highly profitable, and have been for years. When United filed for bankruptcy it was said to have to continue flying to support the underlying credit card business. The airline’s first call after seeing the judge each time was to Jamie Dimon.
The issuer of the United co-brand credit card provided debtor-in-possession financing to United, and co-led bankruptcy exit financing. As with other airlines, United received hundreds of millions of dollars in loans backed by future mileage sales to provide liquidity during the financial crisis.
When it comes to domestic awards airlines are rarely going to give you 2 cents a point in value. And you’re still stuck hunting and pecking for award space rather than taking the flights you want.
As award charts devalue, and airlines charge more and more points for awards (especially when saver seats aren’t available) while paid tickets have often gotten cheaper using points to directly pay for travel makes more and more sense. In an era of regular $300-$400 roundtrips to Europe it can still make sense to pay for travel with credit card points even when it no longer makes sense to do so with airline miles.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
