Frequent flyer programs used to be simple. If you flew a lot, you earned a lot of miles. Following the lead of Southwest Airlines, Delta and United recently changed their programs so that rewards are based on the price of the flight and not simply the number of miles flown. If you spend more money on tickets, you earn more miles and are eligible for coveted elite status. Award chart inflation has also increased the number of miles you will need to use a ticket.
These changes are causing companies and organizations with a significant number of travelers to ask themselves these questions:
- How will these changes impact our travelers?
- Will their buying habits change?
- How will we measure or know the cost?
- What can we do about it?
Under the old systems, a traveler who purchased (and flew) a round trip, nonstop ticket from New York to Salt Lake City earned 3,978 frequent flyer miles – the same as the geographic miles. Under the new systems, if a traveler buys a $411 ticket, they earn 2,055 points. To earn the same 3,978 points, the traveler would have to purchase a $795 ticket.
If your travelers decide to select the more expensive tickets just to earn the points, it could have a significant impact on your budget. When you consider that many of these higher fares come up with additional benefits such as premium or first class seating, priority boarding, and complimentary beer, wine and spirits, it’s not hard to see why travelers may be spending money on a higher fare without their manager or accounting team knowing.
As a traveler, the changes to the frequent flyer program probably have you wondering if it is worth the effort to be enrolled. As an organization, there are more impactful questions, like:
- Are our travelers making decisions that positively impact their mileage and status while negatively impacting our bottom line?
- Do we address this well enough at different employment levels in our travel policy?
- How will we know –especially if they don’t book through my travel program - what we can do about this?
- What would our culture say about these decisions?
There are ways to minimize the effects of these changes. First, select other airlines. American Airlines and Alaska Airlines, for example, haven’t changed their programs. You can also select card programs that chase points. Most of these are personal card programs and not corporate ones so evaluate the impact on allowing personal card use versus the benefits your company can secure with corporate cards. Using corporate cards allows you to leverage targeted purchases outside of travel that reward points, get corporate points yourself through corporate rewards programs and then use them to take care of your budget or people or both.