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The Top 10 Travel Rewards Stories of 2011

By | Published December 30, 2011 9:50 am
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Comparing perceptions of the notable events of 2011 with a fellow travel industry commentator recently, we found ourselves emphatically in agreement on only a single point: There were plenty of candidates for this year’s top-10 list.

Here are mine, in no particular order …

1. American Airlines’ Bankruptcy

When American filed for protection under Chapter 11 of the bankruptcy code in November, I suggested that the airline’s customers had little to fear, and that their frequent flyer miles were almost certainly safe.

In fact, there was the very real possibility that American’s predicament would result in a rush of promotional activity to offset concerns about the company’s viability and minimize defections. That prediction proved to be correct with American’s unilateral double elite-qualifying mile promotion, and a widely-publicized 50,000-mile sign-up offer for its Citibank AAdvantage credit card.

There’s also the prospect of a much less welcome result: American, in its weakened state, could be acquired by US Airways, which has failed in past attempts to acquire both Delta and United.

If US Airways were successful in absorbing American and became the operator of the AAdvantage program, by whatever name, it would almost certainly amount to a downgrade for current AAdvantage members.

2. Southwest’s New Rapid Rewards Program

The dust still hasn’t settled from the launch of Southwest’s thoroughly redesigned Rapid Rewards program in March. Southwest’s traditional base of price-sensitive leisure flyers continues to cry "foul" and wonder "where the Luv went?" But business travelers—a market segment increasingly coveted by Southwest—find the new program, which awards points according to customers’ spend, more rewarding than its predecessor.

Perhaps more significantly, the long-term implications for the industry have yet to unfold. While Virgin America and JetBlue already had revenue-based loyalty programs in place, the endorsement by Southwest of that model could be the catalyst that pushes one or more full-service airlines to follow suit.

3. 30th Anniversary of Frequent Flyer Programs

Yes, it’s been 30 years since American sprang AAdvantage, the first modern airline loyalty program, on an unsuspecting public.

While the programs’ basic model has been mimicked across industries ranging from coffee houses to financial services, the value proposition offered by the airline schemes remains unmatched. The not-so-secret secret to the programs’ success: awards that are cheap to give away (seats that would have been unsold anyway) but have high perceived value, financial and emotional.

Naysayers notwithstanding, frequent flyer programs are here to stay.

4. Starwood’s Guest Reviews

No doubt Starwood’s featuring unedited customer reviews on its website is in part an effort to declaw such independent review sites as TripAdvisor (SmarterTravel’s sister site).

Still, it’s a move in the direction of transparency and as such a step in the right direction.

5. Disappearing Dining Miles

Remember when you could reliably expect to add tens of thousands of miles to your account balance simply by eating at Rewards Network restaurants and using a credit card linked to your airline or hotel program?

Those days are gone, perhaps forever, undone by the scaling back both of the base earning rate (maximum five miles per $1 spent for "elites," versus 10 miles per $1 in previous years) and the frequency and generosity of the bonus promotions.

Not-so-bon appetit!

6. Death of Foreign Transaction Fees

Foreign transaction fees were long viewed by consumers as a gouge. It wasn’t until this year, however, that the credit card issuers began honoring their customers’ anti-fee sentiment en masse.

This year, American Express eliminated the fees from some of its priciest cards, as did Citibank. Chase established itself as the clear leader here, offering no-fee cards linked to a number of airline and hotel programs.

There are many more cards yet to be rendered fee-free, but the trend has been established and competitive pressure should push holdouts to adopt similarly consumer-friendly policies.

7. Rise of Credit Card Super Perks

As never before, 2011 saw the bulking up of perks linked to travel rewards credit cards.

Today it’s possible to purchase such enhanced status and benefits as airport lounge access, elite-qualifying miles, waived fees for checked bags, and priority check-in, simply by signing up for a credit card.

To be sure, these are pricey cards. The annual fees on premium cards are in the $395 – $495 range, three to four times as expensive as cards with lesser benefits.

8. Delta Ditches Expiring Miles

When Delta did away with expiring miles earlier this year, I counted it a modest win for consumers. After all, with so many options available for keeping accounts active, it’s not that difficult to keep miles from dying. So really, the change was a meaningful benefit only to those who are least engaged with the programs to begin with.

Looking back over the year, however, it stands out as an event to be remembered and appreciated. With the general trend in the direction of making frequent flyer miles more vulnerable to expiration, Delta’s decidedly contrarian move deserves kudos.

9. Priority Club Does Last-Minute Awards

It’s hardly a new idea. Airlines have been selling discounted tickets for flights the following weekend practically since the proliferation of email made it possible to publicize such last-minute fares. And the concept has been extended to award flights by United and US Airways as well.

InterContinental’s Priority Club Rewards was the first hotel program to embrace the concept, introducing Last Minute Reward Nights—discounted rates on award stays during the first full weekend of every month—in May.

While not as pressing an issue with hotel programs as it is with their airline counterparts, award price and availability are keys to loyalty program value. Any move that reduces prices and solidifies availability is a positive move.

10. Outsized Credit Card Promotions

There was a time when a 25,000-mile bonus for acquiring a travel rewards credit card was an attention-getter.

In 2011, anything less than 50,000 miles was a yawner. And the really newsworthy bonuses were 100,000 miles (for the British Airways Visa) and 110,000 miles (for the Capital One Venture card).

Trees don’t grow to the sky, however, and it’s likely that the economics underlying such customer-acquisition initiatives have been stretched close to their limit.

Reader Reality Check

What mileage-related events of the past year were most important to you?

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