The Extra Mile

New Under the Sun

Summer is peak season for mileage program developments

August 1, 2005 - This summer has been an uncommonly busy one for travel industry loyalty programs, which have been rolling out changes at a feverish pace -- some of them good for travelers, some of them bad, and some of them, well, just plain intriguing.

Awards more accessible

While it's hardly good news for travelers, whose tolerance for close quarters is being pushed to the breaking point, the airlines have been flying full. In June, JetBlue's system load factor (percentage of seats occupied) was 89.0 percent. United's was 88.1 percent, a record. And Northwest ran 87.7 percent full.

Those high load factors translate directly into fewer available seats for members of airline programs hoping to redeem miles for summer trips, exacerbating the already long-simmering problem of hard-to-book awards.

Earlier this spring, in separate attempts to alleviate the pressure on scarce awards, American and United both expanded their award catalogs to include hotel stays. Several more recent moves suggest that airlines increasingly recognize the problem and have resolved to address it.

First, in a move that may strike many as both brilliant and obvious, America West in July began allowing members of its FlightFund program to mix and match restricted and unrestricted segments, and segments in coach and first class, to create a roundtrip award flight.

So rather than abandon an award trip because there are no restricted coach award seats available for one leg of the journey, the member now has the option of booking that leg in unrestricted coach, or in restricted or unrestricted first class.

Such flexibility should help consumers work around the capacity controls that often make restricted awards maddeningly difficult to obtain.

Also new on the award front: the More Store, an online portal where elite members of Frontier's EarlyReturns program can use their miles to buy or bid for "lifestyle oriented merchandise" as alternatives to flight awards.

There are currently products and services from more than 35 companies on offer, from jewelry to restaurant meals to golf outings.

And finally, in yet another concession to the needs of would-be award travelers, United is allowing Mileage Plus members to redeem fewer miles for domestic award trips of 750 or fewer miles each way. With the discount, roundtrip coach awards are 15,000 miles and business or first awards are 30,000 miles.

Discounted awards must be booked at United's website and are for travel between July 15 and Dec. 31.

Dining programs slim down

On July 1, the high-flying dining-for-miles feature of 10 airlines, including American, United and Delta, lost some of its altitude.

Until then, the programs -- operated on the airlines' behalf by Rewards Network (formerly iDine) -- rewarded participants with 10 miles for every dollar spent, including tax and tip, at more than 10,000 participating restaurants. It was an exceptionally lucrative way to earn miles for an everyday activity.

Following the change, diners now only earn between one and five miles per dollar, depending on their status.

Like the airline programs themselves, the revised dining program has tiers, three status levels reflecting members' level of activity. Members earn elite status by dining 12 or more times at participating restaurants during a calendar year; engaged status is for those with between four and 11 qualifying dines, or who have established an online profile; and active members have participated up to three times in a year.

The earning rate varies according to the member's status: elite members earn five miles per dollar spent (plus an additional five miles per dollar through June 30, 2006); engaged members earn three miles per dollar; and active members earn just a single mile.

For longtime dining-for-miles fans, who were accustomed to being rewarded at the 10-miles-per-dollar rate, the lower earning rates are a disappointment.

Still, at least for those who have eaten their way to elite status, dining miles remain an appetizing option.

Jameson Inns invites guests to "Invest While You Rest"

Beginning July 1, Atlanta-based Jameson Inns began offering loyal customers shares of company stock through its newly launched frequent-stay program, Jameson Stock Awards.

Customers who stay at a Jameson Inn or Signature Inn for three nights during a 12-month period will receive 10% of their room charges in the form of Jameson stock. Members can purchase additional shares direct from Jameson without paying a commission.

Jameson is a relatively small travel supplier, operating a modest network of 123 inns in 13 states. The company's new program has been reported widely, but rather dismissively, as the latest novelty offering to bubble up from the ever-creative font of travel-industry marketing.

But the powerfully self-reinforcing aspect of such an approach to loyalty marketing should not be underestimated. Awarding customers with stock in a company vests the recipient with a compelling stake in that company's success, which encourages the stakeholder to do more business with the company, which earns them even more shares, and so on.

Once the airlines regain profitability and the value of their stock stabilizes, it's easy to imagine one or more of the major carriers adding a shares-for-flights option to their programs. And promoting it with a tagline along the lines of: "Why just fly United when you can buy Delta?"