The Extra Mile

Just How Rewarding Are Airline Rewards Programs?

August 30, 2004 - In 2003, members of the country's three largest frequent flyer programs--those operated by American Airlines, United and Delta--redeemed their miles for 2.5 million, 2 million and 2.8 million frequent flyer award tickets, respectively. In the cases of both Delta and United, that amounted to giving away nine percent of the carriers' available seats. For American, it was just under eight percent.

But against this backdrop of apparent airline largesse toward frequent flyers, there's a steady and ever-louder drumbeat of complaints from consumers who were stymied by the lack of award seats and forced either to abandon their plans to use miles, or to redeem twice as many miles for unrestricted awards, i.e. seats unencumbered by strict capacity controls.

Just how extensive is the problem? And which airlines do better and worse jobs of accommodating program members' requests for award tickets?

To their considerable frustration, consumers will search in vain for definitive answers to these questions.

The airlines themselves, the ultimate source of such data, have begun routinely reporting the gross number of awards issued annually, partly in response to consumer complaints of industry high-handedness. They stop short, however, of divulging the number of award requests denied outright. Or the percentage of requests for restricted awards which had to be converted to more expensive unrestricted bookings. Or the number of complaints received regarding award-seat availability.

The Department of Transportation--which tracks and reports exhaustively on on-time departures, lost luggage and other airline performance metrics in its "Air Travel Consumer Report"--received 145 frequent flyer-related complaints through June 2004, up from 97 for the same period last year. But the DOT doesn't identify the complaints' specific causes or associate those complaints with individual carriers.

So consumers wishing to distinguish mileage fact from mileage fiction are left to sift through a hodgepodge of evidence, some of it contradictory.

On the one hand, there's the buzz among frequent travelers--everything from cocktail party chatter to exchanges in travel-related chat rooms to subscriber feedback printed in travel publications. Judging from this manifestly anecdotal evidence, the problem of scarce restricted awards is serious and growing worse.

That view is reinforced by ongoing surveys of mileage-earners by the likes of e-Rewards, an online loyalty program, and FrequentFlier.com.

The latest e-Rewards survey of frequent travelers, as reported in the New York Times, found that 26 percent of those polled felt that award bookings were "much more difficult" or "virtually impossible" to secure.

And respondents to a FrequentFlier.com poll on award availability indicated that obtaining restricted awards is "usually a problem" or "impossible" more than half the time on three of the Big Six airlines, Continental, Delta and Northwest.

But there are contrary indicators as well. As recently as Aug. 1, a USA Today article cited results of a series of test bookings which concluded that restricted award seats were available on popular routes fully 73 percent of the time. The best performance was racked up by Delta, which accommodated award requests 85 percent of the time.

Those results fly in the face of the generally negative sentiments heard around the water cooler, and the findings of other studies. In the FrequentFlier.com poll, for example, only 11 percent of those responding reported that Delta award bookings were "never a problem," while 63 percent found them "usually a problem" or "impossible."

The questions swirling around frequent flyer awards are hardly academic. Until the data is made available, consumers' decision to participate in programs in the first place, and their subsequent choice of one program over another, will be based on the shakiest of foundations: an unstable mixture of rumor, hearsay and incomplete information.

That lack of transparency strikes many--myself included--as fundamentally unfair and at odds with a basic principle of the free marketplace: that consumers should have ready access to sufficient information to make educated decisions. Accordingly, I have written to the DOT to recommend that they exercise their rulemaking authority to mandate that airlines fully disclose performance data for their mileage programs, including answers to the questions posed in this article.

If you wish to do the same, or suggest a different approach to the problem, the DOT's contact information is as follows:

Aviation Consumer Protection Division
U.S. Department of Transportation
400 7th Street, S.W.
Washington, D.C. 20590
E-mail: airconsumer@ost.dot.gov