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December 20, 2010 – Unlike recent year-end look-backs, a review of the loyalty program highlights of 2010 is likely to be heartening for travelers for whom miles and points are a priority.
Although there were some negatives—chief among them the increasing difficulty in redeeming miles for restricted awards—the year’s most significant developments mostly fell on the positive side of the ledger, suggesting a generally consumer-friendly trend.
Some of the following events are genuinely new, while others are developing trends, newly solidified. No attempt has been made to rank them according to their importance; their order is arbitrary.
1. British Airways’ 100,000-Mile Card Offer
After a prolonged period of retrenchment following the meltdown of the financial sector, credit card issuers are back in the business of aggressively signing up new customers.
The industry standard among airline-affiliated cards is a welcome bonus of at least 25,000 miles, enough for a free round-trip domestic award ticket.
But British Airways—and Chase, the card issuer—quadrupled that with an unprecedented 100,000-mile bonus after spending $2,000 during the first three months. It was the most generous credit card bonus ever offered.
More recently, American also upped the ante for its Citi-issued AAdvantage credit card to 100,000 miles, but with a much higher qualification hurdle: 50,000 bonus miles after charging $2,000 during the first four months; an additional 25,000 bonus miles after charging $10,000 during the first year; and yet another 25,000 bonus miles after charging at least $10,000 during the second year.
2. US Airways’ 100% Bonus on Purchased Miles
Over the past year, US Airways has revived and extended its 100 percent bonus for purchased miles so many times it began to feel like a permanent feature of the Dividend Miles program.
With the bonus, travelers could buy enough miles for a business-class award ticket to Europe for $1,375—a deal with a capital “D.”
Unfortunately, the promotion is just that, a limited-time offer. And with the exception of one semi-comparable offer from Delta—same 100 percent bonus, but only on miles purchased using a SkyMiles-linked credit card—it hasn’t spurred much in the way of counter-offers from other mainline carriers.
3. United’s Award-Travel Discounts
While US Airways was making its mark as the industry’s preeminent discounter of miles, United was busy establishing itself as the industry leader in award discounts.
In just over a year, United discounted award travel in selected markets no fewer than 12 times.
United also introduced weekend saver awards—30 percent discounts on selected award flights, announced on Tuesday for travel the following weekend. Although it was a great idea, and a feather in the cap of United’s program, the airline suspended the weekend saver awards without notice or comment.
Honorable mention in this category goes to British Airways, which offered Executive Club members the opportunity to book premium coach award trips for the price normally charged for regular coach awards—a 33 percent mileage savings for flights between the U.S. and London.
4. Hotel Promotions
Never before have there been so many hotel promotions, offered continuously over such a prolonged period.
Unlike the airlines, which could readily decrease capacity as demand for travel fell off the proverbial cliff, the hotels were stuck, with no easy way to reduce the number of rooms they had for sale. With occupancy rates slipping below 60 percent, the major hotel chains were forced into a dogfight for every point of market share, deploying lower rates and generous loyalty program bonuses.
As a result, the past two and a half years have been a bonanza for travelers, who enjoyed great rates combined with plenty of bonus points and free nights.
The outlook for the new year? While there has been some recent lift in occupancy rates and a gradual firming up of average prices, the loyalty offers are likely to persist through the first half of 2011. But thereafter, it may be a return business as usual.
5. Marriott’s Elite Rollover Nights
Marriott introduced Elite Rollover Nights in 2009, and then extended them into 2010.
With rollover nights, any nights earned in 2010 that exceed a member’s elite-qualifying threshold will be carried over to 2011 and count toward earning elite status for 2011.
So, for example, a Marriott Rewards member who stays 60 nights in 2010—10 more than the 50 required for Gold status, but too few to qualify for Platinum—will be awarded Gold status and have the extra 10 nights applied toward reaching status for the next year.
This seems like a common-sense approach to elite qualification, and a win-win for both hotels and their customers. Travel consumers get full value for their stays. And the travel supplier enjoys the “loyalty effect”—more business, higher profits—of travelers’ continued patronage, even after they’ve reached an elite threshold and might otherwise shift their allegiance to another hotel chain, to earn status in a second program.
A Marriott representative confirmed that rollover nights will be extended into 2011. That’s good, but it would be better to simply make them a permanent feature of the program.
When Delta added rollover elite-qualifying miles to its program for 2010—the only airline to do so—they made it a program policy, not a limited-time promotion.
6. Most Improved Program: Virgin America’s Elevate
Out of the gate, Virgin America’s Elevate program was a promise, unfulfilled.
Sure, it boasted no capacity controls or blackout dates on awards—a headline-worthy selling point with consumers increasingly frustrated with scarce award-seat availability.
But, nastily, the program expired members’ points, terminally, after just 18 months. And then there was the matter of its earning and awards partners—with the exception of a program-linked credit card, there weren’t any.
But Virgin America seeded the partner roster with Budget and Avis, then added Hilton, Joie de Vivre hotels, and the Morgan Hotels Group to the line-up.
Next, the airline linked Elevate to Velocity, the loyalty program of V Australia and Virgin Blue, giving Elevate members the opportunity to earn points for flights to Australia and other Asia-Pacific destinations, and later tied up with Virgin Atlantic’s Flying Club.
In February, Elevate got its own mileage mall, The Red Store, a network of more than 150 online retailers that award Elevate points for shopping at the likes of the Apple Online Store, Barnes & Noble, Best Buy, Home Depot, Macy’s, Target, and so on.
And in March, finally, Virgin America jettisoned Elevate’s odious points-expiration policy in favor of the industry standard: Any account activity now extends the life of all points for another 18 months.
Elevate may not have fully lived up to its catchy name; but it’s on the right path to do so.
7. American’s Hotel Awards
Hotel stays have been on and off the awards charts of airline loyalty programs for years. When they were offered, they generally didn’t deliver very good value—which probably explains why their comings and goings went more or less unnoticed.
But in November, American added free hotel nights to the AAdvantage rewards catalog at prices that make them much more than token awards. Paying 9,600 AAdvantage miles for a room night that would cost $119 amounts to getting 1.24 cents for every mile redeemed. And that’s about the same per-mile value frequent flyers get when they cash in their miles for free flights.
8. One-Way Awards
In February, United followed American in allowing members of their loyalty programs to redeem miles for one-way flights, for half the number of miles required for a comparable round-trip. Delta doesn’t yet allow members of its program to book one-way award trips, but it’s taken a step in that direction with mix-and-match awards (a restricted coach seat in one direction, with an un restricted first-class seat on the return, for instance).
Half-price for half a round-trip. What could be simpler, or more logical?
But for reasons both technical and financial, for decades the standard policy among mainline carrier programs had been to charge the round-trip price in miles, even when the customer only intended to fly one way.
Simplicity and fairness appear poised to carry the day, finally.
9. Rush Fees for Award Bookings
In 2009, when United did away with the fees to book award flights within 20 days of travel, it was a positive for United’s Mileage Plus program and a gesture toward fairness and decency in an industry that has lately been known more for its shameless nickel-and-dimeing.
Rush fees are a holdover from the pre-digital days of air travel, when a last-minute ticket request meant the airline had to prioritize the actual writing of the ticket, and send it by FedEx to the customer. To cover the extra effort and expense, a surcharge was justified.
Today, the process is automated and there’s no cost to email a customer his e-ticket. Rush fees—now called last-minute ticketing fees—in other words, are a gouge. And in rescinding them, United was putting morals (and yes, marketing) before money.
The bad news for 2010: More than a year after United did the right thing, no other airline has seen fit to follow their lead.
10. No Year-End Elite Promotions
Last year was a windfall for travelers aspiring to elite status, or aiming to upgrade from a lower elite tier to a higher one.
For fully half the year, the largest airlines offered double elite-qualifying miles, putting elite perks within reach of many flyers who would have fallen well short otherwise.
This year, those generous elite-qualifying promotions were conspicuous by their absence.
It would be a mistake, I think, to attribute the change to sheer stinginess on the airlines’ part. More likely, the airlines were in fact acting responsibly, recognizing that more members of the elite club inevitably means fewer perks for everyone.
After all, the key benefit of elite status, complimentary upgrades, is in limited supply; and more elite members competing for the few available first-class seats means more frustration for the airlines’ best customers.
Sometimes tough love is the best love.