Saturday, July 26, 2014

Why I love Delta's new loyalty program - and why you'll probably hate it - Elliott

Loyalty programs may be the single greatest scam pulled on the traveling public.

to segment customers into castes of “haves” and “have-nots”? Create
legions of blindly brand-loyal passengers? Lift your profits to
avaricious new heights?

Nothing does it like a clever frequent flier program.

Yet, as a consumer advocate, not a day goes by that I don’t receive a
despondent email from a platinum cardmember who spent every travel
dollar with a company, only to come up empty-handed, betrayed by a
program’s vague promises.

Who wouldn’t be fatigued after hearing from thousands of unhappy
passengers whose miles expired or were denied “elite” status or were
banished to the back of the plane on a Transpacific flight? Who wouldn’t
be furious at the travel companies whose adhesion contracts allow them
to pull this barely legal bait-and-switch?

And that is why I love Delta Air Lines’ new loyalty program.

The nation’s number-three air carrier recently announced it would
restructure its SkyMiles program in 2015 so that award travel would be
earned based on ticket price instead of the number of miles flown. It’s
the first legacy carrier to tie points earned directly to how much
you’ve paid, and in doing so it’s incurred the wrath of many customers.
But for the first time in decades, the cold reality of the SkyMiles
program will send many of us into mileage-collecting rehab, where we can
be weaned from our frequent flier addiction and finally make a more
informed and rational booking decision.

It’s about time.

Let me be clear: SkyMiles remains patently unfair to most air
travelers. According to its terms, Delta can change its program rules at
any time without notice, confiscate your miles, or terminate your
membership whenever it wants to. Don’t believe me? Read the fine print
for yourself. Few air travelers actually do.

Delta, no doubt, is licking its chops at all the extra money you’re
about to fork over in exchange for the possibility that you’ll be
treated with just a little dignity on its flights. Studies suggest
loyalty program members spend roughly 40 percent more than non-members. I
suppose the hundreds of millions of dollars Delta earned from its
loyalty program last year — $675 million alone from the sale of SkyMiles
to American Express — just wasn’t enough.

Delta apparently believes it can move the goalposts on its program
again, and get away with it. Granted, the experience in the back of the
plane is beyond awful today, from seats squeezed closer together to
“you-get-what-you-pay-for” attitude from the flight attendants. I can’t
blame anyone for playing the points game and trying to score an upgrade
to an Economy “Comfort” seat, which has roughly the same amount of
legroom as a pre-deregulation coach class seat, and at the same time, in
an unintentional moment of honesty, admits the other seats in steerage
class are uncomfortable (which they are).

But something tells me a lot of Delta’s passengers aren’t going to fall for it this time.

As America’s number-one critic of travel industry loyalty programs,
I’m truly grateful to Delta. The days of casual mileage collecting could
disappear after 2015, at least if you’re a Delta frequent flier. The
new SkyMiles effectively clamps down on many of the mileage-earning
shenanigans, such as earning “free” flights by collecting the sides of
pudding boxes or U.S. Mint coins. It could also curtail mileage runs,
the foolish act of spending your employer’s money to fly nowhere at the
end of the year, just in order to become a preferred customer and have
access to scarce space-available upgrades. Also, and perhaps most
importantly, it ensures the biggest spenders get the best perks — not
the fanboys who learned to hack the system.

Maybe, just maybe, more customers will make a rational decision about
their next flight itinerary, not one distorted by a pathological
obsession with miles, but based on ticket price and convenience. A veil
is slowly being lifted from the traveling public, and at last, they’re
seeing loyalty programs for what they really are: as habit-forming
schemes that impair your ability to make a clear-headed decision about
travel and that almost always benefit the travel company more than you.

Programs like SkyMiles have deceived an entire generation of air
travelers, and in its attempt to squeeze even more money from us, Delta
has inadvertently confessed the truth about how companies feel about
loyalty. It doesn’t matter how much you fly, but how much you spend.

And oh, by the way, the loyalty goes only one way. As a bonus, the
airline has angered a small army of program apologists who lurked on
blogs and message boards, quietly reaping six-figure referral fees by
endorsing the loyalty lifestyle from their electronic perches. These
unpaid airline employees once eagerly defended and rationalized even
Delta’s most customer-hostile policies, but now they, too, see the folly
of their misplaced allegiance.

Welcome to the club, guys.

So thank you, Delta. And here’s hoping American Airlines and United
Airlines follow you down this flight path soon. You’ve done your best
customers — the 99 percent who fill the economy class seats on every
flight — a real favor.

Are loyalty programs a scam?

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