This seat for free?

Discount airlines seizing on discontent with frequent-flier complexity

July 13, 2004|By Tamara El-Khoury | Tamara El-Khoury,SUN STAFF

Aware of the negative buzz about the complexity of frequent-flier programs, smaller airlines are moving to capitalize on consumer discontent.

In the past few weeks, three low-fare carriers - AirTran, ATA and Frontier - announced improvements in their frequent-flier promotions and industry experts predict larger airlines will follow suit.

Indeed, winning frequent-flier points from airlines is often much easier than using them: Some of the nation's largest airlines have sharply limited the number of seats available to frequent-flier award users on their most popular routes.

In a recent survey of frequent business travelers by e-Rewards, an online market research company in Dallas, nearly a third of respondents feared their miles would have no value in the future.

"One thing that came through loud and clear is that it's more difficult to book free seats with your miles than it was two to three years ago," said Bill Russo, executive vice president and general manager of e-Rewards.

Frequent-flier programs have long been one of the air industry's most popular promotions. Once limited to larger carriers, they are offered by most airlines now. And flying isn't the only way to earn points redeemable for trips. Consumers can rack up miles by charging expenses on certain credit cards, staying in select hotels and joining other merchant-loyalty programs that team up with airlines.

About 80 million Americans are members of a frequent-flier program, and consumers received almost 16 million frequent-flier trips last year. The programs have been growing at a rate of 11 percent a year, said Randy Petersen, publisher of InsideFlyer magazine.

While most airlines haven't been able to post a profit in several years, frequent-flier programs have remained moneymakers as airlines gain revenue through the partnering arrangements on seats that would have gone empty.

"For 23 years now, these programs have been the golden egg for the industry and they really don't want to push Humpty Dumpty off the wall now," said Tim Winship, publisher of FrequentFlier.com, an online newsletter for air travelers.

"These low-fare carriers are starting to turn up the heat with their programs. They can kind of smell blood in the water," Winship said. "They're ... aware of the fact that there is a rising tide of consumer dissatisfaction with the major programs and this is their opportunistic response."

In 1981, American Airlines launched the first frequent-flier program, called AAdvantage, still among the largest programs. It includes more than 1,500 partners so customers can earn more rewards through various means.

Southwest Airlines, which began its frequent-flier program in 1987, has more recently emerged as one of the largest award plans. Consumers have been drawn to the simplicity of the program, which allows them to earn trips by the number of flights they take, not by collecting miles. However, Southwest points expire after a year, whereas the miles given out by other airlines have virtually eternal life.

An example of the lengths to which the smaller airlines will go is AirTran's recent announcement.

The airline said it will buy trips from international carriers to enable its frequent fliers to redeem points for a ticket to anywhere in the world, even if it doesn't fly there. The changes were made, in part, because customers complained about restrictions under the prior program, spokeswoman Judy Graham-Weaver said.

Meanwhile, ATA Airlines Inc. announced enhancements to its program that include a category for its most frequent customers and online services that will allow members to access accounts and make reservations via the Internet.

Frontier Airlines, which travels to 43 destinations domestically, said it will join with Points.com, so members will be able to exchange miles online.

The added competition has been good for infrequent fliers, too, such as Marlene and Henry Garson of Montgomery County, who earn most of their miles through credit-card spending.

"I travel as little as I can get away with," said Henry Garson, who was taking Southwest to a wedding in Florida. The couple said they don't fly enough to earn miles the traditional way.

Karen David, on the other hand, does. The Silver Spring resident and conference planner for a nonprofit group used the Internet to book her AirTran flight and even printed out her boarding pass and receipt. She flies often for both work and play and uses several airlines.

"I can't avoid flying, so it's great to have a free ticket by the end of the year," David said.

Low prices aren't everything to frequent fliers, however. Larger airlines can reward loyal customers with added perks such as upgrades - something a one-cabin-class plane like Southwest can't. And larger airlines also offer more options.

"One thing that we have that's beyond comparison is a global network," said American Airlines spokesman Carlo Bertolini. "Members have access to more than 850 destinations between us and our partners."

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