Business of Loyalty: The Assault on Redemptions and Airline Loyalty

Editor’s Note: Skift’s Business Traveler newsletter is now the Business of Loyalty newsletter.

In this weekly missive, we’ll bring you the same insight into what matters most to the people who travel for a living, but now with an added focus on how airlines, hotels, and credit card programs battle for their attention and their business — a points geek with a Ph.D. of sorts. 

While we are still looking at how these moves impact the consumer, the focus is on what the industry is doing to win their loyalty. The newsletter is being written by Grant Martin, who you’ve come to know as the author of our Business Traveler newsletter over the last three years. He’ll be able to take advantage of contributions from Skift editors including Brian Sumers (airlines) and Deanna Ting (hotels) in order to better explain what’s happening with loyalty right now. We hope you’ll stick with it, and we promise to never devalue your reading experience.

Not long ago, it made sense for elite members in an airline loyalty program to book the cheapest airfare on the market and expect to receive a modicum of decent treatment from the airline in return. Free upgrades, checked baggage and snacks all came with various levels of elite status and passengers knew that despite booking a bargain-basement (or office-mandated) fare, it would be a journey in relative comfort.

Basic Economy fares, however, which American, Delta, and United are now integrating in full force, are now starting to supersede those perks and erode the basic values that loyalty programs used to provide. On each carrier, the restrictions are slightly different; Delta takes away upgrade perks, seat assignments, and the rights to change a flight. American takes it further by reducing earned award miles and rescinding overhead bin space. And United goes even further by slashing elite qualifying miles (though earned miles remain in tact).

Some of these restrictions such as the overhead bin rule are eased for loyalty program members with elite status, but others, such as upgrade restrictions apply across the board.

At first, frequent flyers took the introduction of basic economy fares in stride — after all, the fares were originally billed to compete with low cost carriers and only integrated on a handful of routes. But now, the fares are spreading aggressively and passengers are getting agitated. Last week, United confirmed that it had rolled out its fare to all of its domestic routes. Delta, content with its domestic strategy, is now expanding basic economy to international routes. And though American has only integrated the fare into a handful of routes, most expect that carrier to follow suit.

Some passengers overexposed to the fares have taken to social media to respond. “In reaction to this nonsense I just booked my first ever [Virgin America] flight, SAN-SFO,” said one United traveler on FlyerTalk, who apparently holds top-tier 1K elite status with the carrier.

Late last month, Zach Honig, editor of The Points Guy, wrote about United’s “infuriating” basic economy strategy, calling some of the pricing “insane.” Among the comments in that piece, one reader admitted that “as a United Platinum flyer I have stopped flying with them. It’s not worth it to deal with the hassles. I will fly with an [Ultra Low Cost Carrier] or a [Low Cost Carrier] over them just because I know what I am getting into.”

It’s tough to broadly conclude that passengers are actually leaving their favorite carriers and abandoning loyalty programs en masse — after all, the only story that airlines will tell is that revenue is up and that loyalty programs are only improving. But there’s a real sense of discontent flowing through the passenger base around basic economy fares — and sooner or later, something’s going to give.

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