Question #7 Miles vs Cash

[Oliver Twist]

Would it be more sensible to value our customers on the amount of money they spend and award miles based on that amount? Or, should we continue to award miles on a segment basis?
Awarding status and perks based on the amount spent may look like 10 miles per dollar spent or some such. That way, no matter how you travel, everyone gets the same chance to earn status. Why is the guy who travels cross country 3 times a year at big ticket prices not worth as much as the guy who spends less but travels more on shorter hops? By using the dollar for miles means, everyone is equally able to attain the status they want.
It seems a constant in the western world, spend more and get more stuff, spend less and get less. Why should airmiles be any different? In other words, you get what you pay for. I get a Toyota at Toyota prices and a Mercedes at Mercedes prices. Money talks in my world, why dosent money talk in the air world?
Ask anyone who is about to hand over a full Y fare if he feels like he should get better treatment (FC vs Y, aisle seat vs center seat, beverages/meals etc) than the guy sitting next to him who paid a tenth of what he did. Anyone who says that''s not the case is a fool or a liar. Money talks and we all know what walks.
OK -- your turn to comment!

 

[TomBascom]

I'll take the cash

Oh, that wasn't what you meant [img src='http://www.usaviation.com/idealbb/images/smilies/12.gif']

Ok, my $0.02/mile

I doubt that the high dollar people care all that much about the FF program. They already get all of the perks that you mentioned by virtue of buying a full fare. And they're almost certainly driven by timetables and convienence more than loyalty program perks like free trips. They're probably in the top tier with 2 or 3 airlines if they care at all so you aren't going to be swaying them your way.

It's not like buying a car -- if it were then just eliminate the program and charge a la carte for the perks. (Good luck.)

The goal of these programs is to push people to buy more tickets by concentrating all (or most) of their travel on one carrier and/or simply pursuing miles for whatever it is people eventually do with them. Ticket price doesn't really matter to that goal -- it is assumed that all purchased tickets are profitable (I'm sure someone will want to argue about that).

To some degree by concentrating on a single carrier people tend to pay more -- they aren't shopping the competition as keenly. So that works to your benefit.

But even so encouraging people to buy more expensive tickets is, of course, desirable -- it can be done in many ways. AA, for example, has a good collection of techniques (miles, segments and Q points) that seem nicely balanced and which reward higher priced ticket buyers without chasing off the low end.

I don't think a simplistic dollars approach would work -- people in a loyalty program want to feel like they can gain advantage by playing the game. Even if they know that it's rigged (we all know that a free ticket really isn't free and really isn't as valuable as is implied.) If you make the link to dollars too clear then it is no longer a game and they stop playing.

You also run the risk of drawing attention from accountants and the IRS -- if it looks like it maps directly to dollars then the taxman won't be far behind.

 

[PD]

A few points:
(1) If you start to base the benefits soley on a ticket cost you are going to raise a lot of red flags in a ton of corporations. Don't be surprise if companies begin to tell (read that mandate) their employees Don't fly US Airways.

(2)A lot of us now have to book our own tickets and to tell you the truth I don't give 2 craps about all the codes I just want the ticket. Thats US Airways problem not mine, their goal should be to make the experience as seemless as possible.

(3)If you take away the segments you can kiss the airline good bye. Do you really think Charrlotte or Pittsburgh could justify all those gates based on local traffic. There transfer points nothing more.

(4) Frankly I have no problem with restricted tickets being treated as restricted tickets. But you guys brought this on yourself.

(5)Anybody out there ever go to the local Safeway pick up the grapes that are on sale. Than go to the check out counter and request to pay full price cause you don't want to see Safeways profits squeezed, yup I didn't think so.