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ON BOARD WITH RANDY PETERSEN

THE GIFT OF STAYING THE COURSE
January 2004
by Randy Petersen

Northwest WorldPerks, United Mileage Plus and America West FlightFund each recently released announcements regarding their 2004 elite programs (that they wouldn't change qualification requirements), and though the announcements weren't wrapped in ribbons and bows, the gifts they contained for members and myself were no less appreciated.

I think the fact that each of these programs chose to stay the course helps to mollify the ongoing message from a number of travel writers that frequent flyer programs in general are so "devalued" that all members should quickly cash in all their miles—that there is no longer any valid reason to belong, and the end of the world is soon to come.

These frequent flyer programs have worked hard to make today's marketplace work for them and theirmembers, and I'm especially pleased to see United's announcement, as just one year ago it seemed everyone (save myself and, evidently many of you) had given up on seeing any improvement for the airline, let alone Mileage Plus.

As for American, I think comments recently made in The Wall Street Journal will give you some idea of where American might be going. In a column titled "The Middle Seat" that ran recently in the paper's online edition, Scott McCartney put the proverbial cup to the wall and printed some of the comments made by American Airlines President Gerard Arpey to a group of Wall Street analysts. Arpey is quoted as saying American is pondering whether it should change the way it awards first-class upgrades, since Continental gives away space-available upgrades and the OnePass elite program often rates high in surveys such as the Freddie Awards (OnePass has won more "Best" elite-level program awards than any other airline).

The problem with any change like this is that American sells some $120 million a year in upgrades to members of its AAdvantage program, and it would be very difficult to qualify any change to upgrades and try to justify the subsequent loss of revenue. If American listens to its members, there likely isn't going to be any change, no matter how tempting.

Now, when was the last time you ever heard members of any program argue against more upgrades? Fact is, members of programs have learned that with positives come some negatives, and apparently AAdvantage members are worried about what they might have to give up for this potential upgrade change.

The fact is, I've always rated the AAdvantage program fairly high and if asked, would advise Mr. Arpey against a change like that. Let OnePass be OnePass.

What I liked about Scott's column is the following statement: "You can win back customers by offering good value, not by making it more difficult for customers to get what they want. Finding ways to lessen the cost of frequent-flier programs by cutting benefits won't win loyalty from business travelers. On the other hand, giving them valued rewards—such as free upgrades—is at least a step in the right direction." This observation seems to give credence to both the elite moves by Delta and Continental, as well as Northwest and United.

You can contact Randy Petersen at randy@insideflyer.com.