Why do airlines keep changing their frequent flier rules?
As the United States holiday travel season picks up, many people are noticing that their frequent flier benefits are not going as far as they used to. In September 2023, Delta Air Lines revamped its frequent flier programme to make it tougher to earn status – a tiered system offering travel privileges based on the reward points earned – only to partially reverse course a month later and make it easier. American Airlines also made big changes to its loyalty scheme in 2022 and minor changes in spring 2023. And British Airways recently announced that it is adjusting the way it awards points for travel. Many people think flying is a miserable experience, and having status sometimes makes flights better. So it is only fair that frequent fliers are asking why it is seemingly harder to obtain such status. One big idea to understand is that airlines do not earn very much money, if any at all, from ticket sales. This is mainly due to the highly competitive and capital-intensive structure of the airline industry, which often leads to reduced profit margins. Instead, they make their profits from bag fees, ticket change fees and – importantly – frequent flier programmes. On many airlines, there are two ways to earn status. One is to fly a lot. But that means spending time in crowded airports. The other way is to spend a lot of money using a rewards credit card. Frequent flier programmes, coupled with rewards credit cards, are very profitable for airlines. For example, Delta’s latest annual report shows that the company earned US$5.7b from selling credit card kilometres in 2022. Given Delta made only US$3.6b in profits, this frequent flier programme clearly boosts the bottom line.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-11-23/general/why-do-airlines-keep-changing-their-frequent-flier-rules
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Why do airlines keep changing their frequent flier rules?
As the United States holiday travel season picks up, many people are noticing that their frequent flier benefits are not going as far as they used to. In September 2023, Delta Air Lines revamped its frequent flier programme to make it tougher to earn status – a tiered system offering travel privileges based on the reward points earned – only to partially reverse course a month later and make it easier. American Airlines also made big changes to its loyalty scheme in 2022 and minor changes in spring 2023. And British Airways recently announced that it is adjusting the way it awards points for travel. Many people think flying is a miserable experience, and having status sometimes makes flights better. So it is only fair that frequent fliers are asking why it is seemingly harder to obtain such status. One big idea to understand is that airlines do not earn very much money, if any at all, from ticket sales. This is mainly due to the highly competitive and capital-intensive structure of the airline industry, which often leads to reduced profit margins. Instead, they make their profits from bag fees, ticket change fees and – importantly – frequent flier programmes. On many airlines, there are two ways to earn status. One is to fly a lot. But that means spending time in crowded airports. The other way is to spend a lot of money using a rewards credit card. Frequent flier programmes, coupled with rewards credit cards, are very profitable for airlines. For example, Delta’s latest annual report shows that the company earned US$5.7b from selling credit card kilometres in 2022. Given Delta made only US$3.6b in profits, this frequent flier programme clearly boosts the bottom line.<br/>
