The Extra Mile

As big mileage programs focus, small programs expand

July 26, 2004 - Hobbled by their sheer size -- American's AAdvantage, the oldest and largest mileage program, boasts more than 45 million members -- the established travel-rewards programs are, necessarily, impersonal. And the upstart low-fare carrier programs, like the airlines which host them, are Spartan affairs. These previously durable truths are crumbling as both the industry and consumer expectations evolve, underscoring yet again the adaptability mileage programs have shown since their introduction in 1981.

Large programs: Do it your way

Mileage program managers have long aspired to use their loyalty programs to establish and maintain personal relationships with customers. In loyalty marketing journals and conferences, catchphrases such as "one-to-one marketing" and "mass customization" abound. In spite of the wealth of customer data captured on each and every program member, and notwithstanding the massive processing power of the program's mainframe computers, the plans have done little to distinguish one member's experience from another's. But three recent developments represent significant steps in the direction of more closely tailoring programs to the individual personalities and tastes of members.

Air Canada got the jump on larger programs by introducing YourStyle rewards, nine different categories of lifestyle awards ranging from golf lessons to bungee jumping to river rafting, from spa treatments to a Feng Shui consultation.

So for a cool 1.7 million miles, auto enthusiasts may test drive a Porsche on Germany's Autobahn. But while YourStyle awards can set members back as much as 5.1 million miles, they can also be had for less than 10,000 miles.

Delta's take on choice targets elite members of its SkyMiles program, who, after reaching established mileage levels, will be offered choices from various menus of so-called "threshold awards," including bonus miles, airport lounge passes, and discounted awards.

As did Air Canada, Delta focused on fine-tuning awards, going beyond the industry-standard roster of free flights to accommodate members' individual preferences.

Hilton took a different tack with its HHonors frequent-stay program, emphasizing earning rather than rewards options. With "Earning Styles," program members choose one of three earning schemes: points plus variable miles (points plus one airline mile for every $1 in hotel spend); points plus fixed miles (points plus 500 airline miles per stay at most Hiltons); or just points (the normal 10 points per $1 in hotel spend, plus a 50% bonus).

The feature was introduced as a limited-time offer, in effect between July 1 to Dec. 31, but is likely to be made permanent if member response is favorable.

Small programs: More is better

Even as the largest programs look to ratchet up loyalty through personalization, there are signs of budding vigor among the loyalty plans of the discount carriers, which historically have tended to keep their mileage programs lean and mean. AirTran now allows members of its A-Plus Rewards program to redeem points "for any flight, on any

airline, anywhere in the world." That's a quantum leap forward for the award side of AirTran's program which, like most smaller programs, was limited to free flights on its own limited network.

Unfortunately, there's no commensurate increase in earning opportunities. With A-Plus points expiring after just 12 months, most A-Plus members will be hard pressed to log the 50 roundtrips required to qualify for the newly offered international award trips.

Apparently signaling the importance of rewards programs to its future marketing efforts, ATA has changed the status of Travel Awards from a limited-time promotion to an ongoing program.

Now that Travel Awards is in place for the long haul, ATA has added an elite tier, awarding increased perks to the airline's best customers, and changed the earning unit from flights to points, likely in preparation for incorporating non-airline partners into the program.

And beginning in late Aug., Frontier will become the first low-fare carrier to participate in Points.com's online mileage exchange program. When the agreement takes effect, members of Frontier's EarlyReturns program will be able to transfer miles among other participating programs.

As part of the deal, Points.com will also supply Frontier with the back-end system to permit EarlyReturns members to buy and share miles, features currently only available from much larger programs.