The Future of Frequent Flier Programs

The Future of Frequent Flier Programs

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The merger ofUnited Airlines and Continental Airlines, paired with the more recent announcement of Southwest Airlines' plans to acquire AirTran, has 2011 shaping up to be a very significant year for the merging of U.S. frequent flier programs. So what does that mean for you?

Three of the four largest domestic carriers and their respective loyal passengers are involved in big changes coming down the pipeline. After everything has finally been integrated -- by early 2012, by most estimates -- the unified United/Continental airline (which will go by United's name) will be the U.S.'s largest carrier of domestic passengers, with Delta and Southwest Airlines coming in just behind.

And if you're a frequent flier with any of the involved airlines, there's a good chance you've already started wondering just where your status, miles and potential reward travel are headed.

The good news? Not down the drain. Although that's not to say you'll be merging your mileage accounts for a faster path to reward travel anytime soon.

For the near future, according to United spokesperson Mary Clark, United Airlines' Mileage Plus program and Continental's OnePass program will remain separate. And while there's no official news about how or if reward redemption amounts will be affected by the merger, an FAQ page indicates that by the end of 2011, elite status miles earned on both the Mileage Plus and OnePass programs will be combined to count toward 2012 status in the new program.

"The airlines are in the process of aligning the programs to create the world's leading loyalty program," said Clark via email, "and program developments will be announced periodically throughout 2011 as we aim to fully combine our loyalty programs by 2012."

And while Southwest Airlines has recently completely revamped its Rapid Rewards program, to be officially rolled out March 1, how AirTran's A+ reward fliers will see their mileage balance worked into the equation after the acquisition is still nebulous, despite a website aimed at reassuring members of both programs.

"We'll plan to integrate the two programs once we close the deal, but it's too early to say exactly what that will look like," says Chris Mainz, a spokesperson with Southwest Airlines.

"Whatever will be worked out will be fair to everyone and people don't really have to be concerned about losing any benefits," says AirTran Spokesperson Cynthia Tinsley-Douglas. "[AirTran's A+ members] can still earn miles. We are still operating as a separate entity from Southwest."

As vaguely encouraging as such commentary sounds, there remain plenty of question marks about how travelers can prepare for merging mileage programs and what's to come.

"It's the first time I can remember two pretty major mergers going on at the same time," says Randy Petersen, CEO of Frequent Flyer Services. "Probably 50 percent of all frequent fliers out there will be going through some sort of frequent flier chaos at some point this year."

That said, Petersen feels the mergers themselves are likely to go fairly smoothly.

"I don't think I've seen two airlines work better toward becoming a merger than United and Continental," he says. "There's no official merger of the two mileage programs right now, but if we look at 90 percent of the frequent flier benefits between the two airlines, they already mirror each other -- that includes things like upgrades and status levels."

"Now [United and Continental] have the same amount of miles required to reach elite status," he says, "They didn't before."

And while some passengers may be getting edgy about how and when their miles will be compiled into a single account, Petersen says one way mileage members can prepare is by ensuring their contact details with both airlines are up to date (for receiving e-mail and mail) and that the postal address on both accounts is the same. To avoid confusion, he says, don't have one airline mailing you at a home address and another using a business address to get in touch.

"Most people are not very good at managing their miles," says Petersen. "If you haven't heard from your airline, regardless of the merger -- if you don't remember getting anything over the last six months from them -- you need to go and update your profile, because something is missing."

And while it would be nice to be able to use your combined miles sooner rather than later, that's unlikely to be the case, says Petersen.

"Most people are not very good at managing their miles"
"For people that have a few miles in each program, it would be nice to merge those together," he says. "Everybody would like to have more miles to use to book reward travel, and that's the plus that comes out of a merger. But we probably won't see anything happening till fall."

But worrying about losing your miles with any of the involved airlines, he says, is unfounded.

"The good news is no one will lose any mileage credits or points. But everyone will have to get used to something new with the mergers," he says. "And we'll find antagonism among the members of the different programs, even if it's not warranted."

The first passengers who'll be adjusting to new mileage rules are frequent fliers with Southwest Airlines. While the airline's new Rapid Rewards program still honors all rewards previously earned by members, new rules dictate points accrual to be based on the ticket price and booking class of the fare (with more points earned for passengers who book 'Business Select' and 'Anytime' fares) .

Not surprisingly, travelers used to traveling short distances -- and being rewarded with the same points as those flying longer and more expensive flights -- have voiced concern about the new program.

"Some people are unhappy about it," says Charlie Leocha, director of the Consumer Travel Alliance. "But even for people buying the lowest fare tickets, it's only a small increase in the amount of mileage credit that they'll need to get a free ticket."

Leocha says that not only will Southwest's acquisition of AirTran vastly increase the airline's route coverage, he expects that the enlarged Southwest airline "will start to keep some of the legacy carriers' prices down because it will have a national footprint, which Southwest has never had."

Petersen says the for all the concern from Southwest's frequent fliers about the new program, it's AirTran's A+ members who will have the greater adjustment.

"AirTran has two-class service, and Southwest doesn't," he says, "So AirTran's elite members will miss upgrades." As for the frequent flier programs merging, Petersen says he "[doesn't] think there'll be that big of a challenge for members understanding Southwest's program, but we have to wait for the deal to close and actually see the integration."

And while frequent traveler John DiScala of Johnny Jet says that current mileage members with AirTran and Southwest have "no need to panic by trying to burn their miles before it (the acquisition) happens," he says that one thing is for sure: "Miles are becoming more and more devalued as time passes by. So instead of banking them, start spending them. I know I will."

Leocha agrees: "No one's going to lose miles -- that much the airlines have told us over and over. But what will happen is the amount of miles you need for a ticket will increase."

But that's not to say that you'll need more miles for a basic coach fare, says Leocha. While it's likely still to be 25,000 miles for a roundtrip coach flight on United, availability is likely to be going down, he says, forcing passengers to use more miles to find open seats in the next booking class.

And Leocha says that one of the things that has already happened to frequent fliers of late is that legacy carriers did not have as many double mileage bonus programs at the end of 2010. As a result, the number of elite flyers has dropped. "I don't expect as many people fighting for elite seats in the coming year," says Leocha. "So if you're currently an elite flier, your chance of upgrades may be better, depending on load factors."

It's not time to hoard miles however, he says.

"The advice I've given people for years is still the same," says Leocha, "Miles shouldn't be saved like putting money in the bank." And while he says it can be a good idea to stash away 50,000 miles to use in case of a last-minute emergency, "the number of miles needed to take a flight is not going to go down, it's going to keep going up. And the restrictions are only going to become tighter. Don't save them, use them."

Leocha also predicts that in the future other airlines, including the legacy carriers, are likely to follow Southwest's lead in doling out reward points based on ticket price.

"The airlines are moving away from providing mileage based only on numbers of trips or miles flown. They're starting to look at providing mileage based on the amount of money you spend," he says. "And that will change the way mileage is doled out in this coming year."

And there's good and bad in such a system, says Leocha.

"The guy taking a full-fare short flight for business travel will be better off," when it comes to earning reward travel, he says. "And the leisure traveler looking for shorter flights will still get that, but won't get as many miles as the business traveler who's paying five times as much for the ticket."

For all the ambiguity of how everything will pan out, things look fairly positive for frequent fliers, says Petersen.

"I think, going forward, frequent fliers are in the best shape of any mergers I've seen over the past ten years," he says.

"But this fall period is going to be a busy time to complete mergers, so until then, fly any way you want to, and sooner or later this confusion will go away."

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