Frequent Flyer Cards

[bealine]

It has recently come to light that airline frequent flyer schemes are not having the effect desired by the airline. The company behind the traveller are receiving no benefit and there is evidence that travellers are abusing the system (ie spending £500 more to fly with xyz airline so that they accrue mileage). The same traveller probably drives 30 miles out of his way to fill up at the filling station giving away the free glasses!

Similarly, Joe Blow, who is an oil company roustabout, gets upgraded frequently because of his Frequent Flyer status, but the Financial Director of his company, who made the decision to use xyz airline, doesn't get an upgrade or lounge access because he only travels twice a year! Is that really fair?

Another negative factor is that Joe Blow, because of his Gold Card status, complains lonmg and loud to all the airline staff when he's delayed for an hour, upsetting xyz's staff and customers alike. Back at his oil company HQ, his bosses know that, by and large, xyz's punctuality performance is good and recognise a "one-off" delay as a "blip" in an otherwise good year's travel record.

What we are proposing, therefore, is a corporate reward scheme, whereby the decision maker of the client company receives a limited number of cards and complimentary "space available" upgrades based on the expenditure of that company with xyz airline. The decision maker would then allocate these as he/she sees fit.

The individual traveller would then receive a "Frequent Flyer" card with diluted benefits, such as discounted travel insurance, lounge access when travelling with xyz airline etc.

That would then enable the airline to have a much closer relationship at Decision Maker level.

[Mike Southern]

Careful now Bealine,

generalising is dangerous... I am sure that some idiots are like to 'oil company' chap you mention, but in my 'oil company' we book our own travel directly and those of us who have our own travel budget can (and do) make our decision based upon the following heirarchy;

1) does the flight get me from where I am to where I want to be be in a resonable time - i.e practicality

2) is the fare available reasonable - i.e economis

3) is there a reason to choose another airline which might either offer a bit less flexibility in exchange for a few freq flier points.... - i.e something which swings a decision which is otherwise a close call

in other words the frequent flier bit is really only an incentive if it offers a reasonable alternative... there's no way I would pay 6 grand for a west coast US flight if I could get one for 2 grand with a 45 minute change in Amsterdam or Frankfurt.... then again I wouldn't take the 2 grand option if it meant an extra day travelling.

As for the people who make up our travel policy - they don't have to sit in airport lounges or in planes for half their bl**dy life - so sod them! - given the choice you should look after the people who use your service, not the people who design the rules; they will make their mind up based on what cuts the travel spend, so they aren't your friend...:)

[Boss Raptor]

Same as above...until recently I didn't even bother with frequent flyer programs...now I am in 3, Qualiflier (dead I believe), Virgin and Air Europa...I do find the priority baggage and check-in functions useful but that's about it for me...

[gofer]

You are both right & wrong.

I have 5 FF accounts One World (silver), Qualiflyer, Sky Team & Star (all Gold +) and a KLM (blue)

Depends on which job I'm in which is best - the KLM and AF are at present basically useless as they don't DO my current patch.

I do 250-400K FF miles a year and the fidelity doesn't count for too much. The flights have to go when needed to where needed and what I'm buying is SERVICE. BA business bed or LH standard Business - no choice at similar prices. Food & good wine - not really - sure I love it but I walk on from the office and need to walk off to a full days business with no stress - so little food and sleep galore - for preference backward facing !

But for spending miles - Star is the BEST by far - quick, flexible and easy; with lots of options just about everywhere in the world whenever I want (at least almost always so far)!!!!!

One World won't get near that flexibility without adding an airline in China, Swiss, one or 2 in LATAM and a Japanese airline.

In fact everybody needs a large Chinese Airline in their system.

Agree with the others that we - the flyers - are those you need to pamper - Purchasing just can't take the **** from 25 travellers in our regional office when we have 'problems' with an airline. They learnt the hard way when they wouldn't listen - it cost the company quite a few lucrative contracts and a purchasing head - now they listen hard. ;)

[Boss Raptor]

the other side of the coin is that the senior exec. in charge of allocating these frequent flyer benefits under this new proposed scheme is just as likely to abuse the system as the current individual users...i.e. favouring a specific airline because the senior exec(s) allocate the benefits to themselves and not the travelling staff...really dont see it has/will shifted the balance in reality...

how will independant individuals such as myself fair under this new system...frequent traveller but little buying power in the big picture as I am one of one?

[jethrobee]

My view on frequent flyer cards and other reward schemes (as a director and frequent traveller myself) is that the person who does the travelling should get rewards.

After all, they are the poor devils who are away from home, or cutting their spare time short to travel on behalf of another company. I have never worked for a company that paid employees "travel time" for when they are going to be travelling on business.

I view my frequent flyer card as a way of appeasing my wife (she enjoys our shopping trips to new york, when we spend the miles). At least when I am away and she is unhappy I have something to bargain with ;-)

On the company side, you always get people that abuse the system. Mind you you also get people who steal stationary and use company facilities personal gain, at least with frequent flyer cards the company has happy employees ;-)

Jeth

[Eboy]

First, I would do away with all frequent flyer programs. As The Economist magazine showed in a recent article, there is not capacity to redeem all outstanding miles, so they will likely be devalued.

If the programs must remain, my view is that the person or entity (corporation) paying for the flight, and not making the decision, should get the frequent flyer rewards. Letting the employees keep the miles is not a transparent form of compensation for them. Pay them a few dollars more per pay period instead, and that shows up on the books. Flying credits or awards should accrue to the corporation. The present system creates incentives (as you suggest) not in the best interest of the company.

When considering what to do, think not only of the flyer, or the person making the flying decision. Think of the stockholders of the company employing both.

[SLF]

Er, bealine, that'd be your own carriers "BA On Business" scheme then...:rolleyes:

[Boss Raptor]

Didn't the UK Revenue intend to tax frequent flier miles at one point - as an invisible income to the employee ?

[bealine]

Please accept my apologies if it appeared I was trying to generalise - I was merely trying to produce an example of why airlines need to radically re-think their schemes.

You may, or may not, be aware that, almost without exception, Frequent Flyer programmes are administered by separate marketing companies. The airline involved probably did not even devise its own scheme, having been given proposals by the marketeers and "tweaked" them to suit its own needs.

Therefore, it's not my own airline I'm currently engaged on this project with, BA and its clientele would probably benefit if the marketeers in question succeed!

[OFBSLF]

I used to fly about 100k miles per year. All were domestic US flights. At the time, there was usually little difference in fares between the majors. I was travelling between my home (BOS) to either ATL, DFW, or ORD. Flying to DFW mean that I was going on AA, period, end of story. They had direct flights and lots of them. ATL meant Delta. Chicago meant either AA or United. Since I had Platinum status on AA and the fare was the same, I chose AA when going to ORD. Did I ever go out of my way? Heck no, I wanted a direct flight (no stop-overs or changes, please). The sooner I got to my destination, the sooner I could start billing hours and the sooner I could go home.

Regarding who was the "decision maker" regarding the airline, I was, even though I was just an entry level consultant in a large consulting company. If I abused the system, our travel agent would have told my boss (who had to sign my expense reports anyways) and he would have taken me out behind the woodshed. It is not the job of the airline to act as disciplinarian for our company. That's not your job, that's our job, so don't try to do it for us -- you'll only muck it up.

Regarding giving the mileage to some purchasing hack, I was the poor slob traveling 50 weeks a year, waking up bleary on Saturday AM from a midnight arrival only to start packing on Sunday PM. I was the one who blew out my feet waiting in line at airports, not him. And if I have the choice to take AA or United to ORD, if the fares are close and one of them gives me perks (upgrades, miles, etc.) and the other doesn't, you can bet which one I'm taking.

[cargosales]

Sorry Bealine.,

Not keen on this idea at all.

I reckon it could actually act as a disincentive to travel, let alone on a particular airline.

From the comments above, very few of us try to abuse the system (any halfway decent monitoring of expenses would soon reveal people who were).

FF schemes do persuade us to choose one airline or it's partner over another but not to go miles out of our way or to spend silly amounts of money just to get extra rewards.

Unless you can give us more details / persuade us why we should lose this perk, I think it's a non-starter.

CS

[wub]

The concensus here seems to be that the traveller and not the corporation should get the perk, they are after all the ones that suffer the hassle of actually flying. The schemes are usually called 'frequent flyer', not' frequent purchaser' and as a member of both BA and Star schemes I would be very unhappy if the miles I've accrued had gone to my purchasing manager and not me.

[bealine]

Based on the consensus of opinion herein, I, for one, will not be for this proposal. On a personal level, I feel that both the traveller and the client company should benefit.

The problem we are faced with is that, as the competition with Messrs. EasyJet, Buzz, Go, Ryanair et al bite, not as much hard cash is going through our tills - the "Decision Makers" are utilising
the cheapest carriers and fares available.

Less cash in = Less cash to spend on travellers' perks!

Already, I understand the marketeers are "tweaking" the cards and reducing some "Golds" to Silver and some "Silvers" to Blue and some "Blues" to "Other Ranks" - its a bit tough when there are only a few points in it!

As our fares are being diluted, what would YOU suggest we do as a viable way of keeping these schemes going for business travellers, as well as being seen as giving a fair deal to your business management?

[PAXboy]

(in haste) let me try to put in my 10 pence/cents.

Office or travelling people to benefit? Traveller, for all the reasons stated above. IF the company cuts a deal with one carrier/group and makes them the preferred supplier (as happened in 80s and 90s) you get work arounds.
"There was no direct flight"
"The flight was cancelled"
"Gee, I arrived just too late for the Hoo-Hah flight and managed to get the Hoola-Hoola one"

The people who earn money for the company by going out to the customer will find a way around.

Example, in the UK, it was learnt a couple of years ago that many Members of Parliament (MPs) were flying to their consitiuencies, rather than taking the train. The MPs said that it was speed and that was worth the extra cost. What, the article asked, about the FFMs, which the train company did not give?????

So - if you set up a system - a way around it will be found!

The best solution that I have heard? On my very first corporate flight to NYC, 16 years ago this month (VS Upper :cool: ) I was sitting next to the Fianance Director of Calvin Klein. He said that their policy was simple: "If the employee takes a lower fare to that which they are entitled - the employee gets 50% of the saving in their bonus." Simple! Hard cash will win over FFMs almost all the time.

As to not being able to redeem them - I find the Star Alliance scheme deeply inflexible. One World got a lot better in the 90s. VS are very flexible and seriously helpful, I never have a problem earning or using VS miles.

Incidentally for the person who mentioned Qualiflyer - it's not dead. Your points are being transferred to a new account. Go online to find out, or ring the service desk number for your country.

And in three weeks, I shall be on holiday with flights in VS Upper as a Miles & Money flight. So it works for me! ;)

[Momo]

From a pure legal perspective, I think the solution proposed by the base note is a kickback, which is indeed legal/tolerated in many countries. The history of such schemes is that some unscrupulous decision makers choose the largest kickback over the cheapest supplier, kind of negating the purpose.

I have started a separate topic on bad and good ways to reduce corporate travel expense, though telecoms expense is a larger opportunity for most companies.

There are instances where airlines have negotiated deals to give a rebate instead of FF miles as a special company deal. The issue is that unless all airlines do it for a particular company, the individual traveller is likely to be able to find a lot of excuses to use the other companies.

I feel that the basic conclusion that FF schemes tend to drive travel spend up is probably correct. After all, that is their purpose. The American airlines have been doing this for many years more than the European ones, and have not gone broke because of it yet. Remember when Virgin, for many years, used to give a free economy voucher for each Upper Class segment, in addition to being the first European airline with a proper FF scheme at the same time. Uncle Richard is still with us.

Momo