First things first. Airline loyalty programs are here to stay–they are too lucrative. With airlines beholden to credit card companies, who purchase points en masse and distribute them to their customers, the possibility of loyalty programs going away is off the table.
But, we see that the concept of loyalty and the loyalty programs of several airlines are changing. No longer is the marginal traveler necessarily rewarded for the discretionary choice of flying one carrier over the other. The new determinant of value? Simply the fare paid. This transactional-loyalty model is tough medicine for leisure travelers, but there is an arguable logical basis to it. Airlines are doing better–even United will make money this year. Planes are full; capacity is stagnant with demand generally rising. Airlines no longer need to be so generous with six major U.S. legacy carriers now down to three and and an economy in which business travel has returned to pre-Great Recession levels.
Fine. I hate it and wish the DOT would have blocked all the mergers, but they were likely inevitable in the name of profit and suvivability. The fact that I was able to game the system so much–totally within rules–was fun while it lasted, but it was silly to expect the gravy train to keep running.
We all get that changes are coming and the changes are not going to be good for the most part. But what I cannot understand and cannot accept is that airlines are not honest with us about what is going on.
Take American Airlines. On the day in which it raised the price of some awards by as much as 75%, Suzanne Rubin, President of the AAdvantage Loyalty Program, sends out an e-mail trying to cast the changes as good news by highlighting the crumbs AA was throwing back from the loaf of bread it had taken. A total disconnect from reality.
And it’s not just American. United Airlines raised the prices of some awards by over 80% on 01 February 2014 and though UA must be given credit for the advanced notice given, it too tried to spin off the award chart update as necessary to sustain the program. No, I can say with 100% certainty United’s costs had not risen 87% for first class awards on Star Alliance partners. Consumers, particularly those who had saved large swaths of miles, got hosed.
And don’t get me started on Delta–the carrier that claimed it was legally unable to disclose Skymiles program changes in advance only to be pressured by such negative publicity to do it well in advance of its next 01 January 2015 devaluation.
Why can’t an airline just send out a note that says something like this?–
Planes are full, costs are up, and the competitive environment has prompted us to cutback on several of the benefits you have become accustomed to. This decision was made after careful consideration and we realize that it will disappoint you, but we hope you will also respect our mission to operate profitably while maintaining a loyalty program that is still worth participating in.
While we cannot pledge there will be no more cutbacks, we do pledge to give you notice of any future program changes with sufficient lead-time for you to evaluate your spending and travel patterns appropriately.
Would this note anger many? Of course. But what people respect it? I think so. I’d still call the airlines greedy and still bemoan the mergers, but I would not be able to charge airlines with doublespeak. I think most consumers appreciate candor and airlines would be well advised not to try to spin bad news as good news.
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I discussed the limited legal ramifications of the U.S. Supreme Court’s recent Northwest, Inc. v. Ginsberg decision and we now actually have a chance to test out the world of 2014 airline loyalty programs surrounding the actions of American and US Airways.
Think about it. US Airways is offering a 100% bonus on shared miles this week. American is offering a 40% bonus on purchased miles. These sales happened in the days before the announced award chart devaluations. American and US Airways enticed passengers to buy miles knowing full well that those miles would be worth marginally less in a matter of days.
That’s a problem.
Does’s AA Contract of Carriage (COC) shield it from liability?
AAdvantage award restrictions may be announced by American Airlines or AAdvantage participants at any time without notice.
American Airlines may, in its discretion, change the AAdvantage program rules, regulations, travel awards and special offers at any time with or without notice. This means that the accumulation of mileage credit does not entitle members to any vested rights with respect to such mileage credits, awards or program benefits. In accumulating mileage or awards, members may not rely upon the continued availability of any award or award level, and members may not be able to obtain all offered awards for all destinations or on all flights. Any award may be withdrawn or subject to increased mileage requirements or new restrictions at any time.
AA’s COC may claim the right to act unilaterally, but such language also evidences a potential illusory contract or may still give rise to the invocation of promissory estoppel doctrine to protect those who detrimentally relied on the purchase of miles believing they would have a reasonable amount of time to use those miles at a redemption level that enticed them to make the purchase.
Suing AA/US fascinates me as a newly-minted lawyer specializing in aviation and contract law, but the point of this piece is that honesty goes a long way and airlines have really not been honest up to this point. I implore Ms. Rubin of AA, Mr. Robertson of Delta, and Mr. O’Toole of United to be honest with the public. We know devaluations are coming. Just give us notice and don’t spin the negative changes as positive enhancements. That’s really all I ask.