hen I recently bought a box of
breakfast cereal, I triple-dipped on airline points -- I received
them from the credit card company I used to make the purchase, from
my grocer's frequent-customer program and from a coupon on the back
of the cereal box.
Given those incentives to earn free travel, why would anyone
ever consider eating toast again?
Well, there may be a reason. The New York Times propped up
against the cereal box in front of me had a disturbing headline:
"Reward Miles are Piling Up; Fliers May Face Future Squeeze."
The article noted that along with reduced airline capacity
following Sept. 11 comes a reduced number of seats available for
frequent flyer reward travel. But at the same time, miles are
piling up at record levels, thanks to the myriad ways one can
accumulate points without actually ever setting foot on an
I thought about the Times article later that day when reading an
article in Advertising Age entitled: "United sets hunt for $50M
This article said the troubled airline was looking for an ad
agency to handle its Mileage Plus loyalty program.
Note that in the advertising world, Mileage Plus is called a
"loyalty" program, but in the consumer press it's referred to as a
"frequent flyer" program.
Though the sale of miles to credit card companies and others is
profitable for the airlines, their primary interest is in
establishing direct ties -- "loyalty" -- with consumers. In fact,
the growth of airlines' loyalty programs and their efforts to wean
travel agents from airline commission payments stem from the same
In the mid-1990s, emerging technologies online and in the realm
of database marketing led airlines to believe they could acquire
tools to better manage direct relationships with consumers, thereby
loosening dependence upon travel agents. (Travel agents were
troublesome for two reasons: first, they had to be paid
commissions, and second, they presented options to consumers that
might lead a traveler to choose another airline).
While going consumer-direct and cutting commissions could bring
misfortune to agents, that was, ultimately, irrelevant to the
airlines. They had what must have seemed like an irresistible
To some extent, they succeeded -- they've increased the number
of consumers with whom they directly interact, and they've reduced
the amount they pay in travel agency commissions.
But there have been two other interesting consequences to their
actions. First, as a result of refining their loyalty programs over
the years, they've raised the expectations of their best customers
to very high standards indeed. Second, out of necessity, smart
travel agents became more sophisticated in their ability to retain
customers by providing services that the airlines simply can't
And now comes a critical and painful time for the airlines. The
article in Advertising Age quoted one anonymous source as saying
that over the past year, United decreased its spending on loyalty
Given the carriers' circumstances, that certainly wouldn't
surprise me. I'm at the highest status level with the carrier I fly
most frequently, and I used to receive beautifully packaged luggage
tags, an assortment of upgrade certificates on coated paper stock
and a card identifying me as one of their most valued flyers. This
year, I received a bulk-mail envelope I almost tossed as junk mail.
Inside were some upgrade letters produced on a plain paper-ticket
printer and a sticker to put over the expiration date on my
I was aware of the airline's need to cut costs, but I was
nonetheless surprised that there would be such tangible signs of
erosion in its loyalty program at its highest levels.
And so it occurs to me that, just as the airlines seized what
they saw as an opportunity to win consumer loyalty at the expense
of travel agents, perhaps travel agents can now return the
Travel agents who already make efforts to pay special attention
to their best customers increasingly will stand out in contrast to
airlines, which have both fewer reward seats to hand out and are
spending less on their loyalty programs. For now, the environment
favors agents who make efforts to cement the loyalty of clients who
The agents who will best be able to take advantage of this
opportunity are those who have good databases and customer
relationship management tools already in place. (It's ironic, of
course, that many travel agents sharpened their customer
relationship management skills in response to actions that airlines
took, which, at the time, seemed detrimental to agents.)
Airlines and agents sometimes seem embroiled in a blood feud,
but it may help to remember that the airlines weren't primarily
motivated by a desire to hurt agents when they cut commissions and
went after direct consumer relationships -- they were motivated by
a desire to improve their bottom line. And though they had once
spent quite a bit of money courting travel agency loyalty, well,
that, too, was simply a marketing decision. Now, travel agents have
an opportunity to exploit the current weakness among airlines, and
I suspect few will feel any twinge of conscience in doing so.