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 airplane.

I thought about the Times article later that day when reading an article in Advertising Age entitled: "United sets hunt for $50M loyalty assignment."

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 source.

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 opportunity.

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 match.

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 programs.

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 existing card.

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 favor.

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 travel frequently.

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.

Comments

From Our Partners

2018 Victory Cruise Line Webinar 2
Victory Cruise Lines – Great Lakes, Yucatan Peninsula and Central America!
Register Now
RockyMountaineer_Hero
7 Reasons You Should Be Selling Train Vacations
Read More
2020 Australia Webinar
Australia is open for business
Register Now

JDS Travel News JDS Viewpoints JDS Africa/MI