United Airlines’ CFO garnered some less-than-desired attention last month when he said that “certain groups” in the Mileage Plus program were “over-entitled”. United is the most recent airline to work on “realigning benefits” — downgrading their elite fliers, especially those in the lower status tiers. We talk about how that impacts frequent flier strategies. We also talk about adjustments needed when frequent travelers come off the road — how to find time to yourself. Here’s a direct link to the podcast file or you can listen to it right here by clicking on the arrow below.
Here are the transcript of TravelCommons podcast #99:
- Intro music — Warmth by Makkina
- Been off the road more than I’ve been on it since the last episode. Just another trip to Dallas allowing me to take advantage again of the TSA’s PreCheck line. Getting envious and puzzled looks from other American Airlines elite fliers, getting waved through the special gate, tossing my bags on the X-Ray conveyer belt, sauntering through the metal detector, and then on my way to the gate. A 45-second exercise while they’re taking off their jackets, shoes, belts; emptying their pockets of coins, gum wrappers, business cards; pulling out their laptops, iPads, Kindles, 1-quart baggie of liquid toiletries; holding their arms up in the full-body scanner, waiting behind the tape until someone radios the “OK”; then reassembling their bags and getting re-dressed – belt, shoes, jacket, making sure nothing’s left behind before heading to the gate.
- And this is in the status line. I’m seriously thinking of limiting my travels to only those places with TSA PreCheck lines…
- Bridge Music — Leviathan by Kirkoid
- While my podcasting cadence has slowed, I’ve written a few more blog posts of late. In one, I disagreed with some surveys that called free WiFi the most important hotel amenity. I made the case for free breakfast. First, it’s a great convenience. Unless you’re staying downtown in a city, like in London or New York or San Francisco, getting breakfast outside of the hotel means involves a car ride. Which usually then translates into Starbucks – and I’m a big fan of the spinach feta cheese wrap – or McDonald’s – where I’ll fall back to 1 breakfast burrito no matter how many times they try to sell me two – or Dunkin Donuts where they inevitably give me a hard time about walking in with a cup of Starbucks coffee. And, as Rich Fraser puts it, a great way to stretch your per diem dollars…
- “Can’t beat it on value, although you have to get quite creative when it comes to those reconstituted eggs. Various combinations of cheese, ham, and hot sauce make them much more palatable. That, some yogurt, a cup of oatmeal and a piece of fruit, and I’m good until lunch without snacking. Just have to avoid the biscuits and gravy at all costs!”
- Leo Vegoda, however is suspicious of the whole “free” thing
- I would prefer to have good Internet access that I pay for or a good breakfast that I pay for than something free, which will inevitably be of lower quality. After all, on a business trip, sustenance and network access are reasonable business expenses. That being said, I think the best “amenity” I want at a hotel is a fantastic concierge. A superb concierge is much better than a quick search on yelp.com and will help make your stay in a city far more fulfilling.
- Thanks to both Rich and Leo for leaving their comments on the TravelCommons web site.
- Scott Drake pinged me on Twitter – “Just heard the first 2 minutes of episode #97”, he wrote, which was about my first trip to Beijing in January. “You could taste the pollution. Yes! People look at me like I’m crazy when I say that! Glad I’m not alone.” Oh no, you’re not alone. The other 3 guys with me on that trip thought the same thing – you could taste it when you breathed in and when you coughed it back out. Don’t know which I enjoyed more on our Saturday trip out to the Great Wall – the breathtaking views or the fact that you could take a breath without coughing…
- In the last episode, I talked about restaurants pushing their own sort of BYOD – bring your own device – agenda on customers; taking advantage of customers’ smartphones to do things that restaurant-provided devices like pagers or credit card machines used to. Not that it’s a bad thing; it actually makes a lot of sense. I tried LevelUp, one of the mobile payment apps I mentioned, last week at a food truck – Duck n’ Roll – in downtown Chicago. I’m not sure the truck took cash. The owner had an iPhone with a Square credit card reader and also accepted LevelUp. I started the app on my iPhone – I had already run through the set-up routine, linking it to one of my credit cards. It displayed a QR code that the truck owner read with the camera on her iPhone. She pressed a couple of buttons and, boom, we were done. While she got me my miso short rib bahn mi sandwich, the receipt showed up in my e-mail. Much easier that paying with a credit card – or even cash.
As we get into summer, we get into thunderstorm season, and in the middle of the US, tornado season. Which reminds me of an incident about this time last year in O’Hare. I was connecting through O’Hare on my way from a customer meeting in London to a conference in Austin, TX. No direct flights there. My theory is – if I have to connect through a US airport, I might as well do it through O’Hare. I live 25 minutes from the airport. If things go bad, I can always sleep in my own bed. It doesn’t work for everyone – check the shownotes for a picture of someone setting themselves up in “Camp O’Hare” for the night – but it does for me.
- Anyhow, I arrive from Heathrow early, breeze through Immigration, no problems getting through the TSA in Terminal 3, board my American flight to Austin… The pilot says that a front is moving in and he’s going to try and get us out before it hits. Hmmm, I’ve never seen anyone sprint out of O’Hare before – it’s just too big and too crowded.
- And it didn’t happen this day. The front came hit and started rocking that MD-80 like nothing I’ve ever experienced. We evacuated the plane. People in the back of the plane began to panic. “Get moving,” they yelled – or a cleaned-up version of what they yelled.
- Sprinting out of the shaking jet bridge back into Terminal 3, we were told “ah, you guys should stay away from the windows” which is a tough order in a concourse with windows on each side. People congregated around the McDonalds and a couple of bars – only windows on one side – and waited for the front to blow through.
- Over in Terminal 1 – the United terminal – they moved everyone down into the tunnel between the two concourses. Much safer and, for those who’ve connected on United through O’Hare, you know it’s much more entertaining with the ceiling neon lights chasing themselves down the tunnel. Though I would guess the soothing New Age music would get on your nerves after a while.
- Of course, after all this entertainment, I still needed to get to Austin. After the front blew through, they reopened the runways and started to untangle the delays – flights trying to get in so they could unload and leave again. After two hours of hemming and hawing, American admitted that our MD-80 was damaged by the jet bridge banging on the rockin’-and-rollin’ airplane during the worst of the winds. No surprise there.
- And there were no other flights left to take us to Austin because American had waited so long to cancel. No problem there – I just caught a cab home and slept in my own bed. I was surprised that the first available flight the next day was at 3 in the afternoon. Given I was due to fly back the following morning, that would’ve given me about 12 hours in Austin – 6 of which I would’ve been asleep. I decided to skip it. But here’s the kicker – American charged me a $150 change fee to cancel my ticket and use it later. Really? Weather, they said. No, it was a damaged airplane because your gate agent didn’t pull back the jet bridge. Weather, they said. I didn’t fly American for another 6 months.
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- Bridge music — My Flaming Heart by Wired Ant
Downgrading Elite Fliers
- Last month, United’s CFO said this about their Mileage Plus program
- We had certain groups in this program that were over-entitled if you will. And now we’ve re-aligned the benefits of that program with what the customers and program participants are actually providing to the program, it’s a good change going forward.
- Let’s parse that statement. The first sentence – certain groups, which I assume means elite Mileage Plus members, were “over-entitled”. Even if it’s true, you’d think the CFO would be smart enough to follow one of the golden rules of sales – “If it feels good, don’t say it.” Coming off the industry-worst performance in on-time arrivals and baggage complaints, who would think it’s a good idea to insult a loyal subset of customers – those who bore the brunt of your lousy performance?
- The second sentence – we’ve “re-aligned the benefits” with what those customer are providing. In other words, we were giving those customers too much value for the revenue they were providing us – so we’ve taken away some of what we were giving them so as to balance things out.
- In other words, downgrading elite fliers. United is just the most recent – and probably the most egregious example of late. Using the Continental merger as cover, United took away probably the most valuable perk from the lowest status level – free advanced booking of Economy Plus seats, seats with extended legroom. And added a new status level – Platinum – at the 75,000-mile level – effectively devaluing their mid-tier status — Platinum Exec – now “Gold”. There were other tweaks – none of them positive – but that’s to be expected from an industry that continues to nickel-and-dime its customers for every last bit of revenue it can.
- And it’s not just United. Delta recently reduced the number of free bags its lowest status level fliers can check – from two to one. One more sign that the 25,000-mile status fliers don’t mean that much to the airlines – they really don’t get much more recognition than the guys paying $95/year for an airline credit card.
- Which makes sense if you look at the numbers. When American Airlines started the Advantage program in 1981, it was a loyalty rewards program meant to give frequent fliers a reason to stick with American as deregulation commoditized the industry — increasing flight choices and lower fares from new competitors.
- Today, it’s a major revenue source – a line of business is estimated to have added $7 billion to the top line of North American carriers last year
- For a frequent traveler, these downgrades drive a change in strategy. It used to be that you would always want to concentrate as much of your travel as you could on a single airline in order to hit some level of status because even the bottom tier – the 25,000-mile level, American’s Advantage Gold, United’s Premiere, Delta’s Silver Medallion — had value. Today, since you can pretty much buy the bottom tier privileges for a $95 credit card fee (and even there, you can usually get the first year free), it only makes sense to concentrate if you think you can hit the 50,000-mile tier – American’s Advantage Platinum or Delta’s Gold Medallion. The reduced rewards for bottom-tier status aren’t worth the hassles of twisting your schedule – or paying $50 extra – to fly a single airline.
- And the airlines are probably OK with this. The act of flying passengers is probably the least profitable part of an airline nowadays, while selling frequent flier miles to credit card companies is the most profitable. Airlines are shifting from rewarding their most loyal customers to the most profitable. United’s top-top tier – Global Services – has always been for their highest-spending customers, not their highest-mileage ones. In some ways, this makes life a bit easier. Instead of working to earn special treatment, now you can just buy it.
- Bridge music — Fall to pieces – Silence by mika
Finding Time When Off The Road
- I’ve been off the road for 3 weeks now. Not out of the ordinary for most people. But for me, this is the longest stretch I’ve been home in over a year. And as always, there’s a bit of an adjustment.
- And that’s not to imply that adjustment is negative. I’ve increased the mileage I’ve put on my bike by an order of magnitude. Rather than getting 1, maybe 2 rides a week if I really push it – get up early on a Sunday – I’m getting 3 or 4 a week — and more mileage because I don’t feel pressure to get off the road so I can do other things.
- Indeed, that’s probably the biggest change – the release from the pressure to pack a week’s worth of errands, to do’s, and family time into a 2-3 day window.
- Which kinda dovetails into another adjustment – finding alone time. When you travel, there’s plenty of alone time – even when you’re surrounded by people – in TSA queues, in boarding lines, in a center seat on a full plane. And eating dinner solo at a bar and channel surfing in your hotel room at night. These are certainly not the highlights of travel, but they do offer you time alone – to think, to listen to music (and podcasts), to read, or just to stare off into space.
- Coming off the road, you’re still geared to maximize family or friend or significant other time – even if it means watching lousy TV shows or playing Scrabble. It’s takes some adjustment to figure out how and where you’ll grab/recreate that alone time – figuring out which lousy TV show you don’t have to watch, where you go off to read or listen to music.
- Sunday nights are a good time for me. When I’m traveling, Sunday night after dinner is pretty much lost. I lose that last bit of the weekend to getting ready for my Monday morning flight out of ORD – ordering a cab, checking into the flight, packing, checking/topping off the charges on the myriad of electronic devices I seem to now require for travel…. Since my family is used to me disappearing into my home office after Sunday dinner, I’ve kept it up – but I’m reading or writing instead of packing. It’s that little bit of alone time.
- Of course the real adjustment is having to pay for my morning Starbucks stop. It’s then that you really appreciate the power of the expense report…
- Closing music — iTunes link to Pictures of You by Evangeline
- OK, that’s it, that’s the end of TravelCommons podcast #99
- I hope you all enjoyed this podcast and I hope you decide to stay subscribed.
- Bridge music from the ccMixter
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