If you are following me on social media, you will have seen that I was in New York recently for the Freddie Awards, the airline and hotel equivalent of the Oscars. The awards were started by the most famous frequent flyer of all, Randy Peterson. Randy, of course, started Flyertalk and Boarding Area amongst others. I also attended the [email protected] conference beforehand, where the hotel and airline industry come together to share the latest trends and issues in loyalty. This article will have a round-up of the latest trends and the Freddie Awards.
Punitive loyalty schemes and poor customer experience in the USA
Unfortunately many legacy carriers have what could be viewed as punitive loyalty schemes with points expiry, multiple tier levels and high-priced redemptions. The newer carriers and hotels are now leading the way in how to really create customer loyalty. Will the legacy carriers learn from this?
One of the most notable things about the Loyalty conferences I have attended is the lack of representatives from legacy carriers such as BA, AA, United etc. Is this arrogance that they their schemes are OK and they know everything already? Many of the smaller and more dynamic airlines were in attendance such Norwegian and Jet Blue from America. These airlines focus on delivering a different customer experience, as well as keeping costs low.
We are all familiar with the terrible stories emerging from America of poor airline customer treatment. The man dragged off a United plane, the United customer who has his ticket cancelled for filming the check in agent’s response. It is becoming clear that these are symptomatic of a widespread disregard for customer experience by many of the major USA airlines. This has led to a tipping point and huge public backlash against United, in particular.
— Malbene (@Malbene) April 11, 2017
BA’s Executive Club
Unfortunately it has felt over the last few years that whilst BA has not reached these levels of customer service, it has had less and less regard for the customer experience. For example, BA have dramatically reduced compensation even for serious complaints. Often a paltry 5000 Avios, even to First passengers who experience major issues. Many BA customers have reached the tipping point and whilst they still manage to retain status with BA, they actively avoid BA once they have gained their qualifying flights for status.
It was very clear from the presentations that the legacy carriers will continue to struggle unless they adapt to the new aviation environment and this does not mean cost cutting. There were a number of presentations from bloggers/frequent flyers that all had the same message. “Enough is enough!”. In America the legacy carriers have cut benefits and changed their loyalty programs to be more revenue based. Lifetime benefits have been removed, other benefits such as priority boarding have been offered to too many people, devaluing their worth. Benefits are often offered but never actually delivered such as upgrades. So why even bother having a loyalty scheme?
“Airlines make more money selling miles than seats”- Bloomberg, March 2017
Whilst BA have recently been seeming to try to make amends to their Executive Club members, Alex Cruz has not ruled out changes to the club. He has publicly said he would like to go with a more revenue based model similar to what some airlines are already adopting. However, it would not be a full revenue model but instead ‘value based’ for earnings and redemption similar to the one he introduced at Vueling. He has at least ruled out any changes for 2017, but that just sounds like confirmation that changes are planned later.
Another theme that sounded very familiar was “don’t treat your customers like they are stupid”. US Customers are tired of being told that cuts are actually “enhancements” and that it was what customers asked for. The same has been happening with BA’s recent cutbacks such as buy on board which apparently customers requested! This just exacerbates an already unwelcome change and gradually erodes customer loyalty.
So what is the alternative?
Many other hotel and airline companies are taking a different approach. For example, understanding the benefit of giving small rewards to even the lowest tier members such as free Wi-Fi in hotels. For many airlines the day-to-day benefits of being a member while traveling are very little. American based Jet Blue is a good example of how to do things differently. JetBlue believes its loyalty program should reward customers’ loyalty – not mileage – and be easy to understand. The points have no expiry and there are no blackout periods to using them. Members get access to sales first and can use special features on the Jet Blue website. There is also only one tier to attain for frequent flyers, which gets you a host of benefits.
Freddie Awards 2017
Introduced in 1988 by InsideFlyer magazine’s Randy Petersen, the “Freddies” are named in honour of Sir Freddie Laker. This year there were over 4 million voters from 236 countries! The awards are open for anyone to vote and are aimed at frequent flyers. Interestingly the top 10 voting cities did not include London but did include Buenos Aires, Paris and Moscow. This may explain how Aeroflot managed to win so many awards, for what I would not consider as one of the world’s best airlines! Noticeably absent were any oneworld airlines and Hilton, which I really like as a loyalty program.
Hopefully with one of BA’s arch rivals winning the Program of the year, it may give Alex Cruz something to consider. I have been impressed with Norwegian’s simple program. For every 6 flights you take, you can redeem for 1 reward such as free seat selection, fast track security or free luggage. Norwegian lets you use the chosen perk for 12 months, as much as you want. You also earn Cashpoints which you can redeem for flights, as well as smaller perks like the rewards.
Program of the Year — Norwegian Air – Norwegian Reward
Best Elite Program — AIR FRANCE/KLM – Flying Blue
Best Promotion — AIR FRANCE/KLM – Flying Blue
Best Customer Service — Aeroflot Bonus
Best Redemption Ability — Aeroflot Bonus
210 AWARD — TAP Portugal – Victoria Programme
Program of the Year — Accor Hotels – Le Club Accorhotels
Best Elite Program — Starwood – Starwood Preferred Guest
Best Promotion — Accor Hotels – Le Club Accorhotels
Best Customer Service — Accor Hotels – Le Club Accorhotels
Best Redemption Ability — Accor Hotels – Le Club Accorhotels
210 AWARD — Choice Hotels – Choice Privileges
Do you agree with the winners? Who would you have voted for?