Frequent-flyer program
A frequent-flyer program (FFP) is a loyalty program offered by many airlines. Typically, airline customers enrolled in the program accumulate frequent-flyer miles (kilometers, points, segments) corresponding to the distance flown on that airline or its partners. There are other ways to accumulate miles. In recent years, more miles were awarded for using co-branded credit and debit cards than for air travel. Acquired miles can be redeemed for air travel; for other goods or services; or for increased benefits, such as travel class upgrades, airport lounge access, or priority bookings.
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History [edit]
The very first modern frequent-flyer program was created in 1972 by Western Direct Marketing, for United Airlines. It gave plaques and promotional materials to members. In 1979 Texas International Airlines created the first frequent-flyer program that used mileage tracking to give 'rewards' to its passengers.[1] American Airlines' program was a modification of a never-realized concept from 1979 that would have given special fares to frequent customers. It was quickly followed later that year by programs from United Airlines (Mileage Plus) and Delta Air Lines (SkyMiles), and in 1982 from British Airways (Executive Club).[2]
Since then, frequent-flyer programs have grown enormously. As of January 2005, a total of 14 trillion frequent-flyer miles had been accumulated by people worldwide, which corresponds to a total value of 700 billion US dollars.[3]
Miles accrual: flying [edit]
The primary method of obtaining points in a frequent-flyer program until recent years was to fly with the associated airline. Most systems reward travelers with a specific number of points based on the distance traveled (such as 1 point per mile flown), although systems vary. Many discount airlines, rather than awarding points per mile, award points for flight segments in lieu of distance. For example, a number of airlines in Europe offer a fixed number of points for domestic or intra-European flights regardless of the distance (but varying according to class of travel).[4] With the introduction of airline alliances and code-share flights, frequent-flyer programs are often extended to allow benefits to be used across partner airlines.
Miles accrual: credit cards [edit]
An additional method of accruing miles is credit cards bonuses and spending. Many issuers partner with airlines to offer a co-branded credit cards or offer the ability to transfer their proprietary points to an airline's program. It is not uncommon for the credit card issuers to offer large sign-up bonuses, among other incentives, to entice users to put purchases on their card. This allows infrequent travelers to be take advantage of various programs. It's not uncommon to accumulate enough miles for an award ticket without ever flying with an airline. Many people make a hobby of accruing large sums of miles. This can be done by signing up with many credit cards, optimizing which card you spend on, and taking advantage of various promotions.[citation needed]
Value of a mile [edit]
Travelers frequently debate on how much accumulated miles are worth, something which is highly variable based on how they are redeemed. A typical ballpark figure is approximately 1-2 cents per mile based on discount (rather than full fare) economy class travel costs.[5]
The airlines themselves value miles in their financial statements at less than one one-thousandth of a cent per mile.[6]
Accounting issues [edit]
Business travelers typically accrue the valuable points in their own names, rather than the names of the companies that paid for the travel. This has raised concerns that the company is providing a tax-free benefit (point-based awards) to employees, or that employees have misappropriated value that belongs to the company, or even that the rewards acts as a kind of bribe to encourage travelers to choose one particular airline or travel unnecessarily. Most companies consider the miles earned by their employees to be a valuable personal perk that in part compensates for the daily grind of frequent business travel, though some governmental organizations have attempted to prevent their employees from accumulating miles on official travel. For example, Australian Public Servants are not permitted to redeem points accrued from official travel.[7]
Some programs allow for the donation of frequent-flyer miles to certain charities.[8]
Climate and environmental issues [edit]
Frequent-flyer programs have been receiving scrutiny because of the prevalence and rapid growth of air travel, in terms of both the frequency that individuals fly and the tendency toward longer distance travel. There have also been calls for an end to frequent-flyer programs.[9][10][11][12] An increase in the number of hypermobile travelers has been identified as a particular aspect of the issue because of the highly disproportionate contribution of this class of individuals to aviation greenhouse gas emissions, and frequent-flyer programs are a contributing factor.[13]
Precedent exists for ending frequent-flyer programs. In 2002, Norway banned its domestic frequent-flyer programs in order to promote competition among its airlines.[14] In the U.S. in 1989, a vice president of Braniff said the government should consider ordering an end to frequent-flyer programs, which he said allow unfair competition.[15]
Airline frequent-flyer programs [edit]
Most larger airlines around the world have frequent flyer programs with a myriad of names, policies and restrictions regarding joining, accumulating and redeeming mileage points accrued.
Mileage run [edit]
A mileage run is an airline trip designed and taken solely to gain maximum frequent-flyer miles, points, or status.[16] If a traveler has already achieved some sort of elite status, then that traveler will earn bonus award miles on top of his or her actual flight miles. Depending on the program, that traveler will reach its goal sooner if the miles he or she accrue are elite qualifying miles.[16] A mileage run may allow a traveler to (re-)qualify for a beneficial elite level, which requires a minimum number of miles to qualify.[17] The value of a mileage run is frequently computed in cents per mile (CPM) where the total price of the ticket is divided by the total number of base miles accrued.[citation needed]
See also [edit]
References [edit]
- ^ David M Rowell (August 13, 2010). "A History of US Airline Deregulation Part 4 : 1979 - 2010 : The Effects of Deregulation - Lower Fares, More Travel, Frequent Flier Programs". The Travel Insider. Retrieved September 21, 2010.
- ^ Ben Beiske (2007). Loyalty Management in the Airline Industry. GRIN Verlag. p. 93. ISBN 3-638-77717-0.
- ^ "Frequent-flyer miles". The Economist. 2005-01-06.
- ^ [1][dead link]
- ^ Adrianus D. Groenewege. Compendium of International Civil Aviation.
- ^ > [dead link]
- ^ "APS Values and Code of Conduct in practice". Apsc.gov.au. 2009-05-06. Retrieved 2012-11-03.
- ^ Frequent-flyer points donation a tricky tax issue[dead link]
- ^ Storm S (1999) Air transport policies and frequent flyer programmes in the European Community: a Scandinavian perspective. Unit of Tourism Research, Recearch Centre of Bornholm (p.1-105).
- ^ Cognac M, DeLozier M (1997), Frequent Flyer Programs Promotion: An Analysis Of A Paradoxical Industry. Southwestern Marketing Association (p.1-12).
- ^ Tretheway MW (1989), Frequent Flyer Programs: Marketing Bonanza or Anti-Competitive Tool? (30:1), p.445.
- ^ Cohen S, Higham J, Cavaliere C (2011), Binge flying: Behavioural addiction and climate change, Annals of Tourism Research
- ^ Gössling S, Ceron JP, Dubois G, Hall CM, Gössling IS, Upham P, Earthscan L (2009), Hypermobile travellers Chapter 6 in: Climate Change and Aviation: Issues, Challenges and Solutions
- ^ Aftenpost (2002). Sterling polishes plans for new routes, by Nina Berglund, 19 Mar 2002.
- ^ Orlando Sentinel (1989). Braniff Will SlimDown, Keep Flying, by Kenneth Michael, 4 Oct 1989.
- ^ a b David Grossman (2005-11-14). "The art and science of the mileage run". USA Today. Retrieved 2006-09-26.
- ^ "InsideFlyer.com: Wild About Miles: Inside the Mind of the Mileage Junkie". www.insideflyer.com. Retrieved 2010-06-25.
External links [edit]
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