Amid Travel Gloom, Hopeful Signs for Frequent Flyer Programs

Since the introduction of [[American Airlines | American’s]] AAdvantage program in 1981, [[Frequent Flyer Programs | travel rewards programs]] have multiplied like rabbits. And as fast as new programs have been launched, the old programs have evolved, changing in response to the times and competitive pressures.

These days, with the industry intensely focused on reducing costs and increasing revenue, it might seem that every change was related to [% 2642212 | | fees %] (more and higher) or award prices (higher).

But not all the news is bad. In just the past year, there have been several events that buck the negative trend. And there are other developments in the pipeline that could also give a lift to flyers’ low opinions of loyalty programs.

I Prefer From Preferred Hotels

Introducing an entirely new loyalty program presents a rare opportunity to start from scratch, taking advantage of the lessons learned from the hundreds of other marketing schemes, inside and outside the travel industry.

The Preferred Hotel Group, a collection of more than 300 independent hotels, based its new I Prefer program on the novel premise that gratification should be immediate rather than deferred.

So unlike traditional frequent-stay programs, which deliver rewards only after members have earned points, I Prefer provides extra service and benefits immediately. Instead of offering a free room night after multiple stays, I Prefer rewards its members for every stay, with such perks as room upgrades, early check-in and late check-out, free Internet access, and a gift for booking online.

Is there a place for a program offering such soft benefits in a world where loyalty is routinely rewarded with free rooms? If there is, it would be among travelers who are focused more on service and recognition and less on rebates—travelers, that is, who tend to stay at pricey boutique hotels, like those in the Preferred Hotel network.

Welcomerewards From hotels.com

Where I Prefer is all about extra service, welcomerewards, the frequent-stay program for customers of hotels.com, is all about freebies.

The program’s promise: “Get one free night anywhere for every 10 nights you book.” That’s it—no elite levels or merchandise awards, just a free night after every 10 paid nights.

That amounts to a 10 percent discount on 11 nights. But in fact, it’s easy to improve on that 10 percent rebate, since any night costing $40 or more counts toward earning the free night, which can cost as much as $400.

The program is both simple and generous, a refreshing change from some of the established hotel schemes that over the years have grown convoluted and unwieldy.

JetPaws From JetBlue

Frequent flyer points for pet travel? [[JetBlue Airways | JetBlue]] barks in the affirmative, with its new JetPaws program.

Human members of the JetBlue TrueBlue program now earn two points when they fly with their pets. (JetBlue allows dogs and cats in the cabin if the pet and pet-carrier weigh in at less than 20 pounds. The charge: $100 each way.)

In addition to the frequent flyer points, the JetPaws service includes a pet travel guide, which comes with a list of pet-friendly hotels and rules of pet-travel etiquette. And there’s a line of JetBlue-branded pet merchandise for sale as well.

Elevate From Virgin America

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Although upstart discount airline [[Virgin America]] began signing up members for its Elevate program almost two years ago, it wasn’t until October of last year, when members were finally able to cash in their points for awards, that the program could be considered truly live.

As with Preferred Hotels’ I Prefer program, Elevate was newly designed from the ground up, giving the airline the luxury of picking and choosing from the best features of existing programs, or introducing altogether new policies and benefits.

Virgin chose to offer its customers two features not typically found in airline mileage programs. First, awards are not encumbered by the blackout dates and capacity controls that have so frustrated members of other programs. All awards are unrestricted.

Secondly, instead of awarding miles according to the distance flown, Virgin awards points that correspond to the price paid for tickets: five points for every $1 spent. And the number of points required for award tickets corresponds directly to the ticket’s market price. So consumers can easily see exactly how much the airline values their loyalty.

Unfortunately, Virgin America undermined those gestures toward fairness and transparency by adopting an uncommonly harsh expiration policy: Points expire after just 18 months.

A New (As-Yet-Unnamed) Program From WestJet

With plans to offer [[Codeshare | codeshare]] flights with [[Southwest Airlines | Southwest]], [[KLM Royal Dutch Airlines | KLM]], and [[Air France]], Canadian discount carrier [[WestJet Airlines | WestJet]] is poised to significantly raise its profile in the industry. It’s also on the verge of launching its own frequent flyer program.

The airline stopped awarding points in the Air Miles program at the end of 2008 and will be unveiling a new program of its own design sometime in early 2009. According to recent statements by the airline’s president, the program will incorporate a credit system where members earn a percentage of the amount paid for WestJet tickets, which can be banked for future use toward a WestJet Vacations package.

As with Virgin America’s refreshingly transparent earning and redemption scheme, WestJet’s approach would establish a predictable relationship between what a customer spends and what he gets back on the expenditure.

Rapid Rewards From Southwest

Lastly, a teaser. At an industry conference last week, Southwest’s chief financial officer revealed that plans are afoot to remake Rapid Rewards, the discount carrier’s popular loyalty program.

Since its introduction in 1987, Rapid Rewards has served as the model for several other discount carriers’ frequency programs. While no details were disclosed, it’s likely that the planned changes are designed to make the program more competitive with the more robust programs of the full-service carriers while retaining the simplicity of the current Rapid Rewards.

That could be a game-changer. Unlike Virgin America, Southwest is a large enough player that a significantly enhanced program could force a competitive response from airlines like [[American Airlines | American]], [[Delta Air Lines | Delta]], and [[United Airlines | United]].

So a revamped Rapid Rewards could be a boon not only to members of that program, but to members of mainline carriers’ programs as well.

The Future of Rewards Programs Remains to Be Written

Is there an overarching theme to these initiatives? Not really. Rather than a common strategy or tactic, they suggest that, even after almost three decades, there remain fundamental questions to be answered about travel awards programs. Among them: Whose loyalty is worth securing; how much is it worth; and how should it be rewarded?

For participants in legacy programs, frustrated and disappointed with the declining value of their airline and hotel points, the new developments suggest that there’s still hope for loyalty.

(Editor’s Note: SmarterTravel.com is a member of the TripAdvisor Media Network, an operating company of Expedia, Inc. Expedia, Inc. also owns hotels.com.)