Airline loyalty is dead.. or mostly dead. It has been a dark past couple of years with frequent flyer programmes significantly being devalued and changed to a revenue based model, meaning you earn miles based on how much you spend rather than the actual distance you fly. Revenue based only rewards high spenders, meaning unless you buy full-fare First/Business Class tickets, you will generally earn less miles.
Most of the frequent flyer programmes in North America are now revenue based – American, Delta, and United all allow you to earn miles on how much money you’ve spent on the ticket rather than the actual distance flown. Alaska’s programme has yet to be devalued this way, but I suspect it is coming sooner rather than later.
In Europe the three major frequent flyer programmes, Lufthansa Miles & More, British Airways Executive Club, and Air France-KLM Flying Blue, all award miles for cheap tickets at a percentage of the miles flown. The cheapest tickets generally earn 25% of the miles flown – which is sort of like already being revenue based. The reason why the major U.S. airlines began converting to a revenue based model is because they were all awarding 100% of the miles flown on all fares – something the European programmes haven’t been doing. In Europe, it is hard to earn a substantial amount of miles on cheap tickets – most segments on a cheap ticket earn 125 – 250 miles, which is hardly significant.
Today, Air France-KLM Flying Blue announced they will switch to a revenue based model in 2018, meaning that Flying Blue will award miles based on how much money you spend on the ticket rather than the distance flown. This is terrible news for European frequent flyers – not only does the programme currently award 25% of the miles flown on cheap tickets, but with the new changes passengers will earn even less than 25% of the miles – it all depends on the cost of the ticket.
A revenue based model simply does not work in Europe. Very few miles are already awarded for cheap fares and therefore the switch simply does not make sense. Now that Air France-KLM is implementing a revenue based model, it is more than likely that Lufthansa Miles & More will follow. Hell, even British Airways announced that the Executive Club will introduce “dynamic pricing” on award tickets – meaning the number of miles required for an award ticket will not be fixed and instead will be tied to the cost of a revenue ticket.
It really pains me to say it, but I believe airline loyalty and frequent flyer programmes are dying. Fast. The devaluations that have taken place over the past few years are the most significant in the entire lifetime history of the frequent flyer programmes. None of these changes are positive.
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