Mileage programmes: What price loyalty?

LAST week United Airlines announced significant changes to its loyalty programme, MileagePlus. From February 2014 many passengers, particularly those travelling to and from Europe in business- or first-class cabins, will need to use dramatically more miles to get their award tickets. And for those using United miles to travel on other Star Alliance carriers, such as Lufthansa and Swiss, the cost of a mileage ticket will rise disproportionately higher. A spokesman told USA Today that this was the first rise for several years and was needed to “account for the increased cost of providing transportation”.Because the profits to be made in economy-class travel are so meagre, airlines have invested more heavily in their premium cabins in recent years. In America, carriers competing to provide the best service between New York and California offer features such as lie-flat business-class seats and fancy amenity kits. The rationale is clear: as a recent Bloomberg Businessweek article points out, premium passengers account for 75% of the revenues on transcontinental services. They must be humoured, but the cost of the investment in their cabins has to be met somehow, and the restructuring of the award programmes is one way to control costs.United is not alone in increasing the cost of its award tickets. Delta has also been criticised for reducing the …

Link to article: www.economist.com/blogs/gulliver/2013/11/mileage-programmes?fsrc=rss

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