Published on: September 17, 2009Now available on iTunes…
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Hi, I’m Kevin Coupe and this is MorningNewsBeat Radio, available on iTunes and brought to you this week by Webstop, experts in the art of retail website design.
United Airlines this week announced that it has created a program that allows fliers to purchase the same priority options that until now have been available only to its frequent fliers.
According to the company, it now will allow people to pay for the ability to not just get roomier economy seats, but also get access to faster security lines, earlier boarding, the Red Carpet Club, and even free checked luggage…though I guess it isn’t really free if you have to pay for it, but the argument is that by buying the package you aren’t getting nickel and dimed to death.
At some level, this makes sense. It allows customers to pay for better treatment, and it gives United a new revenue stream…and if you’re in the airline business, I guess, any revenue stream is a good revenue stream.
Except that I think it can be argued that United is making a mistake, and in fact could be eroding the very value of its frequent flier program.
It has always been a truism that airline frequent shopper programs were effective because they encouraged people to stick to one airline – or at least, to airlines within a specific alliance – because as miles accrue, rewards become available and treatment is better. Contrast this to the supermarket industry, where in most cases the people who spend the most money tend to get no better treatment…and in fact, don't even get treated as well as people who buy just a few items and get to use the express lane.
But now, you don't have to be loyal. You just have to have a few bucks in your pocket. I have no scientific evidence of this, but it stands to reason that at least some people will be less loyal to United because they don't need to be…they can just buy the level of attention and speed that they want.
It may be that this new program will generate more revenue than it will lose, but I wouldn’t bet on it. And at the very least, it makes the case to United’s traditional loyal fliers that they don't need to be loyal anymore…and that, in fact, United won’t be as loyal to them because it needs to make a buck.
The argument here always has been that true loyalty programs demonstrate how loyal the business is to the shopper…as opposed to just offering financial incentives to come shop at a particular place at a particular time…which really is renting loyalty, not earning it.
It seems to me that United is making a short term, tactical decision as opposed to thinking long term and strategically. Again, it is too early to prove this…but I suspect to at least some customers, United’s skies just got a little less friendly…and the playing field between United and its competitors just got a little flatter and more even. Some of the differential advantages that were implicit in its frequent flier program are gone…and this is a mistake that no business – not an airline, not a retailer – ever wants to make.
For MorningNewsBeat Radio, I’m Kevin Coupe.
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