Business travelers have long enjoyed airline reward programs as one of their biggest perks, but these programs are rapidly changing.
In the 80s, 90s and early 2000s, it was easy for regular business travelers to rack up airline points and miles — that they could then redeem for personal use.
In recent years, though, earning and redeeming points and miles has become a little more challenging and a little more complicated. That doesn’t mean business travelers are out of luck with reward programs. It just means that they need to be more conscientious and strategic about what airlines they choose, as well as how they plan their travel.
Here’s a look at the evolution of various airline reward programs, as well as the latest on airlines that are changing their approach to rewards.
Airlines: Moving From Miles to Dollars and Segments
Once upon a time, airline reward programs were relatively straightforward — fly a mile and earn a point. In some cases, you could accelerate the accrual of points by reaching a certain status or using a specific credit card. But miles always served as the foundation of airline reward programs.
That has changed in the last 10 years. Today, airlines are more focused on how many dollars you spend and how many segments you fly.
Why dollars? Dollars are important because, obviously, that’s how airlines make money. By switching to dollar-based reward programs, airlines are rewarding the travelers that help boost their bottom lines the most.
Why segments? Segments are a way to reward travelers who are willing to fly a specific airline even when it’s less convenient than alternatives.
For example, a traveler living in Austin needs to get to Albuquerque. Southwest provides a direct flight at a low rate. Flying American would require a layover in Dallas plus a more expensive fare. American’s reward program is based on dollars and segments, though. Choosing American in this case, though less convenient, goes a long way toward helping the traveler earn more points and get closer to achieving a higher status.
No More Multipliers: United and Others Move to Simplify Rewards
The good news is that many airlines are trying to simplify their rewards programs as they change to different structures. United just announced a simpler approach to rewards. It will still emphasize dollars and segments over miles flown, but it will no longer use multipliers based on fare classes.
Previously, United’s convoluted system included a range of different multipliers based on fare class. This approach made it difficult for passengers to understand how many points they were earning for any given flight, which meant less transparency overall. This change, plus the new ability to earning points when flying on partner carriers, ensures that United passengers “get the best value from their benefits,” according to a statement from the airline.
This shift isn’t limited to United and other U.S.-based carriers either. Lufthansa has just announced that it will take a similar approach starting in 2021, emphasizing dollars and segments in a newly simplified reward program.
Greater Competition for Status Passengers?
No matter how simply or complicated a point/reward system, passengers that earn status are highly valuable to airlines. That’s why there’s so much competition for their business — and it looks like that competition will only grown hotter in the coming years.
Southwest has announced that it will match elite status from any other airline. Losing status is a great barrier to regular travelers changing their preferred carriers. Southwest is overcoming that obstacle with this new policy. Will other carriers follow and do the same, further stoking competition for passengers who travel regularly?
JTB Helps Your Travelers Maximize Their Experience
As a travel manager, it’s essential that you fully understand how reward programs work so that you can best support your travelers — and help them maximize the travel experience.
You can do that by helping them choose budget-friendly itineraries that will boost point accrual, and you can also do that by providing education on reward program tips and tricks — like taking advantage of corporate reward partnerships.
You can also choose to work with JTB Business Travel, allowing our team to provide the tools and comprehensive services needed to save your company many while maximizing the experience of your travelers. Behind every solution we provide is a common sense approach to business travel.
Get in touch to learn more about what JTB can do for your company and its travelers.