Ask Randy

Randy Petersen answers reader questions about how to maximize travel-related loyalty programs.

Dear Randy,
What would have happened to airline fares if frequent flyer programs had never been implemented?

I’ve done some research on this over the years and have concluded that airline fares would likely not show any major difference today if these programs had not been implemented.

As it stands, most of these programs produce a cashflow back to the airline based on the expansion of partnerships with other businesses. It might be reasonable to assume that if these programs had not been implemented, airline fares would be higher in order to compensate for the lost revenue.

We might argue that airline fares would be cheaper, since without frequent flyer programs, airlines would be forced to compete even more aggressively—and given that there would be nothing other than fares, and arguably product (service, in-flight amenities), fares would be the battleground. But given the influences of the price of fuel, labor and terrorism, it is highly likely that other forms of marketing would have evolved outside of fares as the difference between Airline Product A and Airline Product B.

What consumers have to understand is that these programs exist as a very specialized form of marketing, and to some degree replace more billboards, more newspaper ads and even more snail and email to your mailboxes. Most of us are happy with the tradeoff—reading an email advertisement that includes a respectable mileage balance with free award opportunities is a preferable option.

Ask Randy.

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RANDY PETERSEN is publisher of Inside Flyer magazine and is president of Frequent Flyer Services. Email Randy at editor@executivetravelmag.com.