Frequent Flier Programs Change Course

Today, frequent flier miles can be cashed in for hotel and car rentals and even, in some cases, electronics and home gadgets.

Delta's Robertson said airlines haven't communicated well the value behind the evolution of the frequent flier program's airline partnerships, which allow the airlines to reward loyalty in different ways.

When American started its program, it looked to the S&H Green Stamps loyalty program as a blueprint. That program allowed grocery shoppers to collect green stamps for purchases that later could be traded in for prizes ranging from toasters to mopeds. (Today, that program's stamps have been replaced with bytes - S&H Greenpoints are now doled out via computer).

Ironically, today's frequent-flier programs look more like the S&H Green Stamps program than the original airlines' loyalty programs. Today, frequent flier miles can be cashed in for not only airplane tickets but other awards, including hotel and car rentals and even, in some cases, S&H-like prizes from electronics to home gadgets.

United, American and Delta each rake in an estimated $1 billion a year from the partnerships between airlines and credit cards, restaurants and other companies that pay cash to purchase frequent flier miles. The companies then give them to their customers, Robertson said.

"They have changed quite a bit, a transformation from 'frequent flier' to 'frequent buyer,'" Petersen said of the programs.

At the same time, airlines say they try to provide perks that their most frequent fliers want, such as upgrades, advance boarding and special lines through airport security. They also work to make sure all travelers are able to use their miles for free tickets.

"Ninety percent of the time somebody asks for a flight, they're able to get the flight they want. Eighty percent at the time they wanted," said American spokesman Billy Sanez of AAdvantage participants.

Back in Georgia, Erickson says he understands that the airlines must walk a tightrope between nourishing a profitable business opportunity and wanting to keep their best customers.

"The mileage program in the early stages was really about flying with someone frequently or choosing them first so you could accumulate mileage points," Erickson said. "Now with points you can get on credit cards and every conceivable way, it becomes a bank account to some degree. It's a place to aggregate additional value to your life."

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