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Will Alaska Airlines Adopt A Revenue-Based Mileage Plan Frequent Flyer Program?

by on April 15, 2014 · 7 comments

in Alaska Airlines

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The past year has brought some major changes to the frequent flyer program landscape, and most notably on how elite status will be earned from now on. Both Delta and United instituted new revenue requirements to qualify for elite status starting in 2014. While American and US Airways haven’t followed suit yet, probably thanks to their ongoing merger, I wouldn’t be shocked if they did in 2015. However, it’s not just the major legacies that are considering changes, it looks like. Alaska recently sent out a big survey to targeted Mileage Plan members, which several TPG readers forwarded to us,  asking for their thoughts on a possible new mileage and elite status program.

First, the airline proposes axing the Mileage Plan program altogether with this question:

No Alaska Mileage PlanThe gist is – would you forgo miles if you got a consistent 10% discount on flights? That would mean you value your miles at less than 10% back on your spending, which I bet a lot of people do.

Then the airline asked for thoughts on what it is calling “Sphere,” a potential program where you earn point on your spending rather than just flying (how creative).

Alaska Sphere ProgramAs you can see, it posits the following system:

  • Earn points on all spending on Alaska and partner airlines including in-flight services, baggage fees and Alaska Visa spending
  • Redeem points towards free flights on Alaska and partners, and for discounts on hotel, car and merchant partners
  • Occasional customer recognition “treats” with a choice of benefits you enjoy rather than a set of benefits that everyone of a certain elite tier gets
  • Earning elite status based on all Alaska-related spending including in-flight purchases, Alaska Visa spending and spending on partner airlines will count – this is different than Delta Medallion Qualifying Dollars and United Premier Qualifying Dollars where the only spending that counts is on base airfare (and Economy Plus upgrades on United)

So there are no bones about it – Alaska is definitely toying with Delta’s idea of moving to a revenue program, but I’m hoping they get enough negative feedback and ditch the idea. As they continue to battle Delta in Seattle, holding onto a traditional, lucrative frequent flyer program could be a big differentiator against Delta, who has one of the least lucrative programs out there in terms of earning (for most people) and redeeming.  While there’s no mention of how earning will be structured, but I don’t think it’s too far-off to guess that it might look like Delta’s impending 2015 program will where you earn a certain amount of miles/points per dollar based on your elite status and whether you have a co-branded credit card.

The third major part of this tester survey is something called “GoRewards.”

Go RewardsAccording to the information, here’s how it would work.

Earning

  • You would earn points based on spending on Alaska and partners including fees rather than just airfare, and on Alaska Airlines Visa spending.
  • You would earn bonus points based on the number of destinations you visit with special bonuses for Alaska/Hawaii trips

Redeeming

  • There would be more last-minute redemptions available at lower point levels and the opportunity to redeem points for discounted or free hotel stays, car rentals and merchandise

So this represents a total shift to a revenue-based program with the same vague “more low-level redemption” language that Delta used when it announced its own revenue-based changes.

While Alaska only put out the feelers in an email to a limited number of Mileage Plan members and is taking the pulse of their membership, but the language in these program description and the details seem fairly well-developed – not a good sign. At the very least, it means that Alaska has put some serious time and thought into revamping its frequent flyer program and converting it to a revenue-based system like Delta is planning for 2015.

If It Ain’t Broke, Don’t Fix It…. Right?
The more I’ve looked at Mileage Plan lately, the more attractive I have found it given that you can earn full elite-qualifying mileage on all its partners, and that the airline has some amazing partners in both Oneworld and SkyTeam including American, Delta, British Airways, Cathay Pacific, Air France/KLM and Qantas as well as non-alliance airlines like Emirates and Fiji Airways. It’s also been fighting off Delta’s push into the Pacific Northwest with aggressive double mileage promos, which has been a boon to Seattle flyers especially.

I think that if Alaska were to institute these changes, it would be a huge blow not only to the airline but also to a lot of flyers who favor the airline thanks to its favorable earning and redemption possibilities – especially on world-class partners like Emirates where there are some amazing value redemptions.

It would also represent a major shift in the US frequent flyer program world to more revenue-based programs that can often represent far lower value for flyers. Delta has already cast its die to go in this direction, while it looked like the other major airlines would see how the public reacted before considering their own moves. Looks like Alaska considered and decided to continue feeling out the possibility of shifting its own program toward a revenue-based model.

While this came out of the blue, I can’t say its an overall shock. I’m not going to stick my head in the sand and hope for the good old days of cheap mileage-run flights and amazing award chart values to continue forever. I don’t think that’s realistic. However, this is an opportunity for those Alaska flyers who did receive the survey to voice their opinions and to do so loudly. There might still be time to make Alaska reconsider and keep Mileage Program as it is. At least, for now.

I won’t be too gloom-and-doom about it either. There are still going to be ways to squeeze value out of revenue-based programs and there are going to be some bright spots, especially for folks who are savvy about their miles and their credit card strategies. I’ll be following this closely over the coming days, but if you were one of the recipients of this survey, what do you think and how did you answer it?

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Justin

    Alaska here’s what you need to do. Whatever Delta did…do the opposite. You’ll get so much more positive feedback that way.

  • Daniel S

    I just did the status match to MVP Gold to escape delta. It would be devestating to have to abandon them and leave points stranded there and do a status challenge to united platinum. I would likely never ever set foot on Alaska metal again if they betrayed me this way after i switched loyalty. May as well be in a herd on a lagacy carrier and in a big alliance than get screwed to support a little betrayer airline.

  • trey

    you’d have to be be a sucker to choose the 10% off. airlines can change fares daily in the 20-30% range. there’s no proverbial set fare between 2 cities to realise your 10% discount!

  • Brian C. Lee

    But will they get more money that way? That’s the question.

  • Matt C.

    I love Alaska’s service, frequency of complimentary upgrades, and partner earning/redemptions. I don’t love their old, ill-equipped planes and limited routes. If they went to a revenue model, it would pretty much kill all of my business with them, as I’d switch to the cheapest carriers on odd routes and Jet Blue or Virgin America on high-traffic routes.

  • mattplunkett

    I got the poll by email this morning and had the same reaction as the author above. As a business traveler, I’m okay with dollar-based earnings, however most of the other contemplated changes looked like they would dilute the value of Alaska’s program to frequent business travelers. Alaska is my preferred FF account for flights on AA and DL because of their award availability up and down the West Coast. However they really do need a higher-level redemption option for partner airlines (e.g. 200K miles for greater availability in business class to Europe, etc)

  • FlyDude

    I’ve been a Delta Gold or Platinum every year for the last 8 or 10. Probably 10 years of silver before that. I’m asking Alaska for a status match late this year and all of my earning will be on them next year. I will also be moving my credit card over. This is specifically because of Delta’s FF program changes.

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