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Today TPG Contributor Richard Kerr explains airline business loyalty programs, and how you can benefit by signing up.
Most points and miles enthusiasts know the names of domestic airline loyalty programs. SkyMiles, AAdvantage, MileagePlus, and Rapid Rewards are like the ABC’s of award travel, but I’d bet that most of you are less familiar with SkyBonus, Business Extra, PerksPlus, and SWABIZ. Many airlines offer perks, savings, and in some cases completely separate loyalty programs to win over the travel accounts of small and medium-sized businesses. Today I’ll give a brief run down of each of these programs, pointing out which ones may be worth a look.
At the core, each of these business frequent flyer programs operates similarly. A single, centralized account is created for each registered business. Employees of that business can enter the separate business frequent flyer number on their reservations in addition to their personal frequent flyer number, and the business is credited with all revenue spent. Depending on the program, companies are awarded cash back bonuses once they reach a certain amount of annual revenue spent.
Alternatively, points for the business account are earned based on the revenue spent each time an employee travels and enters the business program number on a reservation. Individual flyers still earn points or miles like normal regardless of whether they’re participating in a business program. Another nice perk of these programs is that they ease the work of travel managers by providing monthly spending reports, a centralized reservation system, and the ability to set policies for company travelers.
Let’s look at the programs offered in the United States:
American Airlines Business Extra
Set up as an entirely separate points-based loyalty program, companies earn Business Extra points based on the revenue they spend. For every $10 your company spends with American, the Business Extra account earns 2 points. Redemptions begin as low as 300 points ($1500 spent) to get an Admiral’s club pass.
Free coach flights within North America start at 2,000 points. A business class flight between North America and Europe is 7,200 points (curiously flights to Japan, Korea, and China cost the same), or you can even redeem for AAdvantage Gold Status at a cost of 2,400 points per person. Your business will earn points on flights with American Airlines, American Eagle, US Airways, and US Airways Express, plus you can now earn points on any codeshare flight operated by British Airways, Finnair, Iberia, Japan Airlines, Qantas Airways or US Airways. Companies with 2 or more employees that do not have a corporate sales agreement, discount, or other agreement with American Airlines or US Airways are eligible to join Business Extra.
Completely separate from SkyMiles, SkyBonus awards points based on the revenue of each ticket. Delta has seemingly made the program so complex that they created a SkyBonus University with four courses to try and explain the program and how to get the best use out of it. Delta announced changes to the program last year, and another change involving a new earning structure is scheduled to take place on August 1, 2015.
Beginning in August, Delta will update its system of earning SkyBonus points based on the origin/destination of your flight and fare class. Flights that are not to or from certain Delta hubs (Atlanta, Cincinnati, Detroit, Minneapolis, or Salt Lake City) and are booked in the most expensive fare classes can earn 30 SkyBonus points per dollar. In contrast, discount fares flying into or out of one of those hubs will earn just 1 Skybonus point per $1 spent.
When it comes to SkyBonus redemptions, you can get free flights, upgrades, Sky Club passes or Silver Medallion status. The cheapest redemption available is a beverage or headset for 10,000 SkyBonus points. A SkyBonus certificate for a main cabin flight within the USA/Canada is 85,000 points. A recent program enchancement is the ability to redeem points for a system-wide travel certificate. Beginning at 220,000 points, you can redeem for a Main Cabin flight anywhere Delta flies. An important note for all free flight redemptions in SkyBonus: you can pay more than double the points for all options to get an “enhanced availability” certificate. This leads me to believe that trying to find availability to use your regular certificates may be quite a headache.
You can earn also SkyBonus points for travel with Air France, KLM, and Alitalia.
JetBlue Blue Inc.
The convenience and simplicity of the Blue Inc. program is alluring at face value. The program is based on a tablet and mobile-friendly IT system that allows a travel manager to seamlessly keep track of employee itineraries, store payment methods, manage travel policies, and book flights. The company earns 3 TrueBlue points per dollar spent, and those points are redeemable for any company traveler.
Southwest’s business program is really just a free online corporate booking tool aimed at making a company more efficient, but offering no additional savings. Much aligned with Southwest’s easy and no frills attitude, SWABIZ travel managers can generate detailed reports for a given time period and centrally manage all company travel. The website does say that members get access to exclusive promotions and offers, but the word is that those are rare and of little use.
Like the other legacy carriers, United’s business program is completely separate from its frequent flyer program MileagePlus. The earning chart is a little simpler, but operates along the same principles as Delta SkyBonus. The number of PerksPlus points you earn is based on your booking fare and whether you’re flying to/from a hub airport. You can earn between 1 and 6 points per dollar spent on travel. Besides flying United, you can earn PerksPlus points when flying Lufthansa, Austrian Airlines, Brussels Airlines, and Swiss International Air Lines. Tickets must be purchased and issued in the US, Canada, Latin America, and Caribbean countries in order to be eligible to earn points.
You can redeem PerksPlus points for free flights, United Club passes, Mileageplus Silver or Gold status, or beverage and headset coupons. Free travel certificates are priced in 5 different entities, with 1-4 being region-based flight certificates, and entity 5 being a system-wide travel certificate. A system-wide K fare economy round-trip certificate costs 125,000 points. Round-trip discount economy fares between the lower 48 states, Canada, Mexico, and Caribbean start at 35,000 points.
One price point that sticks out to me is for free flights between the US and Europe. A discount economy round-trip certificate will cost you 75,000 points, whereas a discount business fare ticket is a staggering 4.5 times the economy amount at 340,000 points. That’s in line with revenue fares, but not the usual pricing we see for award tickets.
Virgin America Elevate, Inc.
A rather simple webpage explains this rather simple program. Register and spend $20,000 or more in your first year and you will receive 3% of your spending back in rewards dollars to use with Virgin America.
As a business manager, the first items you should look at when deciding which of the above programs to partake in are the routes you fly most often and which program offers you the greatest return on those routes. Here are a couple of examples comparing the value provided by the three legacy carrier business programs:
1. New York – London Business Class May 12-19, 2015
- American Business Extra — I fare $5,210 — Business Extra points earned = 1,042
- Delta SkyBonus — Z fare $5,210 — SkyBonus Points earned = 156,300
- United PerksPlus — Z fare $5,210 — PerksPlus points earned: 5,210
2. New York – Chicago Economy Class
- American Economy — O fare $177 — Business Extra points earned = 35
- Delta Main cabin — V fare $176.20 — SkyBonus points earned = 1,062
- United Economy — G fare $177 — PerksPlus points earned = 177
In these examples SkyBonus is the clear winner. After two trips you would almost have enough points for a free one-way main cabin transatlantic flight, or almost enough for two flights within the USA and Canada. With American’s Business Extra, you would only be half way to a free flight within North America. Since you’re flying out of a United hub, you only earn a small portion of the lowest free flight redemption with PerksPlus.
If you can stomach the complexity of the program, SkyBonus also has promotions that can earn you even more points, placing the program even further ahead of the competition. Complete the above calculations for your most popular business routes to help you decide which program to pursue.
Be sure to read all of the fine print and requirements when you sign up for any of the mentioned programs. A tax ID is usually required in order to sign up, and minimum revenue requirements exist to keep your company registered and maintain your points. If you qualify (sole proprietors are eligible), these programs can be a great way to supplement your normal frequent flyer earnings.
Have you earned rewards in any of these programs? NEW INCREASED OFFER: 60,000 Points TPG'S BONUS VALUATION*: $1,200 CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners *Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
NEW INCREASED OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
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