Who doesn’t love a points & miles conspiracy theory?
I have a conspiracy theory, and I don’t think I’m all that wrong. Airlines love a game of follow the leader, and there’s no question that in 2018, that leader is Singapore Air. The airline just cleaned house at the annual SkyTrax World’s Best Airline Awards, and continues to receive applause for the KrisFlyer loyalty program. With well documented “glitches” in partner availability across a variety of airlines lately, I’m beginning to think that airlines wish to limit points redemptions using partner airline miles.
The Premise
Singapore Air was the first major airline to say no can do for sitting in their forward cabins with miles from other airlines. If you want to fly business or first on Singapore Air, you must redeem Singapore Air points. You can’t use points from their partners. Singapore allows KrisFlyer loyalty program members to convert points from SPG, Amex, Citi and Chase into KrisFlyer miles which still makes them relatively easy to acquire from everyday spending, but by blocking other airlines from cashing in, they control their exposure.
The Points Conspiracy
An airline having a glitch with availability is easily within one standard deviation of the norm. But if you read the blogs, which you probably do, you’ve undoubtedly seen that there’s been a series of glitches from a variety of airlines. Cathay Pacific flights haven’t been readily appearing in airline partner programs, same for American Airlines, British Airways and Iberia transfers are blocked, the list goes on. Is this a coincidence, or is this the beginning of proprietary points availability, accessible only to those who hold the airlines points currency?
The Prediction
I’d be more surprised than not if Cathay Pacific’s AsiaMiles program doesn’t copy Singapore Air, and limit points redemptions in business or first class only to those who hold AsiaMiles, rather than American, Alaska and other lucrative partner airline currencies. Qatar Airways is another prime candidate, especially since the airline already blocks OneWorld members from using their “true” business class lounges. When they do, other airlines will inevitably go the same way. The airlines could argue that their points are easier to acquire than ever, via spending, hotel and retail promotions, and that they’re looking to reward customers who are loyal to their program, and not some obscure partner airline program, which offers better rates. If airlines follow this route, seats in economy, and perhaps even premium would still be shared across loyalty programs, but the “good stuff” people seek would not.
The Opposite Prediction
Airline alliances have also held high level discussions about taking loyalty programs in the opposite direction. Rather than each airline having proprietary points currencies, and strict rules about upgrades, who you booked with, and what not, an alliance wide currency could be formed. Could SkyTeam create a unified currency, where earning rates are the same on all airlines, and you can cash in your points for upgrades or seats on any airline, at one easy to understand price? This approach has vast appeal to the mass market, to those who hate getting bogged down in the draconian flyer speak, and endless sea of red tape, every time they wish to cash in their points. Creating an alliance wide IT system which can communicate in both directions would not be easy, but there’s definitely a big segment of travelers who would love the usability.
The handwriting is on the wall. I expect all the airline alliances to take away the partner frequent flier benefits except limited coach/economy tickets. And I predict the few awards that are left will be at enormous redemption rates with black-out periods. I’ve tried & tried to get partner awards in biz for many years with no success.
how wrong you were
I am not an airline analyst, so take the following with tons of salt.
I think limiting/removing partner access to premium is more like than alliance currencies, though not likely as an industry standard. For the alliance currency, nobody is going to want to shell out the tens of millions to create and manage the single currency, which to me makes it a non-starter *until* after the next recession, when airlines will need to compete for fewer premium flyers. And even then it probably won’t happen IMHO; there’s not a lot of growth in alliances at the moment,so why would they create a massive spending program?
But that same message would limit the opportunity for all the majors to close their premium awards to partners. It may seem like a good idea in the short term (as flying has grown so massively), but the loss of incremental revenue would begin to pile up during the lean years of a downturn, potentially. FF programs are (generally) very profitable, and while there are always those who will break things that don’t need fixing, cutting the value of your program to only reward where you fly is a massive cut in value to those who you want to reward the most.
So could airlines that feel they have a proprietary market do it (Singapore, Cathay, weirdly maybe the IAG group, and an expansion of AF’s version of this)? They’d feel more comfortable. I think it’s a harder sell to the US3, and they would drive a lot of the response of other alliance members. After all, an elite from Mumbai probably wants premium travel beyond the feeder network as much as one from Philly or Atlanta.
I don’t know where I stand on the argument, but with so many airlines in “non-alliance” partnerships, that could be one of many hurdles in creating a standardized currency. Plus, they’d be creating a socialistic style of currency, which I’m sure many airlines wouldn’t be interested in (why would AA want to pool and equally distribute profits from awards redemptions if they believed they could do it more profitably than Cathay?)