Had a nice summer flying on crowded, often-delayed planes and being charged extra for every conceivable service ranging from checked bags to sitting in an exit row to talking to a customer service agent on the phone? Well, at least you earned all those airline miles, as you carefully selected trip routings that permitted you to fly on the airline to which you consistently show your loyalty. Too bad that loyalty isn’t reciprocated.
Airline mileage programs are designed to be psychologically attractive, even addictive, to customers. But as their benefits have decreased, so too has passenger loyalty.
As everyone knows, airlines are free to change their rewards programs whenever and however they want, and they do. Program changes, such as those announced earlier this year first by Delta and then by United, invariably make it harder to earn miles, obtain better seats without paying some upcharge, and require ever more miles to get the free trips or upgrades to premium cabins that travelers seek.
Mileage programs are big business for the airlines, which sell miles to credit card companies and other vendors such as hotels to in turn give away to their own customers. How big is the mileage business? In 2012, United sold $5.1 billion in frequent flier miles compared to $25.8 billion in actual airfare revenue, and there has been talk of airlines spinning off their mileage arms as separate companies. Better yet, airlines get a lot of that money for nothing! For instance, United expects that 25% of the miles that it is selling will never be redeemed.
Complaints about mileage programs are unending. So why do people fall for these tricks?
Mileage and similar reward programs employ several psychological principles to get you hooked. First and most importantly, there are those mileage balances. Such “quantification influences judgment and decision making,” according to research published in 2005 by the journal Contemporary Accounting Research. Using terms such as “balance” and showing you statements with your “balance” causes people to treat even ephemeral assets as though they were real. And nothing is quite as ephemeral as airline miles. Unlike cash, miles can and do expire. And, exhibiting hyperinflation on steroids, miles become worth less each year.
Second, mileage programs send you those cards with your number on them and, at a certain level, luggage tags. The principle here is psychological identification, creating a relationship between you and the airline. Because you carry an airline card, you are a card-carrying member of that company’s loyalty program. You are more closely identified with the airline whose card you hold, and therefore more likely to think well of it.
Third, there are the levels or tiers. You can “earn” (notice the language, as the common psychological expectation is that when you earn something, that something has real value) status. But of course, free upgrades are largely a thing of the past on ever-fuller flights with more people competing for them. Nonetheless, the achievement of higher status levels hangs like a proverbial carrot in front of the horse—you—to induce you to try and achieve something that is of limited value.
My advice: wean yourself from the idea that your airline mileage balance is like a bank account with actual value—it isn’t. Stop identifying with a company that probably is providing ever worse service at ever-higher prices. Cease showing loyalty to an entity that is not reciprocating your love. And stop trying to concentrate your trips on one carrier for the dubious privilege of learning that the many supposed advantages of elite status get reduced almost every year. Instead, book each trip with a psychologically clean slate. Find the best combination of seat, route, and price each time you travel.
If and when you heed this advice, you will be just doing what the most sophisticated travelers already do. As a report by Deloitte on airline loyalty programs noted, only 40% of business travelers fly at least 75% of their air miles on a single airline. Many frequent travelers belong to two, three, or even four airline rewards programs. After the airlines consistently made rewards programs less attractive, some people have wised up and resisted the psychological tricks. That leaves mileage programs with diminishing value both to travelers and to the airlines, which now must confront reduced customer loyalty. Better use—or in the case of airlines, sell—those miles while you can.
Jeffrey Pfeffer is the Thomas D. Dee II Professor of Organizational Behavior at the Graduate School of Business, Stanford University. His latest book, Leadership B.S.: Fixing Workplaces and Careers One Truth at a Time will be published in September 2015 by HarperCollins.