Happy birthday to the frequent flyer programme

Happy birthday to the frequent flyer programme, which turns 25 this year. Programmes have changed a lot since Western Airlines first launched its "Travel Pass", which awarded $50 in travel certificates to passengers who flew five trips.
And this change is not all for the good, according to research commissioned by Etihad Airways. Almost a third (31%) of professionals surveyed believed that the standards of rewards offered to loyal customers had decreased in terms of actual benefits to the individual. (Read one traveller wax lyrical about how generous benefits were back in 1988.)
A further 79% of those surveyed said they felt that these days such schemes were simply regarded by airlines as clever marketing ploys rather than a genuine service to their customers, while 77% lamented that the only people to benefit from the rewards cited were business travellers.
More surprisingly though, two thirds of regular travellers (67%) belonged to an airline loyalty programme, but only 37% had ever used their accrued points and just one in five (21%) had redeemed air miles within the past year.
"Our research clearly indicates that the travelling public has become increasingly dissatisfied and disillusioned with the concept of frequent flyer programmes," says Etihad head of marketing Peter Baumgartner.
As airlines strive for increased revenues, they must strike a delicate balance between optimising profit and managing the customer relationship. Some frequent flyer programmes now gain revenue from charging fees for paper tickets and booking through call centres, and applying penalties for making changes and cancellations. But, says Ravindra Bhagwanani at Global Flight Management, such penalties may alienate customers from the programme and eventually even from the airline.
Other issues highlighted by the survey included an overall lack of choice for lower-tier members. Three-quarters (75%) of those surveyed complained that there was an extremely limited range and choice of rewards options, particularly for those who travel less frequently and tend not to accumulate sufficient mileage to enjoy the full selection of membership benefits.
To capitalise on the 25th anniversary of the frequent flyer programme, Etihad Airways - itself not yet 3 years old - is launching its new Guest loyal and recognition programme on 30 August. The survey results were apparently important in creating the new programme. "Taking this consumer feedback on board, our aim remains to introduce hospitality-orientated initiatives which rebalance the notion of encouraging loyalty amongst travellers - this time in the customer's favour," says Baumgartner. Membership of the programme is free and mile accrual is immediate.