Alaska Airlines Re-affirms Commitment to Generous Frequent Flyer Program and First Class Upgrades

Delta adopted a revenue-based frequent flyer program for frequent flyer earning two years ago, and removed their award charts to reduce transparency with members. (They intended to do full revenue-based redemptions but were surprised by member pushback in focus groups.)

Naturally United and then American followed because they blindly copy Delta the way fast food restaurants locate stores near McDonalds on the belief that McDonalds is smart and knows what they’re doing.

We’ve seen LATAM in South America make a similar move, and I’d expect to see a European program make this move sooner than later.

Alaska Airlines ran the numbers and found that nearly all members would be worse off if they went revenue-based.

Alaska believes only 5% of flyers would earn more miles under a revenue-based program. 79% of flyers do better under their mileage-based system. In other words, 79% would do worse with revenue-based.

We know that Delta, American, and United set the break-even mileage-earning substantially above their average fare and American was candid that fewer miles would be awarded for flights after their switch than immediately before it.

Last year Alaska re-iterated their differentiated, more value program as a competitive advantage. It’s helped them to grow and remain highly profitable despite Delta’s onslaught in Seattle. (And Delta concedes that its revenue premium isn’t driven by changes to SkyMiles.)

Delta has even added to its frequent flyer program as it loses its partnership with Delta. My only beef is the lack of notice of changes to members, such as raising the price of Emirates awards and eliminating Japan Airlines premium economy awards from their charts. Still, Alaska’s award pricing is on the whole better than competitors and so are routing rules allowing stopovers on one-way awards.

Now Brian Sumers in Skift covers Alaska Airlines comments continuing to stand behind its decision to keep a generous frequent flyer program while major US competitors cut, cut, cut.

“We have a huge percentage of our guests who are earning miles and using miles, and that’s equally as important as how much you actually paid for that ticket,” [Chief Commercial Officer Andrew] Harrison told analysts. “We all have different business models but at the end of the day, we believe that a generous loyalty program for our business …. will be a very very good thing for us longer term and for our investors.”

Alaska has a similar philosophy on first class upgrades. Alaska executives said Wednesday the carrier is still selling only 35 to 40 percent of all first class seats. At another carrier, such as Delta Air Lines, which in late 2015 said it wanted to increase its paid first class load factor to 70 percent by 2018, Alaska’s paltry first class sales would be a disappointment.

But Alaska executives insist that giving first class seats to road warriors — even ones who buy cheaper tickets — drives loyalty. “The philosophy for us is to have a generous upgrade policy,” Harrison said.

Even if Alaska eventually changes its mind and takes the revenue-based cop out, that shouldn’t come any time soon. Their Virgin America acquisition means their focus is elsewhere and they aren’t going to want the message of devaluation as they’re working to win over Virgin’s customers (indeed, the economics of the deal are predicated on convincing Virgin America customers to sign up for the Alaska credit card).

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. switched all my mileage earning to alaska, and fly with them as much as I can, best move I did
    dumped AA after 15 years and did not spend a dime so far with AA in 2017 and unlikely I will
    the big 3 can disappear for all I care, I try to fly european carriers, south american carriers, and credit to alaska
    not earning as much as I did with AA old program, but best around under current programs
    now watch out for JoshG to come out defending his bosses…stay tuned

  2. Alaska has more than a generous Mileage Plan that it is smart enough to market as an advantage. They also have a culture that would NEVER see the kind of authoritarian behavior that staff at AA, UA and DA are allowed to lord over passengers. This makes them a good fit with Virginia America who also have very approachable staff who let you know they want to solve your problem. I will go out of my way to fly these two airlines and JetBlue whose whole concept of customer service is modern and tailored away from the bullying corporate autocracy that has overtaken the rest of the industry and country. This is also generational with young modern people holding the ultimate trump card not far down the road. Rednecks and Wall Street’s time is limited running us into the ground over and over.

  3. Yeah, I can’t fault Alaska; I even fly more on the West Coast and Mexico because of them (and that’s on paid tickets). I’m also willing to pay a little extra knowing that there’s a long term benefit (be it upgrades or quicker award tickets). The other airlines are all looking for short term profit at the expense of long term loyalty. Alaska seems to be one of the exceptions to the rule…at least for now. As such, I’ll reward them with my long term loyalty.

  4. Can you please edit your posts?

    What does the following mean? Do you mean to say Alaska? Honestly, you lose credibility with your sloppiness

    Delta has even added to its frequent flyer program as it loses its partnership with Delta. My only beef is the lack of notice of changes to members, such as raising the price of Emirates awards and eliminating Japan Airlines premium economy awards from their charts. Still, Alaska’s award pricing is on the whole better than competitors and so are routing rules allowing stopovers on one-way awards.

  5. I’m draining my AA miles on Qantas business tickets and my UA miles on Air New Zealand. I’ll take a connection on Alaska or Virgin before I ever step on a AA or UA plane again. I think I’m going to cut up my lifetime Red Carpet club and my lifetime President’s Club card and send a piece to each of their board members with instructions for where to place it.

  6. Status match from AA and haven’t looked back. Can’t wait until VIrgin America is fully integrated.

  7. Alaska also has the best call center. Friendly people that speak English is a treat after talking to UA reps. The Alaska reps are also more empowered. If it’s something that can be done they just try and do it with a focus on excellent customer service. It’s nice to have an old school airline. When I call them, I always tell the rep they are may favorite airline. Sort of like Delta in the 80s or BA in the 90s before they went to the self loading freight model.

  8. JetBlue also has very cool phone agents who I think work from home. You can get into a mutual lovefest with the airline just chatting with them and Alaska, even Virgin agents. This is the opposite of the Big 3 which I started noticing as they went through their mergers and became sour and would even vent about it if you tried to chat them up. Then it turned outright mean, where I saw on more than one occasion FA’s tell passengers that if they said another word they would have them removed. It turned my stomach, something that seemed to disqualify them from being any kind of decent airline. Then it got worse, forcing us to change to their measure of a mile as though it has a negotiable meaning, outright telling me (Delta) that if I didn’t like it I could leave. Well, I did. Millions did. They now exist for millions in a Dead Zone.

    Oscar’s email to customers just came through. I notice they accept replies. I had my say. Hope you do too.

  9. Alaska is great. They just need to get bigger – fast. Scale is the primary motivation for the Virgin merger, not gates or Virgin’s routes.

  10. I believe Aer Lingus’ AerClub is already a revenue-based program. Which to me is interesting since it’s probably a neat way for IAG to test a revenue-based program to see if it’s worth moving the rest of the airlines in the group towards that. British Airways’ CEO has also mentioned that he envisions a pure revenue (on earning and redemption) side at some point in an interview he had with The Points Guy.

  11. The old Delta-Alaska partnership used to be great. It’s just odd that Delta thinks making their mileage plan opaque as well as revenue based will work out well for them. I guess I’m saying that how a program change is implemented is as important as the change in the structure, especially with a customer service product. Look at Uber, I was reluctant to try it but people really like the transparency of the pricing, you know exactly what the cost of a ride will be and it cannot be changed once you get in the car because the payment has already been made. The opposite of an uncertainty system.

  12. I think the big take away from the Alaska info. Is that 5% of customers got labeled as “at risk”. That’s a lot of passengers and revenue for any airline.

  13. I LOVE revenue based earning and heavily favor airlines on which I have status when I choose for all of my business flying (I’m in a city where I can choose virtually any major for my flights)! Just wish they did the same for elite qualifying too. Smart business move, frankly.

  14. @Gary —> perhaps it’s a thing with “Jason’s,” or perhaps it’s my having once been a magazine editor, but the “other Jason” is right: you need an editor! Your blog post above contains the following sentence: “Delta has even added to its frequent flyer program as it loses its partnership with Delta.” I had to read that three times before realizing you meant “ALASKA has even added to its frequent flyer program as it loses its partnership with Delta.”

  15. Jason. Did u really need to read the sentence 3 times to realize what he meant . My 12 year old knew the first time she read it.

  16. More random thoughts . . .

    It’s not that I’m “anti-American” (Airlines) per se, but rather when making my own travel arrangements¹, I’ve always received much better service, as well as better flight times and better FF benefits from carriers such as Southwest, then Virgin America, Alaska, and JetBlue. Indeed, I haven’t flown American since 2009, when it was pretty much the only option to the Bahamas for my wife’s conference; Delta since 2004, and United — well, when I was a kid, my folks flew United a lot, and we were a “United family” in the 50s and 60s; I last flew United when we were taking my youngest on a college tour in 2014.

    But once we left Chicago and moved to California, there was first PSA (the *original* Pacific Southwest Airlines), then AirCal, and then Southwest — as most of my/our flights were within California. Then along came Virgin America² in 2007, and everything changed — flying became “fun” again, and while I don’t expect Alaska to be as much fun as VX, I have — so far — been impressed with their efforts to welcome us VX regulars, and intend to stick with them . . .
    _______________
    ¹ As opposed to whatever airline my employer chose.

    ² As near as I can tell, I’ve flown VX some 104 times in my life; Southwest, 74; and United, 50.

  17. @JR —> Yes, because I stopped at that point, and said, “What?” As soon as I read the entire paragraph, the meaning was clear. But either way, it’s shoddy writing . . . how long does it take to proofread a blog?

  18. Whoops! My bad: I last flew United in March 2016, actually, when it was the most convenient (time-wise) nonstop to MSY . . .

  19. I fly AS weekly and like them, but there’s a lot of spin here. There is, in fact, a revenue component to AS’s ff program in that first class upgrades are given preferentially to tickets purchased in higher fare buckets.

    In the past, the upgrade list was ordered mainly by status (based on upgrade inventory release date) and date of purchase. Now fare class has replaced date of purchase in the list ordering.

  20. Got jerked around by Delta for too many years . Now they have made Skymiles even worse .
    I am done with Delta .
    I have never had a bad experience with Alaska . The Starwood-Virgin America- Alaska miles transfer bonus earlier this year sealed the deal for me .

  21. The bigger problem is where do you credit your miles and status when you take advantage of those crazy Biz Qatar or Etihad sale tickets? And you can’t park the $200 AMEX credits in a foreign carrier which is a problem.

  22. I live in Seattle. Among the best benefits of Alaska is a routing along these lines: Normally a Las Vegas to Seattle fight is 7,500 miles. Seattle to LA is also 7,500 miles. However, a LAS/SEA/LAX ticket with as long a layover as you’d like in SEA only costs 5,000 miles total if you book early enough. For those of us with Gold status, you can even change the dates or times of flight on a given date without penalty. Quite a bargain. Same concept applies with an EWR/SEA/ANC routing…whole way for 7,500 miles.

  23. Easy to earn AS miles. Not so easy to burn unless on the west coast. AS has lots of partners that either::
    1) Don’t release FF seats
    2) Giant fuel surcharges
    Or 3) charge too many miles to be worth it — 95K to fly Y to Europe in 10 across coach
    IME DL is the best AS partner for releasing seats … and that goes away after this weekend

  24. Fair enough. I have flown the following routing before though…Philadelphia…Seattle (months-long layover)-London on American for a total of 20,000 miles.

    For those of us on the west coast, especially with the VA merger, Alaska is clearly the best.

  25. @Tom —> Not sure what you’re talking about when you write, “Or 3) charge too many miles to be worth it — 95K to fly Y to Europe in 10 across coach.” After all, according to the AS Award Chart, for ONE-WAY travel:

    Air France/KLM
    — 62,500 Business
    — 32,500 in Coach.
    American Airlines
    — 62,500 in First
    — 50,000 in “Business/First”
    — 30,000 in Coach (peak)
    — 20,000 in Coach (off-peak)
    British Airways
    — 70,000 in First
    — 60,000 in Business
    — 42,500 in Premium Coach
    — 32,500 in Coach
    Emirates (NOTE: remember the devaluation)
    — 180,000 in First
    — 105,000 in Business
    — 47,500 IN COACH WHICH IS 95K R/T!
    Icelandair (to Continental Europe)
    — 50,000 in Business
    — 22.5k/30k/40k in Coach (low/med/high)

    So ONLY EMIRATES is 95,000 in Coach for a round-trip flight. And — between you and me — if I’m spending 95k points, I’d rather spend 100k on Business (American or Icelandair); or 125k for First. But, if I *were* flying in Coach/Economy, why not spend 60-65k for a r/t on Air France, American, or KLM?

  26. I love Alaska service but I have serious misgivings about their frequent flier program. I redeem exclusively on trips to Asia, always in coach, usually for just one person but occasionally for my family of four.
    I book 331 days out, or whatever the number is , on Japan, and as early as possible and keep on checking for Cathay.

    Alaska rarely can see availability, whether I give it to them by date or more detailed with flight numbers, and when they do, one often needs to book one or two seats at a time and hope that the other seats that are available on avios and asia miles and aa miles, come into Alaska afterwards. Finally once they booked Japan for me, four seats, a lot of work to get it, but couple of days later as I continued to press them for a ticket number, turned out they were only on request, and actually scooped up by someone else (the ba continued to show four seats available for 36 hours, then two — at that point Alaska said they had only two seats for me.

  27. I recently learned another great advantage of Alaska airlines mileage plan over American Airlines AAdvantage and United MileagePlus: Alaska airlines does not charge the $75 “close-in” surcharge for mileage redemptions less than 21 days before your travel date.

    Because Alaska airlines mileage plan partners with American Airlines, you can book an American Airlines flight on Alaska airlines using Alaska airline miles and avoid the $75 surcharge.

    Sometimes the number of miles needed on Alaska Airlines is actually less than the number of miles needed on American Airlines.

    For someone like me, who has both American Airlines and Alaska airlines miles, but needs to book a flight offered only by American Airlines, Alaskan Airlines emerges as the superior choice!

  28. I love/hate Alaska air mileage plus. Now that they dropped Delta, there is almost nothing to Europe from Seattle. Yes, there is BA, but it over $400 for taxes, each way. American is almost non existent and its thru DFW or ORD. KLM/AF is nil, and they don’t even fly here either. And to top it off, I think AS has been stingy on their connecting flights. They need another European carrier. Icelandair doesn’t count

  29. Regardless of whether Alaska dropped Delta, or DL dropped AS, there are still plenty of options for Europe from the west coast — though, I agree, it won’t be non-stop. SFO, LAX, ORD, JFK, etc., etc.

  30. More to the point…who would ever use up precious Alaska miles to pay the usurious rates charged by Delta? When looking at redemption options, Delta flights were always obscenely too costly when it comes to the requisite miles. The ending of the relationship is IMO a distinction without a difference.

    Yes, more options would be nice to see to Europe for Alaska miles. American awards are not as bad as people seem to argue in my experience and they often do allow the free additional domestic leg as I pointed out earlier. BA is absurd as you correctly state.

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