I first read it over at Wandering Aramean yesterday, that JetBlue points would no longer expire.
Previously you had to either fly or charge something to their co-branded American Express card every 12 months to keep an account active. That’s a rather stringent policy. In my post last month on how to keep your miles from expiring I surveyed the major frequent flyer program expiration policies and most allow you to keep an account active with any kind of activity every 18-36 months.
Delta miles do not expire, and when they rolled out the change they framed it as a ‘moral issue’ and yet they captured the financial benefits of having led the charge to shorten account expiration times and did not restore any of the miles they had taken away. Some moral stand.
In fact, I don’t think expiring miles are all that unreasonable. From a loyalty program’s perspective they want engaged customers. Asking for some kind of earning or redemption — even an online purchase, in some cases a single iTune through their shopping portal, or crediting one rental car — every year and a half is a fairly de minimus level of engagement. For the truly passive buying 1000 miles every year or so works too. Although I gave a list of 10 easy and inexpensive ways to keep accounts active with many programs.
But the truth is that since these programs are businesses, with budgets, they have to decide how to allocate their expenses cross their members and types of redemptions.
One kind of investment is to change expiration policies since that increases costs both at the accounting/balance sheet level (keeping big liabilities on the books due to loss of breakage assumptions) and at the cashflow level (more awards ultimately redeemed from accounts).
Increased costs for ending expiration of miles means not investing elsewhere in the program.
Choosing to invest in infrequent, unengaged members means not investing in more frequent customers.
So unless JetBlue’s model tells them — contra what the rest of the industry’s analysis concludes — that not expiring miles is revenue-positive because of future business from unengaged members that they wouldn’t otherwise receive, then this is a cost that could otherwise be spent improving the program for JetBlue’s loyal customers.
Now I’m not a regular JetBlue guy. This keeps the couple thousand points I’m tracking in my Award Wallet account active, and in fact they would have expired next month. So I suppose I should be happy, and selfishly I am. But people that actually pay attention to the JetBlue program are also the people least likely to benefit from this change. And are also the ones who should lament what else they aren’t getting from the program as a result.
Lucky has the most skeptical take I’ve read on this change, and even he says, “Look, this is obviously good news and a positive move.. So let me be clear, this is an extremely positive and customer friendly change.”
It may be obvious. I’m just not sure it’s accurate.
- You can join the 30,000+ people who see these deals and analysis every day — sign up to receive posts by email (just one e-mail per day) or subscribe to the RSS feed. It’s free. Don’t miss out!