The frequent-flyer ( FFP ) program is a loyalty program offered by airlines.
Many airlines have frequent-flyer programs designed to encourage airline customers enrolled in the program to collect points (also called miles, kilometers or segments) which can then be redeemed for air travel or other benefits. Points earned under FFP may be based on the tariff class, the distance that was flown on the airline or its partners, or the amount paid. There are other ways to earn points. For example, in recent years, more points have been obtained using credit and debit cards co-branded than with air travel. Another way to earn points is to spend money in related retail outlets, car rental companies, hotels, or other related businesses. Points may be redeemed for air travel, other goods or services, or for increased benefits, such as increased travel classes, airport lounge access, fast track access, or priority bookings.
Frequent flyer programs can be viewed as a particular type of virtual currency, one with an unidirectional flow of money to buy points, but no exchange back into money.
Video Frequent-flyer program
History
Although United tracked customers as far back as the 1950s, the first modern frequent flyer program was created in 1972 by Western Direct Marketing, for United Airlines. It gives placards and promotional materials to members. In 1979, Texas International Airlines created the first frequent flyer program that uses distance tracking to provide 'rewards' to its passengers, while in 1980 Western Airlines created Travel Bank, which eventually became part of the Delta Air Lines program after the merger in 1987 The American Airlines AAdvantage program was launched in 1981 as a modification of a concept that never materialized from 1979 that would provide special rates to frequent customers. It was quickly followed later that year by programs from United Airlines (Mileage Plus) and Delta Air Lines (SkyMiles), and in 1982 from British Airways (Executive Club).
Since then, frequent-flyer programs have grown rapidly. In January 2005, a total of 14 trillion frequent-flyer points have been collected by people worldwide, equivalent to a total value of 700 billion US dollars. Tom Stuker remains the most frequent aviator in the world after entering more than 18 million miles with United.
The United States Supreme Court has held a claim of "goodwill and fair agreement" on the frequent-flyer program imposed by the Aviation Deregulation Act.
Maps Frequent-flyer program
Accrual
Fly
Most major airlines around the world have frequent flyer programs; each has a program name, and policies and restrictions on joining, collecting, and redeeming points.
The main method to earn points in frequent flyer programs over the last few years is to fly with the associated airlines. Most systems reward travelers with a certain number of points based on the distance traveled (like 1 point per mile flown), although the system varies. Many airlines discount, instead of giving points per mile, award points for the flight segment in lieu of the distance or amount paid. For example, some airlines in Europe offer fixed points for domestic or intra-European flights regardless of distance (but vary by travel class). With the introduction of airline alliances and code-share flights, frequent-flyer programs are often extended to allow benefits to be used across all partner airlines.
Bonus points
Most, if not all, programs give bonuses to premium-cabin passengers and their elite members based on tier status; getting an extra 25% -100% of the flyable mile is a common bonus. While these bonus points are not counted for the elite (or retention) status increase, they count towards the total member balance for normal redemption purposes.
Minimum credit guarantee
Some programs give you full 500 points (or similar minimum credit guarantees) for non-stop flights that span less than 500 miles. Airline programs can provide this guarantee to all members regardless of elite status, or they can reserve this privilege only for their elite members.
Purchase credit card
Many credit card companies partner with airlines to offer co-branded credit cards or the ability to transfer points in their loyalty programs to airline programs. Significant sign-up bonuses and other incentives are common. Obtaining points through credit card and expense bonuses allows travelers who rarely benefit from frequent flyer programs.
With a non-affiliated travel reward credit card, a card member can purchase a positive space ticket that is considered the "income" class, which can earn passenger points with the flight being flown.
Other purchases
Frequent flyer programs may offer points through other means, such as buying food or merchandise sold by affiliates. American engineer David Phillips was known as the "Pudding Guy" in 2000 to purchase a $ 3,140 Healthy Choice pudding which gave him 1,253,000 AAdvantage miles.
Elite status
Occasionally, airlines may offer double double-qualifying mileage (EQM) promotions, which accelerate member member (or retention) member status by reducing flight mileage requirements.
Some operators also require frequent flyers to spend a certain amount of money set on tickets before they qualify for elite status. This is in addition to existing requirements in an existing place. Delta switched to elite income-based status requirements in January 2014, United in March 2015, with American Airlines the last of three US legacy operators to switch on August 1, 2016. This caused some leaflets to frequently devalue these programs on top of others, because the changed model can be less useful for the flyer.
Redemption
After collecting a number of points, members then use this point to get a plane ticket. However, the points only pay the base rate, with members still responsible for the payment of taxes and mandatory fees.
Flights
Despite the controversial topics and sources of frustration among the frequent flyers, award aviation is still the main commodity purchased by members using points. While alliances and partnerships have facilitated the redemption process for some programs, the availability of award seats is still subject to blackout dates and seasonal fluctuations, as airlines use statistics, yield management and capacity control formulas to determine the number of seats allocated for award bookings.
This lack of availability has been reduced by non-airline gift programs, such as certain credit cards ( see above ) and other corporate programs (Expedia Rewards, Starwood Preferred Guest) by allowing members to use points to search and purchase ticket income as if using cash.
Products and services
Depending on the airline's program, members can also redeem points for cabin improvements, hotel stays, car rentals, and purchase of various retail items. On American Airlines' AAdvantage program, for example, it is possible to pay for complete holiday packages with just points. Value points
Travelers are often arguing about how much accumulated points are worth, something that varies greatly based on how they are redeemed. An estimate of about 1-2 cents per point based on economy class fares (not full tariffs).
The author of the PhD Economics thesis published in 2014 at Monash University, Melbourne, Australia, examines the value of cash equivalents (loyalty points) of loyalty, the impact of FFP on consumer behavior and surpluses, and tax issues surrounding FFP. Unlike most previous research on FFP, this study uses data from the actual FFP. Cash equivalents from loyalty points in 2010 are estimated to range between AU $ 0.0066 and AU $ 0.0084. However this range excludes the status benefits to status members. Loyalty points obtained by FFP members per flight are equivalent to discounts in the form of goods on average air fares of 3.3% for members with the lowest status, 3.96% for members with moderate status and 4.63% for members of a premium status. A detailed survey conducted in 2010 among samples representing over 3300 special FFP members shows that most business and leisure travelers recognize willingness to pay higher rates - FFP premiums - to fly with the sponsoring airlines because of their FFP Membership. The average FFP premium is estimated at about 8% and is statistically different between recreational and business travelers. The cash equivalent value of the loyalty point as packaged in the FFP premium is estimated to range between AU $ 0.0108 and AU $ 0.0153, depending on the member FFP status.
The airlines themselves value points in their financial statements at less than one thousandth of a cent per point. The loyalty points surely have an estimated monetary value also reflected in the fact that some programs allow for donation of frequent flyer points to certain charities.
Accounting and regulatory issues
Businesses usually collect valuable points with their own names, rather than the names of companies paying for the trip. This has raised concerns that the company provides tax-free (point-based) benefits to employees, or that employees have misappropriated the value of the company, or even that it acts as a bribe to encourage travelers to choose a particular airline or do unnecessary travel. Most companies consider miles earned by their employees as valuable personal individuals, partially offsetting the daily bustle of frequent business travel, although some government organizations have tried to prevent their employees from accumulating miles of official travel.
While it has long been recognized that FFP rewards earned on business-funded corporate flights must be subject to income tax or benefit benefits, this is not currently the case in most countries - except Germany. One of the main arguments against the application of taxation is the lack of a monetary tax base. But it can be said that because the cash equivalency value of loyalty currency can be reasonably estimated with public data, this value is appropriate as a tax base. Distractions preventing the imposition of FFP gift taxes are generally less related to technical assessment issues, but more to legal constraints (eg "who has points") and often lack of political will (eg "who will lose due to taxation"). Interestingly, Australian and German civil servants are not allowed to redeem points earned from official travel for personal purposes. An Australian example occurred in the 1990s when the now dead Australian Qantas and Ansett Australia compete for an Australian federal government travel contract; this is filed as a system requirement for a competing company to win the contract.
In the US, the Public Service Administration has arranged, "travel benefits are often obtained [by federal employees] in connection with official travel, which can be used only for official travel, see 41 CFR Ã,§ 301-1,6 (f). "Frequent flyer program contracts are generally unregulated.
Climate and environmental issues
Frequent flyer programs have been spotlighted due to the prevalence and rapid growth of air travel, both in terms of individual flown frequencies and long-distance travel trends. There is also a call to terminate the frequent-flyer program. An increase in the number of hypermobile travelers has been identified as a special aspect of this problem due to the highly disproportionate contributions of this individual class to aviation greenhouse gas emissions, and frequent flyer programs are contributing factors.
A precedent exists to terminate a frequent flyer program. In 2002, Norway imposed a ban on domestic frequent flyer programs to promote competition among its airlines, and lifted the ban in 2013 when the competitive situation changed. In 2005, Morten A. Meyer, the Minister of Modernization asked the competition authorities to consider extending Norway's ban on frequent flyer miles to include all Scandinavian. In the US in 1989, a vice president of Braniff said that the government should consider terminating the frequent-flyer program, which he said would allow unhealthy competition.
Mileage runs
"Travel mileage" is a travel airline designed and taken solely to get the maximum frequent-flyer miles, points, or elite status. If a traveler has achieved some kind of elite status, then the explorer will get bonus rewards miles or points over his actual mile or flying point. Depending on the program, the explorer will reach their destination faster if the miles they collect are elite qualifying miles. Mileage operations allow travelers to (re) qualify for a favorable elite level, requiring a minimum number of miles to qualify. Some airlines have changed their frequent flyer rules to get miles based on ticket costs rather than the absolute distance traveled, which can eliminate incentives for mileage operations.
Status match
Some airlines will "match" their status to competitors at the time of the application, usually to airlines outside of any alliances that airlines use to match status with the property. This allows business travelers primarily to divert their journey more easily from one operator to another (for example, when the airline switches operators because a new travel contract is being signed). It does so by maintaining the elite benefits that are equal to the new airline, without the need for time to pass while travelers "earn" the benefits; it also has the side effects of maintaining elite benefits with the airline before, so one does not have to give up for the other to allow for a more gradual transition.
Status challenge
Status challenges can be an often unpublished offer to accumulate a limited number of flights in a very short period of time (typically 90 days), to gain elite status. A higher status may or may not be given immediately if it can be seen that qualifying trips (especially non-refundable trips) have been booked before the challenge is offered, otherwise higher status will be given after the challenge is formally completed. In some cases, the cost of a challenge can also be imposed.
See also
- FlyerTalk
- Revenue mil passenger
- Scripts
References
Source of the article : Wikipedia
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