Two Interesting Articles In The New York Times

The New York Times published two interesting articles about the airline industry in the past two days. The first article from Monday details frequent flyer programs' gradual shift towards revenue-based rather than mileage or flight-based rewards. Increasingly, airlines are now tying elite status levels to spend generated on their self-operated flights. United has already announced some details of it's revamped MileagePlus program, which will include a new 4-flight minimum requirement on United, Continental, or COPA in order to achieve status. There were rumors flying around prior to their announcement that United would also initiate a new minimum revenue requirement as well, but it doesn't look like that will be the case. Needless to say, however, that may be where all frequent flyer programs are indeed headed in the near future.

Southwest Airlines, as one of the most prominant examples of this trend, completely revamped their Rapid Rewards program this year, shifting from a flight-based scheme to a spend/fare-based one that differentiates both the amount of points earned and the points needed for redemption solely on how much the ticket costs. Operating a frequent flyer program like this automatically designates a specific value to each point or mile earned, and gives the airlines a much better handle on the costs of maintaining loyalty. Unfortunately for us, however, this means it becomes much harder (or practically impossible) to redeem points/miles for high value awards.

The second article talks about how the airlines have fought their way back to profitibility despite the economic downturn by way of consolidating, shrinking, and tacking on dozens of ancillary fees. It's an interesting look back at how airlines nowadays compare to the gloomy days just after September 11th, and even earlier during their heavy expansion in the 90s.

In particular, the article singles out American Airlines, who is the only major airline to remain unprofitable in recent quarters. Left out of the major mergers during the past few years, AA is plagued with high cost, debt, and poor labor relations that are threatening to drag it into bankruptcy protection. Despite it's ambitious turnaround plan to purchase 460 new fuel-efficient aircrafts from Boeing and Airbus, a lot still remains out of it's control, as the economic climate and labor negotiations continue to pummel prospects.

But while most airlines are on more solid footing nowadays, the sad truth is that much of the belt-tightening gets trickled down to the passengers, who must endure fewer flights, more crowded planes, less service, and higher fees. Just another sign of the times I suppose :(