By Colin Nagy
With business travel down, is there a future where we see a surge in free agents untethered to loyalty plans? This might be on the horizon for certain segments.— Colin Nagy
Pre-Covid, airline status was a bragging right of a certain tier of the traveling public.
Road warriors would rack up the miles, and in turn, unlock “game-ified” levels of elite status. From the entry-level American Airlines Gold, all the way to Swiss and Lufthansa’s rarified Hon Circle, these schemes are built and refined by airlines to create stickiness and addiction.
We’re all familiar with the unlocks that come with this: little things that make the traveling experience more pleasant: early boarding, access to international lounges, preferred seats, and the ability to actually get through to someone on the phone. Look around at any airport boarding line, and you’re sure to spot the various status tags dangling from someone’s Tumi bag. The status signaling is implicit: I’m important enough that my company spends the money to fly me all around!
The long accessible to Swiss First members at the Zurich airport. Source: Swiss Airlines
But, post-Covid, a lot of business travel is in limbo. Smart executives are pivoting their strategies from all-in on business travelers to having “premium” leisure pick up some of the slack, as Virgin Atlantic CEO Shai Weiss said recently. But now that we’ve proven a lot of things can be done on Zoom, there are existential questions for the future of business travel at the front of the plane, along with the corresponding “carrots” of enticing people to be loyal to an airline to receive their ego-boosting status and corresponding riches.
Sure, business travel will continue in certain circumstances: face time with teams, strategic planning sessions, and perhaps most vividly, to close an important sale in person over a splashy dinner.
But as we have seen, year over year, the status programs for U.S. airlines got harder and hard to reach. It is a treadmill that keeps getting faster, with the rare exception of mileage-based programs like Alaska’s Mileage Plan. With most of the legacy U.S. carriers, in addition to flying miles, you also have to jump through revenue hoops and other types of gates. For example, a Delta Diamond Medallion member needs to fly 125,000 miles with their airline, but also spend $15,000. This was obviously a way for the airline to reward higher spending premium tickets.
If a large amount of this business travel is curtailed, what will become of loyalty programsand the status of old?
One prediction I have is this might be a forcing factor for people to step off the yearly treadmill of keeping up with the standards. They might decide to become free agents. Sure, people might retain a loyalty association that they port their Amex credit card points over into, but another possibility is that more people will just end up buying the right product for their specific travel needs. I’ve recently spoken to a few very frequent travelers who have told me that with their travel cut down to ten or twenty percent, they’re simply opting to buy business class tickets for the few flights they take and not worry about where their status will land in 2022. Is this the coming age of the frequent flier turned free agent?
This admittedly working theory actually checks out for more of the luxury travel segment: if you’re buying business class tickets, you’re already getting a lot of the bells and whistles that airlines give to high-status customers. So, if those benefits are off the table, a lot of customers might just pick the best flight, for the best routing, for the best product they can get for the price. Or they might even opt for some of the new basic business fares, offered by the likes of Emirates of Finnair, which are basically the flat bed, with all other elements priced separately.
The idea of a large exodus of existing frequent fliers into free agent status could be a cool thing. More people could experience more products and be able to shop by price and experience, rather than blind and outdated loyalty. You could have a dalliance with Turkish to see the new 787 product and that shiny new airport.
You could flirt level of Swiss precision brought to life with the lounge at Zurich airport, you can go on a hot date with ANA’s new business class product. It sounds positively refreshing after being stuck in the locked groove of one loyalty program.