For Elite-Status Fliers, Loyalty Is Two-Way Street
By Joe Sharkey - New York Times

Attention major airlines with elite-status mileage programs and a corps of loyal customers who keep flying all those miles each year to qualify for free upgrades. Business travelers like David Rago have noticed you are making it harder for them to get into the first-class cabin, and their allegiance to you is fraying.

"If they're not going to be loyal to you, why should you feel loyalty to their programs any longer?" Mr. Rago asked. "If your purpose in accumulating elite-status miles is just for the comfort involved in flying an upper-class cabin on an upgrade, you need to know that they're now changing the rules of the game. You need to be creative."

Being creative, Mr. Rago and others suggest, might mean abandoning the annual quest for frequent-flier elite status and working harder to find the right fare and the right level of comfort - at any one airline that offers it. I'm hearing echoes of that sentiment from elite-status frequent fliers all over the country: Goodbye loyalty! Hello JetBlue , Southwest, AirTran and others! What do you have to offer me, now that my preferred airline seems to have pulled the rug out from under me?

The agitation among frequent fliers comes at a very intense stage in the long-running poker game between major airlines and those - overwhelmingly business travelers - who maintain elite status to get at least the occasional upgrade.

The latest affront came last week. While the news media were agog over an announcement by Delta Air Lines  that it was renovating its fare structure and setting a maximum $998 fare for round-trip coach travel anywhere in the contiguous 48 states, these fliers were also looking closely at another number: Delta also slashed fares for first-class seats to a maximum of $1,198 round trip. And several of Delta's competitors were also slashing first-class fares.

The elite-status upgrade brigade (in which I am a commissioned officer who battles each year to hit that 75,000-mile threshold on Continental) snapped to attention. If first-class fares fall far enough to attract buyers, fewer first-class seats will sit empty. In that case, what will happen to us loyal tightwads who have been conditioned to expect an automatic upgrade?

Terry Trippler, who indefatigably tracks every blip on the air fare radar screens for his Web site, TerryTrippler.com, says that Delta's fares might attract some new business, but would also have unintended consequences among elite Medallion members in its SkyMiles frequent-flier program. One such likely outcome would, obviously, be the defection of once-loyal customers to low-fare airlines.

"This was sort of a slap in the face to the Medallion members," said Mr. Trippler, who is based in Minneapolis and is well known for his insistence that he'll stay home if the alternative is flying coach.

The potential devaluation of their miles is only the latest setback for upgrade-hungry elite-status fliers, Mr. Trippler and others say. In recent years, major airlines had already begun alienating them by employing an ever-increasing number of cramped regional jets (without any first-class seating at all) on an ever-increasing number of routes, often flown by regional-airline affiliates and subsidiaries.

According to the Regional Airline Association, regional airlines in the contiguous 48 states accounted for 30.6 percent more revenue passenger miles in the first nine months of 2004 than in the comparable period in 2003. Capacity increased 26.8 percent in the period.

Regional jets are also increasingly being used on longer routes that used to be flown by standard-size jets with first-class cabins. In the first nine months of 2004, the average trip-length for regional airlines was 414.6 miles, a nearly 10 percent increase over 2003. Trips of over 1,000 miles on a regional jet are not uncommon.

Now, with Delta and some competitors slashing first-class fares from levels that exceeded $3,000 round trip on some long routes, many frequent fliers wonder if the upgrade lure that is the basic inducement of every elite-status program is on the endangered perks list.

Mr. Trippler offers an example: Before Delta slashed first-class fares, "if you had a plane with 20 first-class seats - let's say on a transcontinental out of Atlanta - there was probably a good chance that nobody had bought a first-class seat; they were all filled with Medallion members on upgrades."

"Now, pricing that seat at $599 one way, there is a very good chance that 7 or 10 or 12 of those seats are going to be paid for - meaning that many fewer Medallion members get upgrades."

Mr. Rago, who owns an auction house in Lambertville, N.J., and has been an on-air appraiser for 10 years for the television program "Antiques Road Show," is a top-status flier on two airlines. But he doesn't plan to break his neck this year re-qualifying for elite status, which, he said, is increasingly "inconsequential."

One reason, he said, is the increased use of "those miserable little airplanes," regional jets. Another is the growing difficulty of getting an upgrade on a standard-size plane.

A third, also cited by many travelers who don't have elite-status level, is the increasing difficulty of using accumulated miles for award trips and guaranteed upgrades.

Mr. Rago's solution this year will be to purchase first-class seats on whatever airline offers the best deal, now that the fares have come down to a viable level. "Let's say it costs me an extra $450 to fly to Los Angeles in first class," he said. "Is it worth it, out of my pocket, not to worry about the upgrade? The answer is yes."

James E. Owers, a professor of finance at the Robinson College of Business at Georgia State University in Atlanta, noted that there were several definite improvements in the new fare structures, especially the fare and other cost reductions for those making last-minute changes.

But he also conceded the peril for the major airlines who have chosen to entice far more paying customers into the premium cabins. They are in danger of "alienating many of their road warriors," he said.

Does that matter at a time when air travel is routinely referred to as a mere "commodity?" Opinions are hereby solicited.