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The Honolulu Advertiser
Posted on: Sunday, February 15, 2009

FREQUENT FLIER
New developments could make loyalty programs work

By Tim Winship

These days, with the industry intensely focused on reducing costs and increasing revenue, it might seem that every change was related to fees (more and higher) or award prices (higher). But not all the news is bad. Here are other developments that give a lift to fliers' low opinions of loyalty programs.

I PREFER FROM PREFERRED HOTELS

The Preferred Hotel Group, a collection of more than 300 independent hotels, based its new I Prefer program on the novel premise that gratification should be immediate rather than deferred. Unlike traditional frequent-stay programs, which focus on rewards earned only after members have earned points, I Prefer provides extra service and benefits immediately. So instead of offering a free room night after multiple stays, I Prefer rewards its members for every stay, with such perks as room upgrades, early check-in and late check-out, free Internet access, and a gift for booking online.

Is there a place for a program offering such soft benefits in a world where loyalty is routinely rewarded with free rooms? If there is, it would be among travelers who are focused more on service and recognition and less on rebates — travelers, that is, who tend to stay at pricey boutique hotels, like those in the Preferred Hotel network.

WELCOMEREWARDS FROM HOTELS.COM

The program's promise: "Get one free night anywhere for every 10 nights you book." That's it — no elite levels or merchandise awards, just a free night after every 10 paid nights.

That amounts to a 10 percent discount on 11 nights. But in fact, it's easy to improve on that 10 percent rebate, since any night costing $40 or more counts toward earning the free night, which can cost as much as $400. The program is both simple and generous, a refreshing change.

JETPAWS FROM JETBLUE

Human members of the JetBlue TrueBlue program now earn two points when they fly with their pets. (JetBlue allows dogs and cats in the cabin if the pet and its carrier weigh in at less than 20 pounds. The charge: $100 each way.)

The JetPaws service includes a pet travel guide, including a list of pet-friendly hotels and rules of pet-travel etiquette. And there's a line of JetBlue-branded pet merchandise.

ELEVATE FROM VIRGIN AMERICA

Virgin chose to offer its customers two features not typically found in airline mileage programs. First, awards are not encumbered by the blackout dates and capacity controls that have so frustrated members of other programs. All awards are unrestricted.

Secondly, instead of awarding miles according to the distance flown, Virgin awards points that correspond to the price paid for tickets: five points for every $1 spent. And the number of points required for award tickets corresponds directly to the ticket's market price. So consumers can easily see exactly how much the airline values their loyalty.

Unfortunately, Virgin America undermined those gestures toward fairness and transparency by adopting an uncommonly harsh expiration policy: Points expire after just 18 months.

AN AS-YET-UNNAMED PROGRAM FROM WESTJET

The airline stopped awarding points in the Air Miles program at the end of 2008 and will be unveiling a new program of its own design sometime in early 2009. According to recent statements by the airline's president, the program will incorporate a credit system, where members earn a percentage of the amount paid for WestJet tickets which can be banked for future use toward a WestJet Vacations package. WestJet's approach would establish a predictable relationship between what a customer spends and what he gets back on the expenditure.

RAPID REWARDS FROM SOUTHWEST

Lastly, a teaser. At an industry conference last week, Southwest's chief financial officer revealed that plans are afoot to remake Rapid Rewards, the discount carrier's popular loyalty program. While no details were disclosed, it's likely that the changes are designed to make the program more competitive with the more robust programs of the full-service carriers while retaining the simplicity of the current Rapid Rewards. That could be a game-changer. Unlike Virgin America, Southwest is a large enough player that a significantly enhanced program could force a competitive response from other airlines.

So a revamped Rapid Rewards could be a boon not only to members of that program, but to members of mainline carriers' programs as well.

Rather than a common strategy or tactic to these initiatives, they suggest that the question remains: Whose loyalty is worth securing? How much is it worth? How should it be rewarded? The new developments suggest that there's still hope for loyalty.

Reach Tim Winship at questions@frequentflier.com