US Airways risks alienating frequent flyers

US Airways’ newly announced fares policies are rooted in the premise that those who pay more should get more. That’s fair. But when it comes to attaining elite status in its frequent flyer program, US Airways apparently believes that the corollary is that those who pay less should get nothing.

Wrong!

The new mileage policy is positively draconian: Beginning January 1, 2003, miles earned for full-fare, unrestricted tickets count toward elite status; discounted, restricted fares do not.

A better solution would be to award more elite-qualifying credits for full-fare customers, and fewer elite-qualifying credits for those traveling on discounted fares?as, for example, American does. That’s transparently simple, and fair. Perhaps more importantly, for a company that’s in Chapter 11 bankruptcy and is asking for a bailout from the federal government, it’s good business.

Some related thoughts…

One customer, multiple personae

While US Airways’ elite policy assumes a distinction between high-fare business travelers and low-fare leisure travelers, the real world is more nuanced. Most of us are business travelers one day, and leisure travelers the next. And we don’t think of our loyalty as accruing to one but not the other. Neither should US Airways.

The elusive biz traveler

Business travelers, notoriously, are balking at the disparity between unrestricted and restricted fares, and are sacrificing convenience and flexibility to use the latter. So the traditional pricing schema?walk-up fares are for business travel; advance-purchase fares are for leisure?is no longer valid. So US Airways’ new mileage policy will not even apply uniformly to business travelers.

The competitive calculus

Given the choice between an airline which recognizes my patronage in both leisure and business modes and an airline which values me only when I’ve paid top dollar, I’ll choose the airline that rewards me in both ways every time. So will many of US Airways’ customers.

The bottom line

The real costs of delivering elite services and benefits are negligible. So there’s little cost savings to be realized from US Airways’ new policy. And there’s a lot to lose: The loyalty and revenue of the carrier’s best customers.

I expect this to result in a net loss?in customer loyalty and on the bottom line?for a company that can’t afford either.