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Will Alaska Airlines Downgrade Its Mileage Program?

Last week, Alaska Airlines made two significant announcements. First, the airline will be making changes to its upgrade policies and procedures. And second, it will be rolling out a premium economy product worthy of the “premium” designation.

The announcements were newsworthy not because they nudged Alaska ahead of the competition – they didn’t – but because they put the airline in conformity with the competition. And not just tactically, but strategically as well. In particular, both moves are revenue-focused: The new upgrade policies make revenue a key factor in awarding upgrades; and the new service is designed to generate incremental revenue. Both moves are in keeping with those of American, Delta, and United.

There’s nothing inherently controversial or portentous about matching the competition. In most cases, it’s taken for granted; it’s business as usual. But in Alaska’s case, the moves could be early indicators that Alaska plans to overhaul its Mileage Plan loyalty program, converting its current mileage-based scheme to a spend-based scheme, as the Big Three have done. And that would be a big deal for Alaska’s customers. A big, bad deal.

As the last remaining U.S. airline loyalty program that awards miles on the basis of flown miles, Alaska’s Mileage Plan has been widely recognized as the most generous of the major programs. It’s one of the airline’s key marketing assets. It gives Alaska a competitive advantage over American, Delta, and United, whose programs have been revamped to richly reward road warriors at the expense of the other 99 percent.

In December of 2104, Alaska reassured its customers that there were no plans to change Mileage Plan:

As other airlines move to revenue-based programs that have the potential of diluting the rewards earned for the average passenger, we are continuing to offer our same great mileage-based plan while increasing bonuses for customers who purchase our more flexible fares. Our customers tell us ours is the best loyalty program in the business and we plan to keep it that way.

That was then. Since making that reassuring statement, Alaska has been on the receiving end of almost two years of Wall Street pressure to increase profits. And the airlines’ acquisition of Virgin America has created even more such scrutiny and financial pressure. An obvious response to that pressure would be to convert Mileage Plan to a spend-based scheme.

Will Alaska succumb to Wall Street’s imperative? The airline has been mum on the subject lately, so there are few tea leaves to read. But, again, the latest moves by Alaska, while hardly definitive, are certainly consistent with a change to a program that disproportionately rewards the company’s most profitable customers.

The great majority of Mileage Plan members can only wait and watch and hope for the best.

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After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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