Wednesday, January 16, 2013

Sun Country Airlines switches Mileage Plan to Revenue Plan (UPDATED)

*Note: The post below was updated at 7:17 PM CST to add the Delta information


Courtesy of Frequently Flying comes the news that Sun Country Airlines has relaunched their Ufly awards program based solely on revenue dollars spent instead of miles.  This is something I (and many others) have predicted was coming to America for quite sometime. Although, as Frequently Flying points out, Southwest has been there for a while.

What's discouraging to me is to see the award chart that Sun Country is utilizing and realizing that award flights are soon going to be very unattainable if the other airlines follow suit.  Maybe it's just me, but the 'price' for the ticket that FF illustrates is $4,000 for a round tip awards ticket (This assumes 10 points to a dollar, and 20,000 points for redemption each  way.)  That's a very, very low valuation for points, considering you can get the same round trip flight for somewhere around $412 on AirTran (I'm assuming a Friday departure, 3 night stay using Feb-Mar as my travel months on ITA Matrix).  Under this new reality, and given the airlines increasingly treating co-branded credit card travelers as identical to elites, I see no reason to bother with Sun Country's new program at all.

We're getting close to the point (My projection is that 2014 will be the final year we'll see mileage based plans) where only full-fare business and government fare travelers will be included on any airlines 'loyalty' plan.  The age of mileage-running for points and credit card churning could very well be reaching its end.

This is not, entirely, a bad thing.

For one, travel blogging could improve.  Once mileage rewards are eliminated and credit card churns become a thing of the past the prevalence of "please click my referral links" posts on travel blogs will, most likely, go away. A second benefit could be slightly lower fares going forward. When you consider that awarded miles are a cost to the companies, it makes sense that those costs are passed on to customers. By removing attached miles to most tickets it's possible that this, and increased fare competition, would act to lower fares by (this is a guess) somewhere around 5%.  Ending complimentary upgrades might help some as well. I've a feeling the airlines would much rather fly with an empty premium seat than give it away.

The downside to all of this will be the end of complimentary upgrades (for the most part) and increased competition to find seats in economy.  The airlines, given their history, will use this to their advantage to game the system and try and force customers to pay for premium upgrades. Because of this travel booking will become more of a contact sport going forward, customer service will decline (at least on the American flag carriers) and the flight experience will become slightly more fee-based and less enjoyable.

The fact is, how we view budget airline travel is going to change rapidly once these new programs start to emerge. Having knowledge of the system is going to be key, and there will be some smart operators who leverage this and build an airline that takes advantage.  Sadly, I don't think any of the American flag carriers will lead the charge.  I have a feeling the International airlines are going to be the beneficiaries, provided their governments don't mess it up. 

UPDATE:

After I wrote this post Delta airlines posted and then almost immediately retracted their own version of something resembling a hybrid plan.  I will admit that this is going to happen a little bit earlier than I expected, and I HOPE that United doesn't follow suit.  Hopefully Delta doesn't go forward this late in the game either. Many people already have at least part of their travel plans booked for the year and a mid-course correction could be impossible. I'll update as I can but, for right now, Delta has been silent on the matter.

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