No Perk Too Small for Top Fliers

No Perk Too Small for Top Fliers
By MICHELINE MAYNARD
Copyright by The New York Times
Published: December 22, 2009
http://www.nytimes.com/2009/12/23/business/23elite.html?th&emc=th


United States airlines have cut back on all but the most basic services in recent years — for most passengers.

But for their very best customers, some airlines are providing extra perks and creating new tiers of status to make them feel special. Continental Airlines, for example, created a new top category this month, Presidential Platinum, for customers flying at least 125,000 miles and spending $30,000 a year on plane tickets. Delta Air Lines established the new Diamond level this summer for customers who earn a minimum of 125,000 miles each year.

Members at these levels, in addition to getting bragging rights, might be offered free access to airport clubs and automatic check-in, might get fees for extra bags waived, and might be allowed to go to the front of any line — and sit in the front of the cabin — even when other travelers paid more for their tickets.

Once inside those airline clubs, these elite fliers can get free cocktails and buffet meals, perhaps a shower, and in the case of some Delta clubs, practice time on putting greens.

Airlines are also studying how to create a greater sense of personalized service on board — perhaps allowing passengers to preorder a favorite wine for an international flight or a special treat for an anniversary, or letting them designate a favorite seat on various kinds of aircraft so they sit in the same place on every flight.

Giving special perks to the biggest spenders is an old trick used by casinos, who pamper the “whales” so they feel appreciated more than all the “minnows” that populate lower-stakes poker tables.

Airlines must compete to hold onto these fliers because they are so valuable to their bottom line.

But these fliers have been hit by the recession, too. Revenue from premium travel fell 20 percent in October versus last year, according to an estimate from the International Air Transport Association, the global industry’s trade group.

Airlines are generally reluctant to discuss the number of people who are in its elite programs. Delta, which has 75 million frequent-flier club members, says it has not calculated how many qualify for the Diamond level, but notes that its top 1,000 customers each fly over 300,000 miles a year.

At Continental, about 20,000 travelers out of its 20 million frequent fliers qualify for the new uppermost tier.

With the push to create even higher levels of elite programs, the gap is growing between those at the head of the line and those behind them. Charles Witt, who has earned membership in Delta’s Diamond level and in United Airlines’ 1K, its highest tier, said the top classes were worth the effort for the special treatment he received, like frequent upgrades and access to special hotlines.

“It’s comforting to know when you have a canceled flight or a problem that, boom, your call is answered,” he said. “You never have to hear, ‘Your wait time is 35 minutes.’ ”

These new superelite tiers are in addition to programs the airlines offer for a tiny group of fliers, like Global Services at United Airlines and Concierge Key at American — the inspiration for the exclusive club to which the character played by George Clooney aspires in the new film, “Up in the Air.”

Executives at Continental and Delta said they had to do something to reward travelers who had long since passed the 75,000-mile benchmark, a once-lofty goal that has become increasingly easy to attain, thanks to bonuses like those for full-fare tickets.

Delta found that passengers routinely would book elsewhere once they had logged enough miles to make it into the 75,000-mile club.

The new tier “gives them something to strive for,” said Jeff Robertson, vice president of loyalty programs at Delta.

Even airlines that do not offer business class or other traditional amenities are doing more for their most valued fliers.

Southwest Airlines has its A-list, whose members always board in the first group, do not have to go online the night before to check in and can earn companion passes that allow someone to travel with them free.

“I don’t care about the particular seat I get, other than I want either aisle or window — and I want to be sure I get overhead space. Both of my criteria are assured,” said Mo Garfinkle, a veteran airline industry consultant who is on the A-list and holds a companion pass. The pass saves him as much as $5,000 a year on tickets he would otherwise have to purchase for his wife to join him on business trips.

But Mr. Garfinkle can find himself in line behind passengers who pay extra for Southwest’s Business Select, which provides priority boarding and a special security line, features that a number of airlines like United have begun to offer for sale to any flier, not just those who earn elite status.

This “perks for sale” strategy stems from airlines’ need to not only fill planes but wring more money out of every flier, said Henry H. Harteveldt, an analyst at Forrester Research who follows travel trends.

“Why not try to monetize it?” Mr. Harteveldt asked of travel features. “People will pay for this.”

With airlines examining every feature of a flight to see if it can be sold separately — what the industry calls unbundling — Mr. Harteveldt said he could see a day when the carriers might sell membership in the elite tiers of their frequent-flier programs, perhaps letting passengers purchase an upgrade from silver to gold status.

But Mark Bergsrud, senior vice president for marketing at Continental, said he was skeptical of such a strategy.

“It’s something any company would have to be very careful with,” he said. “We have a public program with defined rules and almost all our customers earn their status the old-fashioned way. If you sell it to someone, you could really hurt yourself.”