How frequent flyer programs and airline mergers are affect passengers

A recent study just came out regarding the results of frequent flyer programs.  The results aren’t good.  A couple of weeks ago, the news was announced that United and Continental are merging.  This could mean bad news for business travel and summer vacations.

Earlier this decade, we saw great fares to many destinations all over the world.  Many small, budget airlines were booming in the United States and Europe.  Now, many of these smaller airlines have collapsed or been bought out.  So what happened?

Airlines: From good times to bad

Many of the airline struggles began with the higher fuel costs.  While this didn’t doom many airlines, it did increase the costs of operating them.  As the economy fell, so did business and leisure travel even though it has seen a rebound lately.

A struggling economy and higher costs meant lost profits with many airlines declaring bankruptcy.  Some, like Delta, were able to survive while others were bought out or vanished.  As demand slipped, profits fell and airlines looked for new ways to bring in money.

Passengers began to feel the pain of the airlines’ struggle as more fees were added to the cost of flying.  Baggage and service fees, charges for meals, peak day travel fees all have emerged as a result of the airlines’ struggles.  Gone are the days of checking your bags, getting a pillow and blanket, and a free meal (much less a decent one) on a flight.  If that wasn’t enough, the news is just getting worse.

The increasing costs of travel for passengers

Recent news about airline loyalty programs now give us the data which confirms what many of us already know – they aren’t very rewarding.  Southwest airlines had the highest number of seats available for an reward flight at 99.3% while Delta and US Airways were two of the lowest (12.9%, 10.7%).  With fees for using your frequent flyer miles to book flights up and with a number of blackout dates for travel, the opportunities to fly using miles are getting fewer while the cost of using them is getting more expensive.

Another reason for the low seat availability is fewer flights and less capacity.  As airlines have struggled, they have but back on the number of flights to try and make sure that more flights are full.  With airline profits now up again, don’t expect the fees, fares, or number of flights to help out passengers.  Forget finding the best airline seat – finding any seat on a flight may become more difficult.

Airline mergers are making this even worse.  With the United and Continental merge, they will consolidate their flights in certain cities meaning less flights and choices for the future.

Many airlines are even changing the frequent flyer programs.  Southwest Airlines is making big changes to their Rapid Rewards program starting March 1, 2011.  Even the major airlines are looking at changes, fees, and frequent flyer requirements for their loyalty programs.

After a couple of down years in travel, people are ready to fly again.  While this might be considered good news by some, it’s bad timing for passengers.  Less capacity and greater demand had led to higher prices for flights.  Recent searches for flights for domestic and international travel have led to much higher fares than what we saw a couple of years ago.  Almost anywhere you go, flights are more expensive.

Don’t expect this to change any time soon as higher airfare may be here to stay.

What can passengers do?

There are a number of tips out there for finding the lowest airfare.  Signing up for airfarewatchdog or farecompare allows you to specify flights for a specific destination and get emails when that destination has great deals.

So what can passengers do?  Along with signing up on airfarewatchdog and farecompare, check the airlines’ websites or sign up for their special offers through email.  Don’t book a flight too early but don’t wait until it’s too late either.  A good time to start looking at flights is 3 months out.  However, you may be able to find deals up to 21 days out if you are flexible with your travel schedule.

Try budget airlines like Southwest or Jet Blue.  Find out how to get money back when you travel.  Fly offseason (early spring, Fall, Winter) for better prices and deals.  Look for vacation packages which can book your hotel and flight together to save you money.  (Check out these great tips on how to save money for your next vacation)

A changed industry

When it comes to airfares, the news isn’t good.  Frequent flyer programs are becoming more one-sided deals as airlines reap the rewards of customer loyalty while not providing much in return.  Airline mergers and fewer flights mean demand for travel will push airfares higher.  While all hope for cheap tickets and airfare isn’t lost, it’s going to take more effort to find them.

The bottom line – airlines have changed and the short-term forecast isn’t good news for passengers.

business class airline meal (Flickr: robertDouglass)

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