Required Reading for Frequent Flyers
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Travel Talk - Annual Interview Issue
[Jul 2014 Issue]
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We speak with representatives from American AAdvantage, RewardsPay, SAS EuroBonus and Travelskills


Our annual interview issue strives to give readers a behind-the-scenes look into frequent travel programs and to talk one-on-one with those making decisions that will have an effect on frequent flyers everywhere, as well as highlight those who are the watchdogs for the industry. This year, we were pleased to speak with Suzanne Rubin, Anu Shukla, Nils Lindhe and Chris McGinnis.

American AAdvantage

Suzanne Rubin is the President of the American AAdvantage program, the world's first frequent flyer program, currently with more than 70 million members worldwide. Prior to her current position, Rubin worked in several positions at American including roles in planning, finance and sales.

InsideFlyer
How is the AAdvantage integration with Dividend Miles coming along? Any news from that corner?

Suzanne Rubin
As you can imagine, the integration of our two loyalty programs is a long and complicated process. We are working heads-down to create the best loyalty program for the world's greatest airline, and we are tackling the integration in three phases. The first phase, which we are in now, we are calling "Reciprocity" - focusing on providing customers expanded benefits across the two carriers such as the ability to redeem inventory-controlled awards, launching the codeshare between American and US Airways, integrating US Airways into oneworld and offering select reciprocal elite benefits. The next item to come in this phase will be a domestic, day-of-departure upgrade product for our elites when flying on the other airline's metal that will be in effect until we are a single frequent flyer program. While we continue to work on "Reciprocity", we are already working on the second phase: "Integration and Stabilization". The final phase - once we are on a single loyalty platform - will be "Innovation".

InsideFlyer
For such a busy person, you seem very approachable. How many emails from AAdvantage members do you receive in a day and do you personally answer them?

Rubin
Some days are busier than others. For example, April 8th was a very busy day. I do personally read every letter I receive from customers, and depending on the issue, I or someone from AAdvantage Customer Service will respond, or we will engage the appropriate group here at American to resolve whatever the question or issue may be.

InsideFlyer
Speaking of April 8, 2014, American had some negative press recently from members who say the program made changes to the program without adequate warning. Now that you've had some time to reflect on what happened, do you think American should have done anything differently?

Rubin
We heard a lot of valuable feedback about how we could have improved the delivery of the recent changes, and we will do our best to incorporate those learnings going forward. We value the input from our customers because it makes us better. The announcements that were released in April spanned across many areas of the airline, and to make these changes easier to digest, we wanted to make sure we were communicating as many changes as possible at the same time. We quickly heard from customers, as well as media, that we missed the mark ranging from the length of advanced notice that we provided, to the level of detail, all the way to the tone of the communications. We have absolutely taken these suggestions and comments into account as we move forward.

InsideFlyer
How do you view how frequent flyer programs should introduce changes to the program?

Rubin
After attending the recent Executive Travel Summit, I thought Randy articulated very well something that all loyalty programs should keep in mind as programs evolve. Randy referred to an old hotel campaign - "The best surprise is no surprise" - I think that is wise counsel. Everyone seems to understand that changes are necessary and will happen in business. It's how programs introduce that change, and how they mitigate the impact of that change on customers, that matters as much as the change itself.

InsideFlyer
How can a frequent flyer program regain trust from members?

Rubin
As in anything, trust is built by doing what you say you are going to do and by being open and transparent.

InsideFlyer
AAdvantage has won the Freddie Award for Program of the Year/Americas for the third year in a row. How do you think the program satisfies members so much that they vote for AAdvantage?

Rubin
American and AAdvantage have placed a lot of focus on putting customers at the center of everything we do. We have a world class loyalty program, but we also recognize that loyalty comes from everything we do - not just the program. It is a function of our network, products, customer service and dependability all coupled with loyalty program benefits that customers value and enjoy.

InsideFlyer
What's one aspect of American AAdvantage, and frequent flyer programs in general, that you would change if you could wave a magic wand to make the change?

Rubin
If I had a magic wand to wave, it would be to drive more simplicity throughout the program. Understanding the ins and outs of loyalty programs, while incredibly valuable and rewarding, can be quite time consuming.

InsideFlyer
In recent years, much has been said about the lower elite tier benefits of frequent flyer programs eroding. With so many elite members, how is AAdvantage ensuring that these lower-tier elite members are happy?

Rubin
AAdvantage has always tried to maintain an appropriate balance between the volume of members and the benefits that we can successfully deliver based on the size of the audience. That said, there are certain times and flights where you will inevitably find a higher concentration of elite members simply based on demand. For example, high business demand flights will have a higher concentration of elite customers - think DFW-LGA early Monday morning and late Thursday afternoon.
We have tried to address this with a more consistent experience regardless of when customers are traveling and where they are seated. For example, we recognize that not all Executive Platinum members will be able to upgrade every time they fly, which is why we go out of our way to recognize them and provide a higher level of service when they are sitting in main cabin.

InsideFlyer
With Delta introducing a more revenue-based program in 2015, and United making some moves in that same direction, can you tell us how American AAdvantage views the future of a revenue-based program?

Rubin
We are always watching the competitive environment and we'll make sure AAdvantage is positioned as an industry-leading loyalty program fitting for the world's greatest airline. As I mentioned earlier, our first priority is to integrate the two loyalty programs to provide our customers a more seamless travel experience and greater opportunities to earn and redeem miles on our expanded network.

InsideFlyer
For our final question, we are asking everyone we interview - please tell us about one particularly memorable trip you took.

Rubin
That's too easy. It would have to be the oneworld MegaDo! Honestly, I love traveling - for the journey - not just the destination. I'm a window seat flyer because I love seeing the world from a different perspective.

RewardsPay

RewardsPay is a consumer payment service that enables consumers to use credit card rewards points, cash rewards, hotel points or frequent flyer miles to pay for goods and services at merchant websites or in stores. We spoke with Founder and CEO, Anu Shukla, about her company. Shukla is a serial entrepreneur with RewardsPay being her fourth venture. She has also held a variety of executive roles in marketing and product management. She was named to the Computer Industry "Dream Team" by Business 2.0 magazine in 2004, awarded an honorary doctorate and the YSU Distinguished Alumni award in 2005 and the Entrepreneur of the Year by the Washington D.C. based Dialogue on Diversity organization in 2005.

InsideFlyer
How did the idea of RewardsPay come to pass?

Anu Shukla
My last two companies were dealing with personalization for e-commerce sites and virtual currency monetization for social and mobile games. I was immersed in these two areas and happened to be buying event tickets online where I was offered the option of paying for my purchase with my credit card reward points. As a consumer, I perceived this as a great utility and of course paid with my points. I started to investigate and found that there were $50 billion in points, miles and cash rewards that were given out every year, and about a third went unredeemed. Reward programs built up huge liabilities and low redemption rates lead to lack of engagement and loyalty. So, I thought a platform that enabled the redemption of rewards at merchant sites and stores would be beneficial to all the stakeholders and popular with consumers. Hence, RewardsPay was created.

InsideFlyer
Can you explain how the purchase process through RewardsPay works?

Shukla
RewardsPay is present as a payment option at a variety of online sites. Customers select it as a payment method at checkout just as they would select a credit card or PayPal payment option. They can then select any of their reward programs that we work with and pay with points for their purchase. It is a few clicks and even less if they have used the service before and stored their reward program credentials. They can view their reward program balances in one place and select the program they want to use and they can choose to split tender - pay some portion with points or miles and the balance on a credit card.

Later this year, consumers will be able to pay with their miles in physical stores using a mobile app.

InsideFlyer
What are some of the trends you're seeing in regards to using points/miles for things other than free flights/hotel stays?

Shukla
Non-air and non-travel related redemptions are still a relatively small but rapidly growing redemption option that customers seem to love. In an independent survey, 89 percent of consumers preferred to redeem their rewards at merchant sites vs. any other redemption option. The two big trends we are seeing are online shopping where customers have the flexibility and convenience to buy whatever they want and pay with miles; this is far more convenient than the restrictive choices at the typical burn mall. Secondly, we are seeing an exponential increase in the the use of mobile devices and apps to redeem miles, send gifts and look up reward balances.

InsideFlyer
Many frequent flyers say that using miles for international award flights offer the best value per mile. Why would a frequent flyer choose to use their miles for something other than an international award flight?

Shukla
Frequent flyers should always use their miles for the best value possible! But having more options for redemptions is also good for frequent flyer program members. What if you could buy an international ticket for $600 and earn miles, while spending 50,000 miles you had for $2,500 of shopping? That would be a better value. Other reasons may be expiring miles, blackout dates, no international travel planned, not enough miles, etc. I think it is up to the individual flyer to make that choice. But, having a choice is desirable.

InsideFlyer
What are some of the benefits for loyalty programs to use the services of RewardsPay?

Shukla
RewardsPay was designed to keep the needs of loyalty programs front and center. The user flow is branded with the loyalty program and they are engaging with the program directly. Increased engagement leads to increased loyalty. The burn rate is determined by the program and partially merchant funded, the spend can be directed by the program by choosing the merchant and the eligibility for participation as well as the exchange rate. Currently, programs are burning liability at a discount compared to other redemption options.

There is good brand association for the loyalty program by being visible at merchant sites outside the four walls of a destination website. For programs that offer redemption or burn malls, in other words, non-air and non-travel related redemptions, this is a no-cost addition that greatly increases the choice and flexibility for their members.

Programs that are newly venturing into offering non-air redemptions can avoid all the costs of building and maintaining a destination website and the associated warehousing, fulfillment and shipping costs, which are significant.

Simply put, RewardsPay offers a no-cost redemption channel loved by members!

InsideFlyer
RewardsPay partners with United MileagePlus, SAS EuroBonus and Choice Privileges. Are there other travel loyalty programs coming online with RewardsPay soon? Any you can mention? Or can you give us a hint (ie: airline, hotel, car rental company, etc.)?

Shukla
We currently work with Discover Cards in addition to the programs mentioned and RewardsPay will roll out another hotel rewards program in a month, and three airline programs in Q3/early Q4 this year.

InsideFlyer
Can you tell us about how RewardsPay works with amazon.com?

Shukla
We have integrated into the Amazon.com e-gift code platform and have an agreement with them to enable redemption of miles into Amazon e-codes, that can be used to instantly pay for shopping on Amazon.com.

InsideFlyer
What do you see in the future for Rewards Pay?

Shukla
Our goal is to be a global service that provides the greatest value to consumers, merchants and loyalty programs. Consumers get increased liquidity and increased options to spend their rewards when and how they want, merchants get new users and incremental revenue and loyalty programs get more loyal and engaged members, while optimizing burn and reducing liability.

InsideFlyer
How have consumers responded to using their miles/points to pay for items online?

Shukla
Every metric we can see indicates that if the consumer is made aware of this option, they will use it. And those that use it, use it repeatedly. We have consumers that redeem every month for the $50 of iTunes, for example. Also, for international programs, it has been a great way to increase engagement with members in other geographies where they may not have had as many options as their base. So, if you have some members in the U.S., they may not have all the options available to them that your European members have. This is a low-cost, low-maintenance way to increase their redemption options - and we have seen that those consumers take advantage of that.

InsideFlyer
For our final question, we are asking everyone we interview - please tell us about one particularly memorable trip you took.

Shukla
Recently, I went to Cancun with my family - my first time. We went to Chichen Itza, the Mayan Pyramids and zip-lined for miles over the rainforest, swam in underground rivers, snorkeled, sailed to nearby islands and stayed in a resort with the whitest, softest sandy beaches and the warmest ocean I have ever been in! I am amazed that this heavenly place is so close and yet I had never been there before. To top it off, we spent an entire day swimming with dolphins and feeding lettuce to Manatees. My kids have had the best vacation of their lives, and I have to say it was one of the most amazing experiences for me!

SAS EuroBonus

Nils Lindhe, Vice President Sales and Marketing at SAS, has been in this position since September 2013. Before that, he held positions at TradeDoubler, Lowe Brindfors and Razorfish. He has a track record with building multi-territory businesses within digital marketing and e-commerce and is a graduate of Stanford University School of Business.

InsideFlyer
You've been with SAS for almost a year now, what changes to EuroBonus have you seen during that time?

Nils Lindhe
In recent months, we launched a series of innovations and improvements in the EuroBonus program. We added key benefits such as fast track and lounge access to the Silver tier level, while at the same time lowering the threshold to reach this level from 10 roundtrips to five. We launched Diamond, a new tier level above Gold for the most frequent members and added key benefits like Give away a Gold Card and an exclusive concierge service in collaboration with Quintessentially. We made major improvements to the points and cash booking flow by capping prices and giving higher tier level members substantial discounts. We also introduced new coalition partners within retail banking, food and fuel. And this is just the start!

InsideFlyer
If you were to compare frequent flyer programs in Europe to those in North America, what do you see as the main differences? And what about the travelers, what differences do you see?

Lindhe
We always look at the U.S. FFPs for inspiration as this is the most mature and developed market. However, we now see a major trend in the U.S. where the FFPs are moving towards more revenue-based accrual schemes. Some European FFPs follow this trend, but since the market is more fragmented and competitive in Europe, I believe these programs will stay relatively more generous than the American programs. On the traveler side, the general understanding of how FFPs work is much higher in the U.S. and members are more savvy about both accrual and redemption possibilities. In Europe we still have an educational task in front of us, especially since more programs are increasing the number of partners where you can earn and redeem points.

InsideFlyer
As a frequent flyer living in North America, is SAS EuroBonus a program worth considering for membership? Why?

Lindhe
SAS EuroBonus is one of the world's most generous frequent flyer programs. You earn points based on the service class and not booking class. This becomes very rewarding if you plan your travel in advance. Further, we have an outstanding redemption scheme with the points and cash feature that gives full availability on all flights and service classes for highly attractive prices, especially if you are a premium member.

InsideFlyer
Do you think frequent flyer programs are better off as stand alone entities or should they stay tied into the airline?

Lindhe
An FFP has two major assets, its customer database and the award trip mechanism. If you separate the FFP from the airline, the airline risks losing a major source of competitive edge in CRM [Customer Relationship Management] and the FFP typically tends to get fewer award trips at higher prices from the airline. I therefore believe that FFPs that are integrated to airlines or have very strong ties with them will stand a better chance in the future.

InsideFlyer
What's one aspect of SAS EuroBonus, and frequent flyer programs in general, that you would change if you could wave a magic wand to make the change?

Lindhe
I would like to create customer experiences that make it as easy to understand and engage in a program as it is to book a flight. We suffer from a situation where we have a very advanced program that is highly appreciated by the most loyal frequent flyers but is perceived as complex and difficult to grasp by other customer groups.

InsideFlyer
How do you view the move by airlines in the U.S. to more revenue-based programs that mileage-based programs?

Lindhe
I sympathize with the business objectives behind these moves but I see a risk for the loyalty programs, that ultimately are there to build customer lifetime value, by being too shortsighted in maximizing revenue and profitability from their loyal customers. At SAS we try to go the other way by saying that SAS should be loyal to our most loyal customers by looking more at customer's lifetime value when designing the program's features and benefits.

InsideFlyer
In recent years, much has been said about the lower elite tier benefits of frequent flyer programs eroding with so many elite members; how is EuroBonus ensuring that these lower-tier elite members are happy?

Lindhe
As I mentioned, we have a highly attractive accrual structure and reward scheme that all members benefit from. We work hard to encourage our low-tier members to find new ways to earn points through our partners in co-brand cards, fuel, food, utilities and other sectors. As for benefits, we are taking a big step in offering our Silver members a taste for what it's like to be a Gold member for three months a year during holiday seasons by offering a fast track to Gold and lounge access during this time.

InsideFlyer
How does SAS EuroBonus work toward keeping members engaged in the program?

Lindhe
We have come quite far in building skills, processes and systems related to big data and CRM. We use the phrase "True CRM" to describe what we want to do, i.e. give the right member the right offer in the right time through the right channel. Once you get good at this it becomes the key driver to keep engagement up by showing that you understand your members and give them offers that are relevant to them.

InsideFlyer
For our final question, we are asking everyone we interview - please tell us about one particularly memorable trip you took.

Lindhe
Back in 1998, I was working a lot within Eastern Europe and Central Asia. I spent a week in Almaty, Kazakhstan, looking for new distributors for our products. The flight home was scheduled for 3:30am from an airport that previously was a military installation. It took two hours to get through security and once all of the passengers had boarded the plane a big fog came in over the valley. Everyone, including the flight crew, really wanted to get home and the captain chose to taxi up and down the 4 km long runway to find just enough clear sight to take off. After one hour of going up and down the runway he spotted a few hundred meters of clear sight, put the pedal to the metal and with cheers and applause from everyone in the airplane we finally took off!

TravelSkills

Chris McGinnis has worked as a travel columnist for BBC.com and travel correspondent on CNN Headline News, as well as the business travel columnist for the Atlanta Journal-Constitution and Entrepreneur magazine. His popular Frequent Travel Advisor column is a mainstay on SFgate.com, the website of the San Francisco Chronicle. In addition to his work as a consultant and speaker, McGinnis writes about frequent travel on his TravelSkills blog and co-hosts the weekly #TravelSkills chat on Twitter. McGinnis regularly contributes and comments about travel trends on TV networks like CNN, HLN and Fox News and writes occasional special travel sections for the Wall Street Journal, Fortune and Bloomberg-BusinessWeek magazines. His TravelSkills blog is featured on BoardingArea.com.

InsideFlyer
Do you feel that the "golden days" have come and gone for the frequent traveler?

Chris McGinnis
I cringe when I hear people talking about the so-called "golden age of travel". When I began my career as a business traveler in the 1980s planes were filled with smoke, on-time performance stunk and there was no such thing as "lie-flat" business class. Passengers fought over the handful of magazines provided as inflight entertainment. Most airports were dull, dark and institutional. Hotels had yet to provide basics like in-room coffeemakers or desktop plugs. Nonetheless, I loved traveling then as much as I love it now. And now I get to enjoy things that I couldn't even dream of back then like inflight WiFi, spectacular, architecturally significant airports (and airport lounges), big, bright business class hotels and checking in for flights and having my boarding pass stored on my mobile phone. Of course, there's a downside: these days flights are more crowded, airport security is a bear (but improving) and it's expensive. Nonetheless, I believe we are now living in the golden age of travel.

InsideFlyer
What are some of your favorite travel apps for business travelers?

McGinnis
Although the media focus primarily on the air travel side of the business travel experience, the reality is that most business trips are by car. For that reason, I love the Waze app, which uses crowdsourced info from other "wazers" on the road to alert you to speed traps, traffic, etc. I use it all the time. When I attended the Freddie Awards in Seattle this spring, I used another favorite app, Hotel Tonight, to snag a significant last-minute deal at a posh hotel near Sea-Tac that I'd never heard of, but really liked. (Cedarbrook Lodge, which used to be a training retreat for Washington Mutual and is now a very nice hotel.) And I also have to mention Tripit Pro, which helps keep my crazy travel schedule organized, alerts me to changes or delays, and keeps my family informed of my whereabouts. Oh! And one more: Uber has completely changed the way I get to/from the airport. Push button on mobile phone, car arrives. Take nice ride. Get out. Thanks! No money changes hands and receipt arrives via email. It's like magic!

InsideFlyer
What's one piece of advice that you would give to someone who is new to business travel?

McGinnis
Always be nice. It will come back to you.

InsideFlyer
Do you have a favorite frequent flyer program? And if so, which program is your favorite and why?

McGinnis
All frequent flyer programs are pretty much alike, so it's tough to name a favorite. However, since my business travel career began in Atlanta, I've kept a close eye on the Delta program over the years and watched and reported as it turned from an industry follower to a leader. I've earned more miles on Delta than others, but that's changing now that I live in San Francisco and fly Virgin America and United the most.

InsideFlyer
What is your opinion on the recent changes to Delta SkyMiles to align the program to revenue rather than miles flown?

McGinnis
I know I'll catch a lot of flack for saying this, but I think what Delta (and Virgin America, Southwest, JetBlue) did makes a lot of sense and will improve the loyalty experience for true frequent business travelers in coming years. The airlines made a mistake when they started distributing applications for "frequent flyer" programs to everyone - even those who fly once or twice a year. That diluted the loyalty experience for the airlines' best customers - the ones who pay the most (not those who flew the farthest). It opened the door to a wily generation of "gamers" who figured out how to snag more than they were entitled to by manipulating an admittedly imperfect system. The move to revenue-based programs realigns the system back to its initial premise: to reward truly frequent business travelers, those who fly 10+ times per year on non-discounted fares. If that's not you, then sorry. If that is you, then get ready for things to get better. But it will take a while.

InsideFlyer
Tell us about your weekly #Travelskills chat on Twitter. What types of resources do you offer travelers?

McGinnis
I partnered up with popular travel blogger John DiScala (aka Johnny Jet) last year to create the #TravelSkills chat and it's taken off like a rocket! Our weekly chats draw hundreds of travel enthusiasts and media in a free-for-all online conversation about a wide variety of topics. Since it's called "TravelSkills" we always try to be sure that the chats are newsy, informative and teach participants new things. Recent popular chats covered: New York City, In-flight etiquette and hygiene and finding travel deals. Since the chats draw such big crowds and create millions of impressions, we're lucky that a steady stream of some of the biggest travel industry brands have lined up to sponsor them. Please join the fun! Follow the #TravelSkills hash tag Fridays at noon eastern, 9am Pacific or see http://www.travelskills.com/chat

InsideFlyer
With the changes and devaluations of frequent flyer programs, how can members still derive value from their memberships?

McGinnis
As I just mentioned, members who are true frequent travelers (10+ flights per year on non-discounted fares) will get the most value from the programs in the future. If that's not you, and you have a big stack of miles sitting in your account(s), I advise you to redeem them as soon as you can because they will continue to lose value over time.

InsideFlyer
Do you have any insider advice for booking award travel?

McGinnis
I'm a frequent flyer program enthusiast, but I?m not an expert. When it comes to advice about frequent flyer programs, I would suggest turning to my fellow bloggers like Gary "View from the Wing" Leff, Ben "Lucky" Schlapping or Bryan "The Points Guy" Kelly. I'm impressed with their ability to track the minutiae of these programs and find little "aha!" gems I'd never see.

InsideFlyer
For our final question, we are asking everyone we interview - please tell us about one particularly memorable trip you took.

McGinnis
All trips are memorable to me for one reason or another. But my most recent memorable trip was to Tokyo. ANA invited me and a group of travel writers on its brand new Boeing 787 Dreamliner flight from San Jose to Narita last winter. The trip over (in business class on a brand new plane) was outstanding. But on the day after we arrived, the 787 was grounded worldwide due to battery issues. And there was a rare blizzard in Tokyo. Nonetheless, the trip was a success, made for some great blog posts on TravelSkills and we made it safely back to SFO on a Boeing 777.


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