Air Canada was on Wednesday ordered to compensate a passenger who was misled by its online chatbot.
29.01.2024 - 08:51 / forbes.com / Helane Becker
Pity the poor airlines. It’s bad enough that they had to limp through COVID, beg $50 billion dollars from the Federal government, cancel or delay thousands of flights, and now, once again, deal with Boeing 737MAX issues.
Profitability remains elusive; “Industry revenues are back to 2019 levels, but costs are over 2019 levels by about 18 or 19%,” US airline analyst Helane Becker at TD Cowen told Bloomberg in October.
But to add insult to injury, a bipartisan pair of U.S. Senators are questioning a 40-year financial pillar of airline revenue—the frequent flyer program. Delta Airlines alone claimed 100 million SkyMiles members in 2020. In 2023, according to Business Traveler, Delta was set to earn $7 billion from its partnership with American Express.
Nonetheless, Senators Durbin (D-Illinois) and Marshall (R-Kentucky) sent an extraordinary letter last fall to the heads of the US Department of Transportation (DOT), Secretary Buttigieg, and the Consumer Financial Protection Bureau (CFPB), Director Chopra. The senators demanded to know what these agencies are doing to “protect consumers against unfair and deceptive practices in airlines’ frequent flyer and loyalty programs.”
Millions of Americans participate in these points and miles programs. Yet the senators wrote “reports have suggested that airlines are changing point systems in ways that are unfair to consumers, including by devaluing points, meaning it takes more points than initially marketed to achieve the promised rewards.”
The senators added that “While these programs may have originated to incentivize and reward true “frequent flyers,” they have evolved to include co-branded credit cards and now often significantly or exclusively focus on dollars spent using these co-branded credit cards.”
Senator Durbin and Marshall are correct. Americans are hooked on loyalty programs that bind consumers to one airline over another in the search for points and status. Loyalty is supposed to deliver perks from free flights to free luggage, a free visit to the lounge or a coveted seat “up front.”
When you buy anything from a Modigliani painting to Valentine’s flowers, credit card companies and vendors often clinch a deal with frequent flyer points. Every airline has a credit card, and seemingly every credit card has an airline.
For consumers, a problem with the alternative currency of points and miles is that it is at constant risk of being devalued. It has become harder and harder to get a free ticket, let alone an upgrade to business class from the back of the bus.
If you don’t have enough points for a free flight, you can always buy some. But it’s rarely a good deal. As the letter noted, “Airlines allow consumers to directly purchase points from the airlines’
Air Canada was on Wednesday ordered to compensate a passenger who was misled by its online chatbot.
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Imagine taking off for a vacation, and having no idea exactly where you are going. Scandinavian Airlines, a Sweden-based carrier, commonly known as SAS Airlines, offered just that, by recently introducing a special mystery flight called “Destination Unknown.” SAS sold tickets for the flight exclusively to members of the airline’s frequent flyer loyalty program, EuroBonus. Instead of money, travelers needed to redeem 30,000 miles for a seat. The trip will depart from Copenhagen on April 5 and return back to Copenhagen on April 8. Travelers are only provided a clue that the flight will last “a few hours”, and the exact location of the destination will be revealed at some point during the flight through an announcement. “The prospect of embarking on an adventurous and mysterious journey with fellow enthusiasts, finding new connections and friendships along the way, is truly exciting,” SAS’s Chief Commercial Officer and Executive Vice President Paul Verhagen said in the news release. Over 1,000 people submitted interest in joining the flight, and the airline is no longer accepting reservations, a spokesperson shared with Travel + Leisure. Due to the limited quantity of seats on the plane, tickets for the April trip will be distributed randomly to the travelers who signed up. SAS operates flights around the world to 125 destinations, and currently has flights from the US (Atlanta, Boston, Chicago, Los Angeles, Miami, New York, San Francisco, and Washington) to destinations in Scandinavia and across Europe. The concept of “surprise” travel has taken off as travelers seek new experiences. Lufthansa, a German airline, offers a program called ‘Lufthansa Surprise’ where travelers select their home airport, and a general theme of what type of vacation they want (such as arts, outdoors, or shopping). Once the trip is paid and ticketed, the airline reveals the destination to the traveler. The surprise bookings cannot be changed or canceled, and the 24-hour flexible booking policy also does not apply.
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