Changes to airline loyalty programs are having major implications on business travel spend. To drive increased revenues, airlines are shifting their loyalty program models to base them not only on how many miles travelers fly, but also on qualifying dollars (or how much travelers spend), In other words, upgraded seats and other perks are no longer readily available to high-level frequent flyers…unless they pay up for the right to earn them.
The result? Airlines are encouraging travelers to spend as much as possible on airfare to earn elite status. Company interests are thus in direct conflict with those of the airlines and traveler. Travel managers will struggle to discourage employees from overspending to earn elite status with their favorite airlines.
Some industry experts have proposed closer management to monitor trends and opportunities for savings. Although we recommend paying attention to changes in booking behavior, Rocketrip provides powerful incentives for employees to make cost-sensitive choices that offset the motivation to spend. Employees using Rocketrip earn significant rewards as well as elite status with their favorite airlines. In other words, Rocketrip can provide all the motivation employees need to do right by their company.
Demystifying the Elite Status Programs:
Earlier this year, Delta announced updates to the SkyMiles program which take effect in 2015. The method of earning redeemable miles based on the distance flown by a traveler will shift to a model based upon how much money was spent to “better reward customers who spend more with Delta”.
Before earning ‘Medallion Status’, you need a certain amount of MQM’s (Medallion Qualification Miles) or MQS’s (Medallion Qualification Segments) and MQD’s (Medallion Qualification Dollars). Check out the image above and site for full details about therules.
United has already implemented revenue requirements for elite status called Premier Qualifying Dollars (PQD’s). The new requirements work in the same way as Delta’s – status is no longer based just on miles, but also on dollars spent.
Other major airlines are likely to follow suit.
Implication for business travelers:
The new rules favor those who are willing to pay top dollar for flights. Predictably, business travelers are the most likely to remain insensitive to costs at their employer’s expense. Airline status and the benefits that come with it are long-held perks in the stressful life of the “road warrior”. Those who make frequent business trips are undoubtedly still motivated to earn rewards through loyalty to their favorite airlines.
Except now travelers also have to spend more to enjoy the perks they have long enjoyed, such as seat upgrades, breaks on checked baggage, high priority on standby lists, and access to airport lounges. To maintain loyalty status, business travelers will now spend at the very upper limit of company policy, because, well, why wouldn’t they? Wouldn’t you?
Your Business Travel Spend Problem:
What does this mean for travel spend at your company? Unless travelers shell out for expensive airfare on the company’s dime, they will not earn rewards the same way they used to. And unless you do something about it, spending on business travel will increase. How to maintain a reasonable budget for business travel? That’s where Rocketrip comes in.
Rocketrip – the Antidote to the PQD:
Rocketrip rewards business travelers for making cost- and time-sensitive choices. We’ve found employees enrolled in Rocketrip as motivated (if not more) by our reward incentives as they would be by their airline status.
What’s more, Rocketrip rewards have no impact on a business traveler’s status with an airline. Not only will they earn Rocketrip rewards, but they’ll still earn elite status with their favorite airlines as they travel for work. For the road warriors out there, “double dipping” with Rocketrip Rewards as well as earning a sufficient number of qualifying dollars shouldn’t be a problem.
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Featured image by Flickr user TravellingOtter