Big changes have come to airline frequent flyer programs in the past five years. Southwest Airlines was the first to change its travel rewards program, known as Rapid Rewards program. In 2011, Southwest began awarding points based on the cost of each ticket rather than the number of flights. Southwest also began offering additional points to travelers purchasing refundable fares and to travelers who fly often enough to be in its A-List elite program. Delta and United mimicked Southwest’s changes in 2015, awarding travel rewards (miles) based on the cost of the ticket and the traveler’s elite status rather than based on the distance of the flight. American Airlines announced that similar changes to its AAdvantage program will take effect in the summer of 2016.
What impact do travel rewards from airlines have on a corporate travel program?
Are these changes good news for a corporate travel program? In short, no. They incentivize the behaviors that the travel policy is designed to avoid. Everyone knows that airfares usually rise closer to the date of departure. In fact, a study revealed that tickets sold one week before departure are 30% more expensive than they were two weeks prior. Tickets sold a few days before departure are often more than twice as expensive. The new programs encourage business travelers to wait to the last minute to buy their ticket so that they earn the most miles by paying the highest price.
Elite status has always provided an incentive for the business traveler to choose their flights based on the airline rather than the price. However, the bonus miles and points take this perverse incentive to a new level.
How can corporate travel managers curb this trend?
Corporate travel managers can fight back with a few powerful tools.
- Require travelers to choose the flight option with the lowest logical fare. An online booking tool with a rules engine can determine which flights are “logical” based on departure and landing times, duration, and number of stops.
- Require travelers who make last minute bookings to justify them with a written explanation. The explanation can be captured using your corporate travel system when the reservation is made.
- Notify travelers with the most frequent policy violations. An integrated travel and expense solution can quickly show you who these people are.
- Run your own travel rewards program. Travelers who choose the least expensive options earn the most points.
Learn more about how Clarcity can get your corporate travel program on the right track to saving.