The pendulum is swinging in the direction of less generosity from frequent flyer programs in exchange for actually flying an airline. Airlines are doing well, planes have been flying full, and low even fuel prices are falling. In that environment there's little need to spend significant marketing dollars to fill incremental seats on aircraft.
There are few industries more cyclical than travel, and few businesses where success ephemeral as airlines. I'd bet that this direction will change.
At the same time, frequent flyer programs have become victims of their own success. Multi-billion dollar businesses in their own right, they're arguably the single most successful marketing vehicle ever devised -- first they took an essentially commodity product (airline seat between A and B) and turned it into a differentiated product that engenders loyalty, and then they took that vehicle and turned it into a generic all-purpose and very real currency.
But as the currency expanded, the redemption product (airline seats) did not. Planes filled up, capacity didn't expand, award seats became fewer while more and more miles were outstanding.
So less need to reward passengers, too many miles chasing too few seats, there was a perfect storm waiting for a correction.
And yet the programs themselves remain profitable, and the currencies valuable, change has happened along certain margins but you can still use miles and points to travel in a manner you couldn't otherwise afford. There's real value in the programs.
As for the specifics, airlines around the world and not just in the US provide miles for tickets and offer upgrades. The programs are profitable and can afford to maintain these, the question is along what margin will they cut back spending on certain customers, and how can we continue to benefit from the offerings?
Co-brand credit card holders receive priority security and boarding and with some cards even lounge access. Those cards are big business, Delta just re-upped its $2 billion a year deal with American Express. Miles remain a desirable currency that drives consumer behavior even as the value propositions of the programs shift.
And there will continue to be opportunities to generate outsized value from the programs, if only because many continue to get more - rather than less - complicated. Instead of two or four award tiers, Delta now has 10, and that's without even offering awards for premium economy or international first class. With both Delta and United a single flight earns qualifying miles, redeemable miles, and qualifying dollars in separate amounts -- which vary based on whether you travel with them or one of their partners and even based on who issues the ticket. Complexity means arbitrage opportunities. And with ancillary revenue as high as ever, we can earn miles in myriad ways. Right now non-flying opportunities are relatively more valuable.
Benefits will remain, opportunities will change.. and then they'll change again. When the economy turns we'll quickly see airlines turn to their marketing engines to fill empty seats, and promotions like 'double elite qualifying dollars' to fill the ranks of their ostensible most valuable customers.