Airlines invented frequent flier programs to help build loyalty and keep people flying. Over the years, there have been a lot of efforts to further build loyalty. The latest comes from US Airways (LCC) in the form of so-called Special Dividends, and the plan seems like a good one.
While frequent flier programs themselves don't engender loyalty today, the awarding of elite status most certainly does. Once a customer qualifies for elite status, he is entitled to free bags, priority seating, priority check-in and security lines, and more. It's good to be in that elite group. But there was still a gaping hole in the program.
These programs are all based on hitting certain mileage or flight segment thresholds. For most, once you earn 25,000 miles in a year, you're in the club at the base level. Further thresholds as you go higher give you higher levels of benefits. On US Airways, 50,000 miles gets you Gold, 75,000 gets you Platinum, and 100,000 gets you Chairman's.
The downside of elite-status programs
That provides incentive for those people who want to reach higher levels, but it also provides a disincentive in a way. For example, let's say you expect to fly 40,000 miles this year. Once you hit that 25,000 mileage level on US Airways, you're not likely to get to 50,000 so you might as well try to see if you can throw some bonuses together to earn status on another airline. This becomes a challenge of sorts for the true road warrior.
Some people hit the top threshold before the year is even half done, so what to do for the rest of the time? Many will go out and get elite status on multiple airlines instead of concentrating business in one place. And that's what the US Airways Special Dividends are meant to prevent. This program provides incentives to stick around even if you won't make the next level.
At 35,000 miles, travelers get a US Airways Club Day Pass, the ability to nominate someone else to elite status, wine discounts, and VIP status in a dining points club. The benefits go all the way up to 200,000 miles where you can nominate 4 gold members in the program, get free US Airways Club access, and a bunch more.
The end result is that by putting additional bonuses in reach for elite members, it might help sway them to keep flying US Airways instead of straying to another airline. The cost to US Airways is small in the scheme of things, so it's a smart effort.
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