Advertisement
Will Delta's New Program Increase Travel Costs?

Earlier this week, the Business Travel Coalition, an organization that purports to represent the interests of corporate travel managers, sent out an email query requesting input on the anticipated effects of the airline industry's move to revenue-based loyalty programs.

Of course, airlines like Southwest, JetBlue, and Virgin America have featured revenue-based programs for several years. They're nothing new. But Delta's recent announcement that SkyMiles would transition to a spend-based model in 2015 has crystallized the prospect that American and United will follow suit, shifting the model of all legacy carriers, which still carry the bulk of the country's business travelers.

Advertisement

The results of the BTC survey are in, and based on responses from 66 organizations, programs like Delta's are indeed expected to pose a challenge for corporate travel managers, who are tasked with keeping travel costs under control.

The findings:

  • 84 percent of the respondents expect that spend-based programs will result in their organizations' spending more on airfare.
  • 82 percent worry that the new programs' spend incentives will make it more difficult to enforce corporate travel policies.
  • 63 percent find they have less power when negotiating airfares and other travel terms as a result of the industry's consolidation.

The findings certainly accord with common sense. Linking perks with spend creates an obvious incentive for business travelers to spend more, booking their flights last minute, for example, to earn more points from a higher-priced ticket.

The question is not whether travel expenditures will rise, but rather how much they will rise. The severity of those cost increases will dictate how aggressively companies clamp down on workers' booking flexibility in their travel policies.

Atlanta-based companies, whose employees fly Delta predominantly, will have an opportunity to compare before- and after-costs when Delta's new program is launched on January 1, 2015. That will be an early indicator of how much costs change, and how much more adversarial the relationship between those who travel on business and those who make the rules might become.

Reader Reality Check

Will you change your business-travel patterns to earn more miles in spend-based programs?

This article originally appeared on FrequentFlier.com.


Find Cheap Flights!
Find Cheap Flights!
Get Prices
Find Cheap Vacation Packages!
Get Prices
Find Cheap Hotel Deals!
Get Prices
Find Cheap Car Rentals!
Get Prices
Find Cheap Cruises!
Get Prices

Read comments or add your own insight!
Please enable JavaScript to properly view and use this web site.