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United Manager Sees Bright Future for Mileage Plus

This could be a defining moment for United's Mileage Plus program.

As a result of its merger with Northwest, Delta has displaced American as the world's largest airline, and as the operator of what will be the largest mileage program. And the airline has shown an interest in assuming a leadership position in frequent flyer marketing.

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American, on the other hand, has left its AAdvantage program on autopilot for the past few years, apparently abandoning its longtime commitment to being the industry's loyalty marketing leader.

So where does United—now the third largest player—fit into the picture? We get some hints where the airline and its mileage program may be headed from a recent interview with Graham Atkinson, the president of United's Mileage Plus program, conducted by Ben Mutzabaugh for USA Today.

The Future of Mileage Plus

In response to a question regarding the airline's plans for the Mileage Plus program, Atkinson had the following to say: "I think people should be very reassured that we see this (Mileage Plus) as not only a very important asset for United, but a very important and valued benefit for customers. That may be a statement of the obvious, but (it's an area where) we believe there is more opportunity if we do good hard work and listen to the customers and give them what they want."

While there have always been hand-wringers worried that airlines are perpetually on the verge of shutting down their mileage programs, the reality is that Mileage Plus and similar programs are enormously profitable enterprises, critically important to the airlines' profitability. So the real question is not whether United is going to operate Mileage Plus, but how: proactively, to gain competitive advantage, or reactively, as a necessary evil.

Atkinson seems to be saying that United has made a decision to be a leader rather than a follower. If true—and only time will tell—that's good news for current and future Mileage Plus members, and for airline programs generally.

The Current Double Elite Qualifying Mile Promotion

United was not the first or even the second the roll out a double elite-qualifying mileage (EQM) promotion, so Atkinson's explanation for launching United's offer seems strangely irrelevant and a bit disingenuous. The real answer: The airline offered double EQMs because other airlines did it first, and United couldn't afford to be at a competitive disadvantage.

On the positive side, Atkinson addressed the concern that the offer would swell the ranks of elite members, thereby diluting the benefits of attaining status, as follows: "We are living in a world where ... fewer people will qualify for elite status this year because premium travel is down. The last thing we want is to denigrate experience and the reason that people aspire to Premier or Premier Executive status."

US Airways' Future in the Star Alliance

Noting the conspicuous lack of references to US Airways in recent discussions of Continental's imminent entry into the Star Alliance, Mutzabaugh asked whether that implies that US Airways and the alliance will be going their separate ways.

Atkinson's response: "US Airways is a valued member of Star Alliance. They're a valued member in the U.S., as part of Star Alliance. They help to round out the network. I think when you put together Air Canada, United Airlines, Continental and US Airways, we really do have an unrivaled national network ... that speaks to best in class."

Frequent Flyer Program Transparency

Mutzabaugh asked this question I would have as well: "As frequent-flyer programs have grown and matured over the past 25 years, airlines increasingly advertise frequent-flyer benefits as a big reason to stay loyal. But customers don't ever actually see the number of awards that are available, and I think many feel like that information is being withheld from them. What would you say to people who raise that concern?"

Atkinson answered: "I would say that they're right. I'd say that some of the perceived concerns they have are not born of us trying to withhold information; They're born—again—of technological limitations, given that we're dealing with legacy systems here. And I would say that in almost all cases, it is in our interest to actually be straightforward and honest with customers ... and to try to be as transparent about what is available and what's not available as you can.

"Certainly, some of the work that we've been doing over the last three months is to try to see how we can meaningfully address that issue—both in terms of the display of products more effectively on United.com and in other mediums—and also to look at ways in which we can actually be more creative about making a broader range of offers and more timely promotional-type offers that give people the chance to get more value out of the program.

"So, if you would (pick) one of my goals for Mileage Plus over the next couple of years, it's actually to improve the value proposition—not to take away elements of the program. And to deliver (options and offers) to customers in a way that they want to see it at a time that the want to buy. And not ... trying to be opaque or take things away. I think that ultimately is actually going to lead us to success—not only amongst our airline competitors, but because there are some very other creative products and programs that are emerging all the time. So the competitive bar is being raised and we need to respond to that."

"A Healthy Program"

What a frequent flyer program's top manager considers the program's overarching goal is important. Here's Atkinson's take:

"A healthy program is where people are motivated to earn miles and they have lots of options to burn the miles. If you lose sight of that virtuous circle—either immediately or over time—you will either cause customers to leave and go elsewhere or you will create a program that is unbalanced."

I have always believed that the "virtuous circle" vision of loyalty programs was the proper approach. And while it's often given lip service by airline marketers, that principle is much less often put into practice. The fact that so many consumers have so many complaints against mileage programs is proof positive of that.

As can be said of many other airline programs, there's plenty of room for improvement in United's Mileage Plus. Atkinson's words certainly give program members cause for hope. But to bend a line from Ronald Reagan, they can hope, but they'll also have to verify.

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