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When Airlines Change the Rules, Timing Matters

As consumers are well aware, airlines continually modify the rules governing their frequent flyer programs. Consumers also know those changes are mostly for the worse—more fees, higher award prices, shorter mileage life, etc. Given this state of affairs, how far in advance should the airlines advise program members of changes, especially when those changes will negatively affect the value of miles they’ve already earned under the program’s previous terms?

In the late 1980s and early 1990s, when I was an airline marketing manager, the carriers had a definitive answer to that question. According to the “Task Force on the Air Travel Industry” issued by the National Association of Attorneys General (NAAG) in April 1988, airlines owe it to consumers to give them at least 12 months’ advance warning of any negative program changes, unless they specifically reserved the right to give less notice.

A double message lurks between the lines of the NAAG’s ruling. As a matter of fairness, airlines should give their program members plenty of advance notice of rule changes. But as a matter of law, airlines are free to override fairness considerations and make changes at their own discretion, provided they clearly and effectively communicate the advance-notice policy to affected consumers.

While that directive never had the force of law, it was a guideline airlines recognized and took pains to observe. It was a de facto standard, and for the most part, the airlines routinely gave program members a year’s notice of upcoming changes.

The new rules

In the years since the NAAG issued its guidelines, the airlines have gradually and surreptitiously backed away from the fairness ideal embodied by the 12-month rule. In its place, they have adopted policies that may be legal but are markedly less consumer-friendly.

Typical of the policies currently in place at the largest programs is the following from American’s AAdvantage Award Conditions:

“American Airlines may, in its discretion, change the AAdvantage program rules, regulations, travel awards, and special offers at any time with or without notice. This means that the accumulation of mileage credit does not entitle members to any vested rights with respect to such mileage credits, awards or program benefits. In accumulating mileage or awards, members may not rely upon the continued availability of any award or award level, and members may not be able to obtain all offered awards for all destinations or on all flights.”

In other words, American can do whatever it likes, whenever it likes, with no regard for the needs or rights of its program members.

The erosion of consumers’ rights and benefits is ongoing, as a recent notice from Southwest illustrates:

“Effective December 8, 2007, Southwest Airlines reserves the right to amend, suspend, or terminate the Rapid Rewards program at any time, with 30 days notice. This constitutes a revision of Rapid Rewards rule #27, which currently states: Southwest Airlines reserves the right to amend, suspend, or terminate this program at any time, with six months notice.”

Why the rules matter

A change is a change, and bad news is bad news. So why does it matter whether the airlines break the news 12 months ahead of time or with no notice at all?

Even assuming that the airlines exercise their best efforts to communicate the rule changes, the reality is that it takes months—sometimes years—for the news to be widely disseminated, received, processed, and acted upon. The airlines typically restrict their communications to the most active members, so others must find out by word of mouth or through media reports.

Even among active members who receive airline announcements, many don’t take the time to read them—assuming, understandably, that the “Important News” referenced in the subject line is nothing more than another gushing promotional messages touting this or that mileage incentive.

Then there’s the question of the airlines’ good faith in bringing bad news to the public’s attention. As with corporate communications in most industries, the airlines have a long history of using techniques more likely to obfuscate than illuminate. Two tactics in particular have been used to diminish the anticipated blowback from irate consumers: burying the bad news at the bottom of a message, and timing the news release to generate minimal readership.

Recent examples include American’s announcement of upcoming changes to its mile expiration policy and the aforementioned Southwest change. American emailed AAdvantage members on a Saturday to minimize media exposure. Similarly, Southwest sent its email after business hours on a Friday evening. To make matters worse, the rule-change announcement was the last item mentioned, below a Father’s Day promotion for Southwest gift cards and airport shuttle services.

A rule to live by

There’s no obviously correct answer to the question of how much advance notice the airlines should give members of their loyalty programs when changes for the worse are in the pipeline. More is better, but the airlines need some flexibility to respond to financial and competitive pressures as well.

I happen to think that the old NAAG 12-month guideline was a pretty good compromise between the conflicting needs of the public and the airlines. Maybe in this case, a step back would be a step in the right direction.

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