For an extended period, Lufthansa has been adjusting the loyalty program and reducing possible perks. The program member could see some of Miles & More downgrades justified and gone, and at the same time, the most loyal customers might notice how harsh these program features are.
However, the airline has named its loyalty program Miles & More that implies abundant promotions, gifts, and discounts.
Miles and More Members are Getting Less
Although frequent flyers actually don’t get any additional benefits. Furthermore, they receive much less than before and find the rest of the available upgrades more difficult to obtain. It becomes more expensive to collect miles and more complicated to redeem them.
Besides, passengers are now limited to access VIP lounges and obliged to pay additional hidden costs, such as extra luggage charges, rebooking, and even more.
Miles & More Downgrades
It’s impossible not to mention how outraged the Economy Class Light status customers are. In their turn, business travels used to choose the flight type for short flights as it’s the cheapest booking class available. It provided customers with the opportunity to reserve front row seats and bring an extra piece of luggage with no additional charges. However, since October, they’re not allowed to use the previously offered perks anymore.
Additionally, since January 1, the program members lose a significant number of ways to collect miles. Now, they can’t receive an award mile per euro spent with the Miles & More credit card. Instead of it, they get only a half-mile per one euro paid.
Meanwhile, British Airways launched a new trend, including ‘Hand Baggage Only’ that doesn’t imply any seat reservation or any checked baggage for anybody – not even Gold Status possessors. Unfortunately, Lufthansa is merely implementing the same condition. All current customers, especially those who have the Gold Status, consider it’s an unfortunate decision.
Are Miles & More Members Important Enough?
Frequent flyers should be treated well by airlines, as they’re considered a perpetual motion machine for each airline. It’s an undoubted fact that customer loyalty programs, designed for facilitating and improving in- and out-flight conditions for passengers, are a constant source of each airline’s sales growth.
It’s important to understand that the award miles’ becoming a second currency is right around the corner. Third parties partnered with airlines, car rentals, or hotels, to win customer loyalty. Even Ralph Lauren, a famous fashion designer, proposes to make frequent flier miles as an irreplaceable part of the marketing strategy.
Meanwhile, the ‘loyalty program’ term has also an adverse perspective. For instance, if somebody receives 10,000 miles when subscribing to a newspaper but much less for a business class round trip, it could irritate other passengers.
Are Airlines Like Lufthansa Ruining Their Strongest Business?
Airlines have been completely paid off by the customer loyalty business. Considering that customers often don’t redeem the acquired miles, it’s possible to tie up some capital and sales from issued low-cost miles and translate them into sales with no costs.
There are about 27 million Lufthansa customers who usually collect award miles. Regardless of little information disclosing the program’s real profitability, it’s known that in 2014, the Miles & More program has profits estimated at 87 million euros.
However, the profit earned from miles programs doesn’t play a significant role. The accounts still consider it’s not sufficient. Thus, Lufthansa has decided to limit access to VIP lounges that are quite costly to maintain and operate.
That’s a Bit Simplistic
Passengers who fly on award tickets might frequently face various unexpected situations. For example, the chosen airline offers different incentives to passengers who can’t take a flight as all flights have been oversold. Although considering the high fuel surcharges that can simply reach up to 700 euros for a usual Firs-Class round trip, Miles & More makes impressive profits with the provided awards.
As for 2014, it’s known that Lufthansa passengers have succeeded in collecting about 209 billion award miles. Consequently, the airline built up a reserve estimated at 1.7 billion euros, meaning 0.8 cents per mile flown. According to the CNBC news channel, 20 trillion unused miles still circulate in the airline industry all over the world.
“Such gigantic liabilities tend to worsen credit standing and increase risk” – said corporate consultant Mr. Franke.
The point is that airlines do their best to prevent their customers’ account growth. Lufthansa has paid particular attention to make the mile value closer to the initial ticket price since January 2014.
Now, passengers flying to New York with the cheapest Economy Class can get credit for 25% of the miles flown. Meanwhile, British Airways supported and followed the same initiative in April 2015. At the moment, these airlines are obliged to keep a record of all the miles on their individual balance sheet.