Skies get friendlier the more you spend

By Joe Taschler / Milwaukee Journal Sentinel

Published Mar 9, 2014 at 12:01AM

When it comes to air travel these days, you don’t have to be a rock star to be treated like one.

All you need is cash.

Airlines, which charge fees for everything from baggage to legroom, are now offering fancy perks to anyone willing to pay for them. The more you spend, the more you get in return.

“At the highest level of service and status, airlines will meet and greet passengers at the curb, provide private screening and whisk them to planeside in a sedan car on the ramp,” Jay Sorensen, president of Shorewood, Wis., airline consulting firm IdeaWorks, said last month in a report on the topic. “This level of service normally eludes ‘you and me’ but is now within the grasp of anyone with the swipe of a credit card.”

In some cases, Delta Air Lines will even deliver you to your flight in a Porsche, Sorenson says in his report.

It used to be that airlines reserved regal in-flight treatment for only their highest-mileage frequent fliers.

Those days have flown off into the sunset.

Delta Air Lines said last week it is changing its frequent flier program so its biggest spenders get the most rewards.

Delta’s program “will better recognize frequent business travelers and those less frequent leisure customers who purchase premium fares,” the airline said in announcing the change. “The move is consistent with a trend in the travel industry of rewarding customer behavior based on price.”

The trend is more aligned with reality, Sorensen said.

“It always astounded me that a traveler could spend $5,000 on round-trip business class to Europe and really get very few points (miles), maybe twice the number of miles as the person traveling on the lowest fare,” he said.

Delta’s new program, which takes effect in 2015, isn’t entirely new in the industry and will closely resemble the program Southwest introduced in 2011, Sorensen said.

“Their model is, basically, if you are paying for a low-price fare, you’re going to earn a certain number of points (miles) per dollar spent,” Sorensen said of Southwest. “If you buy an expensive business-type fare, that multiple increases so you earn points even faster.

“For people who are buying the cheapest fares, your benefits from a frequent flier program are going to be far more limited now,” he said.

For the airline industry, a business in which bankruptcies had become as common as canceled flights in a snowstorm, had to change its business model.

The changes represent the transformation that continues to take place. Selling services or upgrades is part of the equation.

“If you have the money, you can buy just about whatever you want,” said Peggy Fischer, owner of Shooting Star Travels in West Bend, Wis. “And people are becoming way more accepting of that.”

Part of the trend also stems from the airlines seeing private, third-party companies cashing in on services.

“What triggers it is, there were a number of independent companies who were found to be charging customers for what amounts to a meet-and-greet service that shepherds them through the process,” said Robert Mann, an independent airline consultant in New York.

“Carriers figured, ‘Well, if there is a third party doing this and making big money, why shouldn’t we just sell it directly to the client?’” Mann said. “If there’s a market for it, we’ll be glad to charge you for it.”

The trend shows no signs of slowing.

“Look for more airlines to simply use pay-as-you-go, also known as a la carte, methods to also seduce more revenue from those willing to buy more perks,” Sorensen said.

Airlines are simply doing what other travel and leisure businesses have done for years, he said.

“Some of the airlines promote the promise of extra pampering to a wide array of passengers, such as moms traveling alone with kids, elderly parents and even minor celebrities,” Sorensen said in his report.

Casinos, hotels, cruise lines and theme parks are among the businesses offering more service in exchange for more dollars.

The market is not necessarily huge, but it is lucrative, Sorensen said.

Among air travelers, “70 percent of the market wants the lowest fare, bar nothing else,” he said. “20 percent considers other factors such as nonstop flights, or their preference for a particular brand. They’ll pay a premium.”

Then there is the top 10 percent of the market. “They always pay a premium for better service,” Sorensen said.

The airline perks business is aimed at that top 30 percent that looks at factors beyond price.

The money involved is big.

“The guy who is paying $600 in coach to fly internationally is probably a $6,000-plus product in first class,” Mann said. “Same flight but different service quality.”

Could pay toilets on flights be next? Ireland’s Ryanair once toyed with the idea.

“I don’t think they could get away with that in the United States,” Fischer said.

But just about everything else is fair game.

“They do have the ability to charge us for other things,” Fischer said. “It’ll be interesting to see what’s next.”