Delta's new airline mileage deal is a deliberate attempt to reward its high-spending customers and take from the unwashed 99 percent -- further widening the gulf between the haves and the have-nots. When mileage programs were started 33 years ago, there was a semi-democratic element to them. If you flew 2,600 miles round trip to Florida you got 2,600 reward points, no matter what price you paid. Under Delta's new scheme for 2015, if you pay $830 for a round trip flight to Florida, you will get 4,150 delta miles. If you pay $300 you will get only 1,500 -- 36 percent as many miles as the high spenders get. Since 1981, these ingenious loyalty schemes have succeeded beyond the airline's wildest dreams, as I have written often. Frequent-flyer programs -- which now enroll nearly 200 million customers -- are the largest, and most brazen, commercial bribery systems ever -- rewarding the deep-pocket elite and neglecting, overcharging, and abusing most everyone else.
Frequent flier programs have become a second national currency, and today, more miles are earned from non-flight activity than from flying. For example In 2012 American Airlines issued more than 185 billion miles to credit cards, and other partners -- 62 percent, raising the price of everything we buy by 1 or 2 percent.
More than 17 trillion miles (and points) are circulating through the stratosphere, according to Conde Nast Traveler, and at a rough exchange rate of 1.5 cents per mile, equivalent to a $255 billion liability.
The hidden agenda is to pay off the business traveler personally into spending the boss's money with one airline rather than with another.
If the purchasing agent of a firm were to accept a free vacation in return for selecting a certain vendor for a large purchase, he would go to jail for commercial bribery.
But ethical niceties don't apply when 200 million people are on the take. More than 40 million frequent-flyer tickets were issued last year. We have become a nation of frequent-flyer junkies, as I have written. Nearly 50 percent of households participate in one or more of these loyalty programs. People choose their breakfast cereal based on what miles they can earn. There is no underestimating the power of human greed.
For starters, a kickback is built into the price of each and every ticket or credit card purchase. Everyone pays more. But while that once-a-year vacation traveler seldom earns enough points to get a free trip and thus loses the benefit, the elite flyers always end up winning. More than 40 billion miles expire annually never to be used.
Second, frequent-flyer programs cost companies $8 billion per year in fraud and unnecessary travel. Corporate travel managers go crazy when their negotiated lower fares are ignored by business travelers who refuse to go along because they won't earn the right type of frequent-flyer miles. Employees are often more loyal to their frequent-flyer program than to their employer.
Delta's new loyalty program rewards will persuade travelers to make even more "irrational" higher priced decisions to get more miles. One survey of frequent-flyers on Flyer Talk revealed that 24 percent admitted taking unnecessary trips to get extra miles. Estimates of waste caused by abuses come to 8 percent of annual travel expenses.
Third, these programs cost the U.S. Treasury billions of dollars per year in unpaid taxes from the wealthiest people in our country. The Internal Revenue Service had been considering regulations to treat frequent-flyer benefits as taxable income. But so far, even as we drown in record deficits, politicians have not had the guts, or political clout, to levy a tax on such a widespread entitlement. Such a tax is only fair, since most middle class Americans pay taxes on all other dividends and bonuses, while an affluent elite flies for free.
Even frequent-flyers themselves recognize ethical dilemmas. Frequent Flyer Magazine polled readers, and 35 percent of the respondents -- the obvious beneficiaries -- saw the programs as unethical. Another third said they would gladly trade points for better service and cuts in airfare.
In this new class system, VIP flyers are rewarded with special favors and treatment including: free flights, expensive vacations, upgrades to First and Business Class, distinctive 'select' check-in lines, priority seating on sold-out flights, early boarding, special seats, and other goodies that the rest of us can only dream about.
It starts when they want to book a flight. There are secret phone numbers for "Gold" and "Platinum" and "Infinite Elite" members. They are blessed. The rest of us have to deal with constant busy signals, impersonal computer voices telling us to punch an endless series of different buttons, one after another, only to be left on infinite hold or, worse, looped back to where we started.
Elite members, on the other hand, get their calls answered right away by human beings who greet them by their name. For the blessed, flights are never sold out. These upper castes always get their reservations booked; even if more seats are sold than exist on the plane. Somebody else can get bumped. They never get squeezed into a middle seat. Airlines save 10-20 aisle seats and "Even More Space" seats per flight for its premium flyers and, on many flights, upgrades them to First Class for a nominal fee or for free.
Airlines send upgrades to all their premium frequent flyers and many airlines block off adjoining seats so that the elite are not forced to rub shoulders with the masses.
At any gate or check-in line, frequent flyers wave around their platinum, gold or premier cards that distinguish them from the hoi polloi. If flights are cancelled or delayed, as is happening more and more, the airline gods -- sophisticated mainframe computers -- identify the "chosen people" according to carefully calibrated mileage totals. Road warriors always get first crack on the next available flight.
Now these elite travelers will be earning twice as many miles per flight as the rest of us. Who said life was fair?