That perfectly illustrates the distorting effect of frequent flyer programmes. In many cases, employers are paying the bills and individuals reap the rewards of the individual frequent flyer benefits. These customers do not behave like normal customers. They continue to fly even if the price is not the lowest or if the customer service is not up to scratch. This has a highly distorting effect on the market, and changes passenger behaviour. The airlines know this... they do not have to provide good service, or even the lowest prices to attract the passenger. The passenger perceives that they are getting something for nothing by collecting miles and the bills are paid by the company. This is bad for everyone, inhibits competition and acts as a barrier to new entrants to the market. That is why the airlines have these schemes. They are nothing to do with "rewarding customer loyalty".
If only all countries were as sensible as the Norwegians, who have banned their domestic airlines from awarding frequent flyer miles for any internal flights, such is the market distorting effect of them.
|