Why Elite Status Matters More Than Ever

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The airlines' sprawling mileage programs have seen better days. Due at least in part to the widespread perception that awards are in ever-shorter supply, travelers are increasingly shunning miles in favor of lower ticket prices.

But there's one aspect of the beleaguered schemes that has bucked the downward trend, gaining value even as travel generally, and loyalty programs in particular, have been downgraded in the public's esteem.

Elite status is the jewel in the very tarnished crown of loyalty marketing. If anything, its luster has been enhanced by the continuing travel slump and its aftereffects.

In fact, elite status has increased in value precisely because of two factors that go hand-in-hand with the travel slowdown: fuller flights and higher fees.

The Coach-Class Crush

Load factor is the industry measure of occupied seats expressed as a percentage of available seats. Airlines seek high load factors, and their stockholders applaud them. But the higher the load factor, the lower the comfort quotient for fliers.

The airlines' response to slumping demand has been, naturally, to cut back on flights, offloading 7 percent of their capacity during 2009 alone. But the flight cuts have outpaced the decrease in fliers, resulting in historically high load factors.

US Airways just reported its highest-ever September load factor. Its mainline flights were 82.1 percent full for the month. And year-to-date, the airline flew 82.6 percent full.

American flew 80.1 percent full in September, up from 79.4 percent a year earlier. For the first nine months of 2010, the airline averaged 82.0 percent.

Delta's load factor was 82.5 percent for the month, and 83.6 percent for the year-to-date.

And United's load factor was 83.7 percent, both for the month and for the first nine months of 2010.

Before the current travel slump, such lofty load factors were achieved only during the peak summer travel period. But if the airlines can continue to exercise restraint in adding back new service—and they've made it clear they intend to do so—packed planes are the new normal.

So today and for the foreseeable future, with coach-class comfort at all-time lows, a spacious seat up front is the only antidote to cattle-car claustrophobia. And because upgrades are the featured benefit of elite status, status itself is more pursuit-worthy than ever.

Far From the Maddening Fee-for-All

A second byproduct of the travel slowdown has been the airlines' imposition of a-la-carte pricing (see SmarterTravel's fee chart), widely derided by travelers as nickel-and-dimeing.

Those nickels and dimes add up.

During 2008 and 2009, U.S. airlines snagged around $7.9 billion in revenues from baggage fees and reservations change and cancellation fees, even as they suffered operating losses of $4.4 billion. While the International Air Transport Association is projecting a $3.5 billion profit for North America carriers in 2010, no one expects the fees to be rolled back.

Elite status doesn't guarantee completely fee-free flying, but it does protect elite program members from a wide range of fees, including several of the most common ones.

Among the largest programs—which tend to set the standard for the industry—American, Delta, and United all waive the fees for at least the first checked bag, saving elite fliers around $25 per flight. Over the course of a year of business travel, the savings can really add up.

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