Q&A: United's Mileage Plus chief answers your frequent-flier questions

CHICAGO -- USA TODAY's Ben Mutzabaugh recently sat down with Graham Atkinson, the president of United Airlines' Mileage Plus frequent-flier program. Atkinson also agreed to a take questions submitted by Today in the Sky readers.

The Q&A session kicks off today, with Atkinson touching on subjects like the double elite-qualifying-mile promotions currently being offered by most big airlines. Come back Monday afternoon for our next installment.

Ben Mutzabaugh:Thanks for sitting down with me today to answer a few questions for our Today in the Sky readers. Our readers have submitted some great questions for you, but before we get to those, is there any upcoming news that people might be able to read about first in Today in the Sky?

Graham Atkinson:Well, we've always got things in the works.

I was appointed to this new role in October of last year as the president of Mileage Plus. And we already had program changes for 2009 well in the works, so I don't take credit or deep blame for any changes we made this year. But more seriously, one of the rationales for my appointment and one of my first assignments was to take a step back and look at our program in the context of its competitiveness as one of the legacy airline programs. But also to more broadly to think about what is a loyalty program in the wider sense, given that the competition is changing and is increasing.

We're very conscious of that and we've been doing some pretty interesting work over the last three months to take a view on that. Out of (that) is coming, I'd say, some interesting ideas that we're certainly not ready to talk about yet, but I think people should be very reassured that we see this (Mileage Plus) as not only a very important asset for United, but a very important and valued benefit for customers. That may be a statement of the obvious, but (it's an area where) we believe there is more opportunity if we do good hard work and listen to the customers and give them what they want.

Mutzabaugh:So stay tuned?

Atkinson:Definitely stay tuned. Some of the ideas that are beginning to ferment, I think, are quite interesting.

Mutzabaugh:Let's start with the double-elite-mile qualifying offer, where customers can earn miles that count toward earning elite status twice as fast. That's not an unusual offer for airlines, though such offers usually don't come until the end of the year. US Airways started off this year's round early – in February – and now every big airline pretty much has their own elite-qualifying offer out there. What is the goal for the double elite-qualifying-mile (EQM) offer? Is it to stimulate demand? Is it to lure business travelers who are booking anyway, but maybe not with United?

Atkinson:There's actually two things going on right now. There is a story to tell on the accumulation of miles side and there's a story to tell on the redemption of miles side. The "earning" and the "burning," as we call it in airline jargon. Both … have been somewhat predicated by the state of the market. And both of them are teeing up pretty interesting and exciting opportunities for customers to be able achieve things – either in terms of an aspirational trip or in terms of reaching a tier and level in which they might not have expected to (reach). Or, indeed, to your comment, given the cutbacks in travel budgets (it may help existing customers) to maintain status that they were afraid they were going to lose because of the decline in travel budgets.

So, on the EQMs and accrual side, there obviously is an element (where) we clearly don't want to lose valuable frequent fliers when the market is in a slump. So it's a combination of a maintenance of our customer base. We are able to apply a sort of "thank you" to customers for loyalty given and an incentive of waivers that there's actually an opportunity to get to an elite tier that they didn't have before. So I'd say there's an element of offense and defense, in terms of that, driven by market dynamics.

On the redemption side – the flip side of that coin – because demand is down, we have more empty seats on the planes than we would normally have. And the dynamics of that has enabled us to spend quite a lot of time focusing on how we can improve the seat availability and play with promotions.

That gives a chance, first of all, to offer a great value proposition to customers at a time when people are wanting to save money and a free flight somewhere maybe means the difference between taking a weekend away or not. And secondly, it allows us – very appealingly – to test concepts and see what actually stimulates people to redeem awards … and (to learn) for the future as to how we might meet customers' interests and wishes in the future. It's filling empty seats that we might have in excess right now, but it also gives us a chance to experiment from a marketing and research perspective as well.

Mutzabaugh: That brings two questions to mind. First, while a lot of United frequent-fliers are excited about the double-EQM offers, there are others that are concerned the promotion will swell the ranks of elite-level fliers and dilute those elite-level benefits by making it harder to redeem upgrades or secure Economy Plus seats since there will be more elite customers vying for them. What would you say to customers who express that concern?

Atkinson:As a matter of course, we run promotional offers every year – particularly toward the end of the year for people who are approaching a tier, to encourage them to continue to fly and indeed get a better experience the following year (by hitting that tier). And, you're right: This has come earlier in the year. There's no question about that because of market dynamics. But, at the end of the day, it's a judgment call. The last thing we want to denigrate experience and the reason that people aspire to Premier or Premier Executive status.

At the same time, we are living in a world where – all other things being equal – fewer people will qualify for elite status this year because premium travel is down. The two go together: that if fewer are people flying, you will have fewer elites at each tier. So we're trying to manage that dynamic. The intention is certainly not to water down or otherwise denigrate the experience people are striving whilst, at the same time, acknowledging that times are tough for people.

I've had many e-mails from people thanking us for the promotion, because many people … are saying: "I was really going to struggle this year because travel budgets are tight and my travel manager has told me to use conference calls instead of travel. (Now) this enables me just to get from (22,000 elite-qualifying miles) to (25,000) or (from 47,000 elite-qualifying miles) to (50,000 miles).

Mutzabaugh:So it's safe to say, based on what you've said, that with what you're seeing from early numbers this year, any increase in elite qualification from the double-EQM offer will offset the fewer number of fliers you expect to qualify normally in 2009? At least at this point…

Atkinson:I would say, conceptually, that's right. I mean it's very difficult to measure customer behavior before they've actually demonstrated what they're going to do. But that's the concept. We don't anticipate a bow wave here that's going to cause dissatisfaction down the road. Obviously, we do look at it as we go through the months of the year and we manage it accordingly to make sure.

At the end of the day, my goal is to have what we call a healthy program. A healthy program is where people are motivated to earn miles and they have lots of options to burn the miles. If you lose sight of that virtuous circle – either immediately or over time – you will either cause customers to leave and go elsewhere or you will create a program that is unbalanced.

Mutzabaugh:This also piqued my curiosity. You say these promotions give you a chance to experiment with some ideas to see what works and what doesn't. Are there any in particular that you've tried recently where the results were better than you expected? Or, maybe on where the promotion didn't do as well as you had expected?

Atkinson:Every experiment teaches you something. Sometimes it's just that it doesn't work. But it's more interesting when you see a change in behavior.

This may sound like "Marketing 101" to your readers, but what we've found is, when we (recently) tested reduction-in-redemption offers (award tickets with reduced mileage requirements – such as a 25,000-mile award ticket for 20,000 miles), the offers are hugely leveraged around how you communicate them. Whilst one may assume the customer base has perfect knowledge and that if you put it on the website that people will find it, we've actually found that the timing of communication (and) the vehicle of communication (e-mail, mail or PR) is hugely leveraged in terms of the success that you see.

As we've tried different communication vehicles, (we've) seen literally (the) take-up of various offers spike. You can have great offers that don't sell because you're either trying to sell them to the wrong people or at the wrong time or not effectively. And you can have mediocre offers that have sold excellently and turn out to be very profitable.