Wow, maybe I should care more about WOW Air as I stare down the barrel of the future of loyalty programs.

Disclaimer: We’re dealing with a political situation that makes it borderline crass to talk about first world problems like which first class is best or how to avoid <GASP> flying in economy when there are people who would strap themselves to the wing of a plane just to find refuge in this country if they could. That being said, I also believe that people can think about more than one thing at once, and that me writing about luxury travel and capitalist trappings like credit card loyalty programs is not going to trade off with the volume of necessary journalism devoted to covering current events. However, I would encourage you to support organizations that help refugees, the ACLU, or independent journalism outlets such as the New York Times, Washington Post, or The Guardian, all of which need all the financial support they can get right now. Finally, if you didn’t come here to hear about my politics, then leave, because I’m not going to hold back just because “this is supposed to be a points and miles blog.”

Interesting news today that WOW Air is going to start offering a premium cabin of sorts, kinda like Norwegian already does. It sounds like it’s going to be fairly nondescript 2 x 3 x 2 seating, but that will still make a huge difference on a long flight like the West Coast to Iceland. I’ve flown Norwegian’s premium class, and I loved it. I still maintain that their food is better than what I had from “real” airlines like Delta and SAS, and the seats are about as comfortable as you can get without being flat beds. At 37 inches of pitch, WOW’s seats will be much closer together than Norwegian and more akin to generic domestic first class, but that’s still pretty good given that I expect fares to be lower.

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I don’t have a picture of Norwegian’s premium cabin, but this is what Greenland looks like out your window.

And here’s why I suddenly care: I’m convinced at some point that all mileage programs are going to go revenue-based on the redemption side. Part of this might just be me catastrophizing, in that I now have this thing I love, so I invent scenarios in which it gets taken away from me. However, chart-based redemptions offer too many sweet spots where you can get outsized value, and if there’s one thing revenue management departments love, it’s picking off opportunities for customers to get too much value for too little cost. There are times when business class costs approximately 2x what you pay for economy, but there are also times when it’s much higher than that (and other times when the two cabins are surprisingly close in price). The point is that airlines are giving up an opportunity to maximize revenue by fixing the cost of an award seat when its cash price is variable. The opportunity to achieve outsized value may be something the airlines are comfortable offering to their customers in exchange for their loyalty, but if we’ve learned anything in the past few years, it’s that airlines are even more comfortable rescinding perks if they think it’s going to save them money. I also considered that maybe airlines are satisfied with current charts because points have no fixed value, so only the savviest swath of customers redeem points for “what they’re worth,” while the majority redeem for a free flight whenever they have enough points, regardless of the return. However, it seems like the programs could just price that in when they determine the fixed value of a point. (And if they get it wrong, the could always pull a Southwest and change the value.) Delta’s already doing that, and all signs point to them revaluing Sky Miles at $.01 sooner or later. In the end, it seems like chart-based award programs are holdovers from a past era of loyalty, and now that planes are suffocatingly full, there’s an opportunity to steamroll the revenue management quirks presented by traditional loyalty programs without losing customers. And when a few programs do it, people will flock to the programs that don’t, and then those programs will have no choice but to devalue their charts due to the sudden influx of new members trying to redeem miles. It’s all doom and gloom I tell you!

What does this have to do with WOW air? I’m glad you asked. Here’s my point: I consider the cubic-zirconia business classes you see from Norwegian, WOW Air (pending), and even Spirit’s Big Front Seat as my ace in the hole when chartmageddon happens. See, I hate flying economy. I do it if I have to (after all, I’m not made of money over here, at least not until the sweet sweet affiliate marketing revenue starts pouring in), but I really dislike it. Part of it is that I’m severely claustrophobic (almost literally being buried alive in a building collapse will do that to you), and economy seats make flying an exercise in anxiety management. Another part of it is that I’m not a small man, and while I don’t have spillover problems into the seat next to me, an extra couple inches of seat width makes a HUGE difference. I can tell you that I’m so much more excited to take trips when I know I’m flying in first class. It has made an enormous difference in my desire to travel overseas, and when I do travel, it has turned the flying into a fun part of the vacation rather than an ordeal that must be endured. If my business class gravy train is going away due to award charts all getting nerfed, I’ll at least have reasonably priced alternatives to fall back on. And again, they won’t be as good as what I get to enjoy now, but they’ll be better than economy, which is all I really need in order to be happy.

The task then becomes switching my points earning strategy to focus entirely on cash back, and using that cash back to buy reasonable premium fares on ULCCs rather than banking miles and trying to redeem them for saver business class awards. It gives me some comfort to know that I have fall-back options just by changing up my strategy, and that I’m not dependent on the airlines’ generosity vis à vis award redemptions. Additionally, the optimistic side of me hopes that business class fares will fall similarly to how domestic first class has fallen here. Rather than an upgrade perk for elites and a massive splurge for everyone else, it’s a modest price premium. That’s fine – with a good cash back strategy, it’s still attainable for someone like me who can’t afford to buy the seats outright. And it’s already starting to happen a little bit, especially on British Airways. Last summer, there was even a window of time when Air France business class was $100 more each way than Air France economy. It’s fairly rare, but I would imagine that you’ll see a lot more price flexibility in business class if airlines aren’t still required to exchange award seats for pre-set amounts of miles.

Who agrees with me? Who thinks I’m a fussbudget who should get over myself and fly economy like the rest of the world? What’s your take on the future of loyalty? Break out the Tarot cards!

3 thoughts on “Wow, maybe I should care more about WOW Air as I stare down the barrel of the future of loyalty programs.”

  1. It will be interesting to see what happens with Alaska over the next year or two. Seems like they are among the last holdouts on the revenue based earning side.

    Personally I would be shocked if the major players all went revenue based on the redeeming side. The aspirational redemption is still a big draw. The actual costs are still easy to control — just make award space virtually nil like AA has.

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  2. I’m with you. I simply refuse to fly longer than 2 hours in economy. And until I got into miles and points, I refused to fly internationally because biz (let alone F) seats were ridiculously expensive.

    But I don’t understand why airlines price biz seats at such a huge premium. Why not offer economy service but add biz lie flat seats for the marginal extra cost? If my seat requires 50% more room, charge me 50% more than economy. If it’s 100% more space, charge 100%. But don’t charge 2+x more. Airlines could cut flight staff since fewer passengers in same space, while generating the same revenue. Fewer passengers means faster boarding/more overhead space/fewer meals. Airlines would potentially make higher profits.

    Liked by 1 person

    1. The problem here is that there are fixed costs to running an aircraft that don’t scale with the number of passengers. Cutting the number of seats in half would require prices to be more than twice as expensive due to the fixed costs.

      Plus, airlines aren’t going to cut prices when they can find takers for business & first class at the prices they’re currently offering. They’re incentivized by profit to raise the cost for those seats as high as possible while still maintaining full capacity.

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