The Tale of My Demotion

The Tale of My Demotion

James R. Rosenfield

May 2003

I have been demoted.

As of today, I have 5,157,138 miles on American Airlines. Flying on airplanes is not all glamour, as you might have noticed, even before 9/11. As a reward for the slings and arrows of outrageous travel, I have for some years occupied the top tier in the American Airlines AAdvantage hierarchy, Executive Platinum.

Today I received a letter, out of the blue, downgrading me to mere Platinum:

"Dear Mr. Rosenfield:

"During the past year, you have enjoyed membership in our AAdvantage Executive Platinum program. Unfortunately, your qualifying flight activity during 2002 has not enabled you to retain your Executive Platinum status. Consequently, as of March 1, 2003, you will become an AAdvantage Platinum member."

This calls for a few observations, about loyalty/frequency programs in general, and about my response to this specifically.

Thomas Edison once said it's much easier to get into things than out of things, and the airlines have learned this to a fare-thee-well. After 20 years of frequent flyer programs the big U.S. carriers have ended up exactly where they started, but with an extra and enormously expensive superstructure.

In the old days, United, American, and Delta, the three largest, flew the same planes to the same places at the same prices with the same bad food. They're still doing it, except it costs a lot more now because of the frequent flyer programs. (As a result of general and ongoing mismanagement, United has already declared bankruptcy, and American, at the time of this writing, is about to.)

There's something wrong with this model. But they can't get out of it. If any large airline unilaterally disengages from its program, it will spend its few remaining dollars on class action lawsuits, as its market share collapses completely.

Southwest Airlines is the only successful large carrier in the U.S., and it uses a different, simpler model. It flies just one kind of plane, it offers only one class of service, and its Rapid Rewards loyalty program gives you a free ticket if you fly 8 times within a 12 month period, with no restrictions on flights as long as there's a seat available. Compare this with the other big airlines, where you need cabalistic expertise just to figure out what you qualify for.

I wish an economist would calculate the estimated cost to American business of the time employees waste trying to figure out what rewards they've earned, plus the cost of unnecessary trips taken to ascend to the next tier or go on that long-desired vacation. Would it be $250 million a year for 20 years, a cool $5 billion? I should think that's conservative.

Loyalty programs provide ample argument for the law of unintended consequences. No one dreamed these things would take on a life of their own to such an extent. And no one even knows if loyalty programs really have anything to do with loyalty.

Why, you might ask, do I have so many miles on American Airlines? It's not because it's a great airline, there's no such thing aside from Singapore. It's because of necessity. I live in San Diego, but my U.S. working life revolves around New York. American has historically been the only airline with nonstop flights between San Diego and New York.

Anyone who figures out how to differentiate customers by loyalty versus bribery or necessity will make a fortune. To me, true loyalty is characterized by a willingness to remain a customer even if the company has done something wrong. There's an important proviso, though: The problem has to be fixed quickly and expeditiously. Therefore, the importance of good customer service, a rare commodity indeed in 2003. Whatever true loyalty there might be now gets squandered in endless phone queues and misbehaving web sites.

What did I get with my Executive Platinum status?

Well, relatively painless 1st class upgrades were pretty good. And when things went wrong the airline kind of took care of me. Flying to Europe not long ago our connection from San Diego landed too late in Boston. Several people met us at the gate, handed us new routings and tickets, took us to a special lounge, and withal treated us royally. They even promised that our checked luggage would get special handling.

Special handling, indeed. When we finally arrived in Paris, our luggage did not. It was more than 48 hours before our bags got there, a long period punctuated by lies, indifference, and surliness on the part of American Airlines, both in Paris and in the U.S. So much for the kid glove treatment.

And no one, not even if you're king, is going to be treated well by the contemporary U.S. flight attendant. I enjoy a glass of wine or two when I fly, but not if it's swill. Flight attendants gave me such grief about wanting to know the brand of wine that a few years ago I found myself saying, "Gee, can you tell me the vineyard, there are certain wines I can't drink."

They interpret this as a health issue, and become more cooperative. But here I am, an experienced traveler, a supposed man-of-the-world in his later 50s, sitting in 1st class, having to play a game in order to find out the brand of wine!

How did I respond to my demotion?

I wrote a letter, which I'll share with you. The letter, I think, pinpoints some ways to do this better. (Just about anything would be better than the way they handled it.)

"Dear Mr. Garton:

"I was deeply disappointed the other day when I received a letter demoting me from Executive Platinum to Platinum.

I feel that American Airlines is not reciprocating my loyalty over many years. I am a Charter Member, I believe, of the AAdvantage program, and have, as of today, a total of 5,157,138 miles.

"Both as a customer and as a marketing professional, I feel that your treatment of me is exceedingly ill considered:

--Should you not have alerted me prior to your letter dated February 2003 that I was in danger of not qualifying for Executive Platinum?

--Should you not give me some sort of opportunity, whether by purchase or other means, of re-qualifying?

--Should you not at least make me Executive Platinum Emeritus for a year, with all the privileges appertaining thereto, rather than just demoting me, with a thud?

--Should you not consider that senior executives like me, having traveled ceaselessly for several decades, ultimately reach a place in their career and life cycles when they travel less, but, importantly, have more influence than ever before?

"Mr. Garton, I realize that American Airlines has enormous problems. But perhaps one reason you have enormous problems is highlighted by the points I make in this letter.

"At the very least, I hope to get a response from you.

"Sincerely,

James Rosenfield"

Wanna make a bet?

What do you think they'll do?

--Give me back my Executive Platinum status?

--Contact me with further explanations and an apology, plus give me a few upgrades as a palliative?

--Ignore me completely?

My money's on the latter. I'll keep you posted.