Surprise! Airlines offer more reward seats despite flying at higher capacity

http://travelkit.msnbc.msn.com/_news/2012/05/17/11748079-surprise-airlines-offer-more-reward-seats-despite-flying-at-higher-capacity?lite

By Tanya Mohn, msnbc.com contributor
A new report has some promising news for prospective travelers: overall reward seat availability has improved in recent years.

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Twenty-three frequent flier programs were analyzed based on reward availability for travel dates spanning from June to October 2012, and showed steady improvement compared with the two preceding years, according to the 3rd annual Switchfly Reward Seat Availability Survey (PDF). The average availability score for the airlines surveyed in the current report is 70.9 percent; in 2010 it was 65.8 percent.
The report was released on Thursday by the IdeaWorks Company, a Shorewood, Wis.-based consulting firm for the airline industry.
Budget airlines, as in past years, were found to be the most generous, offering the best reward seat availability. Six low-cost carriers in the survey averaged 93.5 percent reward availability, significantly higher than the 62.9 percent calculated for the other 17 carriers. British Airways and United Airlines improved the most among the major carriers, compared to last year, according to the report.
Also notable is that Air Berlin, Southwest, and Virgin Australia placed in the top six for all three years of the survey. And both Air Berlin and Southwest share first place this year, with outstanding 100 percent scores, as every flight queried in the survey provided seats at the saver-style reward level.
Jay Sorensen, president of IdeaWorks, said he thought much of the improvement was due to competition from credit card companies, which also offer award seats. “I think frequent flier programs have reacted to that by generally offering a broader array of award availability,” he said, and noted a move toward calculating awards based on how much consumers spend rather on how many miles they have flown.
Both Southwest and JetBlue awarded seats based on the amount of money customers had spent. The carriers’ seat availability improved compared to the previous year, and both ranked high in terms of seat availability, 100 percent and 86.4 percent respectively.
“The industry will go to this system more in the future, because it makes more sense. It’s a more precise measurement of the customers’ value to the airline,” Sorensen said.
To industry insiders, the report’s overall results were seen as a positive for consumers, but with some notable caveats. The news was also somewhat unexpected.
Tim Winship, publisher of FrequentFlier.com, a website and newsletter that provides information and advice for people who participate in travel reward programs, said he was surprised by the uptick because in recent years the airlines have been flying at historically high levels -- at about 80 percent full when the norm previously had been about 65 percent.
“What that means is fewer unsold seats for frequent flier members,” he said. ”But what I’m guessing here is that the airlines are dealing more efficiently with higher load factors and being more successful finding a balance,” filling planes with customers who buy tickets and those who seek frequent flier seats.
He noted that both United Airlines and AirTran Airways had significant improvements, up 15.7 and 40 points respectively, suggesting that management in both cases made the decision to free up more frequent flier seats. “These sorts of things don’t just happen,” said Winship, who said he was surprised to see American lose 17. 2 points. “They’ve been among the better carriers historically,” he said. “This is a bit of disappointment,” he said, attributing it possibly to the carrier’s bankruptcy issues.
Henry H. Harteveldt, a travel industry analyst and co-founder of the Atmosphere Research Group, a market research company, said: “I think that it is good news for frequent fliers because it looks like many airlines are trying to do a better job serving members,” noting in several cases there were major improvements.
“It’s encouraging because the airlines have been reducing capacity, so you’d think it’d be more difficult, not easier,” to find free seats, he said.
Delta’s performance, which has been at or near the bottom of the survey in the two previous reports and this year received the lowest ranking, was viewed somewhat differently by Winship and Harteveldt.
“I am shocked that they are yet again at the bottom,” said Winship. “That is pretty awful because Delta makes a show publicly of putting a lot of strategic emphasis on its frequent flier program.”
It's not necessarily a bad thing, Harteveldt said. “Consumers have to remember that at the end of the day, airlines only make money when they sell tickets. The challenge for airlines is what balance to strike. They walk a financial tightrope,” he said.
Winship noted that Delta, US Airways and American -- three of the big four domestic carriers -- were below 50 percent availability. "I think it is fair to say that while there has been some modest improvement, for the majority of U.S. travelers, the issue of award availability is still very much a problem."
"While there is a little bit of good news here," he said, "I don't think the overall story is an optimistic one."