Loyalty programmes and how they distort traveller behaviourBack to Forum
Good piece on in our sister magazine Buying Business Travel looking at how loyalty programmes distort traveller behaviour – from the travel buyer perspective.
Loyalty programmes and how they distort traveller behaviour
The biggest bugbear for managers is that loyalty programmes can lead to executives booking higher priced air tickets and room nights. The fact is the cheap seats don’t cut it when it comes to points – and more points mean more prizes.
“This can lead to travellers gaming the system whereby they book late to ensure they end up with the last seats at the higher prices and more points. Believe me, this does happen,” says Knights. “I believe this is akin to fiddling your expenses; you are actively doing something to cheat your company. It’s as serious as that.”3 Feb 2018
Well ofcourse thats the purpose to the company. Look at any airline/hotel programme and they’re persuasive since many bookings can’t use their offers.
All US majors and QF and probably EU airlines get a substantial income from their loyalty programmes.
Sometimes an airline sells their loyalty programme and its usually worth in excess of a billion dollars!3 Feb 2018
Makes sense however what are the incremental expenses if there is no hotel lounge for breakfast, snacks and drinks? buying on board vs free? pay for luggage vs included? airline lounges vs airport purchased food? Early flight booking vs cost of change (meeting dates change!). These should be accounted for I believe.
Corporate travel would sometimes try to put you on a cheap flight from Stanstead (saving £50) even though it would cost you £80 extra to get there (+time). They would also put you in a cheaper hotel that requires a taxi ride to and from the office rather than a short walk.
Until corporate travel understand the end to end dynamics of business travel, both from a time constraint and total costs perspective, this will continue to be a challenge.
Deep analytics on travel purchase / expenses behaviours could potentially help companies negotiate better contracts based on staff behaviour and balance the books whilst making staff happy.4 Feb 2018
Both the loyalty schemes and employer own the traveller, for different reasons. As the article suggests, getting the loyalty schemes and employers aligned is no easy task – with cost and loyalty colliding. From experience, the employer rarely wins in the end.4 Feb 2018
I was disgusted by the selfish behaviour of one of my ex-colleagues who, when there was a business trip in the offing, would spend hours looking up flight and hotel options and work out how many loyalty points he’d accrue and how much he’d earn in per diems. As we had some autonomy of choice, he would then decide whether or not it was ‘worth his while’ to go on a business trip or not. If it was, he would go and brown nose his boss, and if not he would magnanimously ‘sacrifice’ it to one of the others on the team.
Fortunately his manager saw through it, consequently I got most of the best trips, my definition of ‘best’ being interesting places or challenging projects rather than the ‘points’ I could accrue.
He was a greedy little sh1t but we got some revenge when he ordered through one of the loyalty scheme redemption shops a big hamper of ‘delicacies’ including foie gras, a substance which should be banned. It was delivered to the office as he was away on a business trip, so I had it left on the window shelf in his office in the sun. I suspect it may not have been in the best condition when he retrieved it. He came into my office on his return and asked : “What ****** left my hamper in the sun for two weeks.” I just grinned at him.4 Feb 2018
I’ve said before that frequent flyer miles should be treated as benefit in kind by HMRC for taxation purposes. It is businesses that should accrue the benefits of FFPs for business travel.5 Feb 2018
I had this discussion recently with a friend who has an interest in the matter as he’s an accountant. The challenge is to attribute a value to the ‘miles’ since there are so many variables depending on how and when they are redeemed. It’s the old ‘how long is a piece of string’ story.5 Feb 2018
HMRC are clear that airmiles which arise directly to the employee as a result of travelling are not benefits in kind, whereas airmiles purchased by a company and used as incentives are.
That seems fair enough to me (note I am not an employee, so have no dog in this fight).
The point being that the airmiles are incentives from the supplier, not the employer.
Here’s an HMRC page with some more details5 Feb 2018
Many moons ago we used to have several sales people that would constantly be on the road, clocking up a lot of points.
For airmiles if someone wanted to use their points for business travel we would reimburse them the cost of the ticket in their salary as a bonus, it then getting taxed as income.
As for choosing the most expensive options to get the most points, we set a budget on all our trips that’s close to discounted fare rates, nobody can go over that without my authorisation6 Feb 2018
I must be one of the few people in my company that never, ever expenses for ‘meals and drinks’ at airports. BA Gold, so I avail myself of the lounges. I reckon the company benefits there, and I’d be severely miffed if the points went to the company, considering the sheer bloody angst I occasionally suffer with delayed or cancelled flights. Sorry Bath_VIP, but there it is. In any case, if I can score a decent deal in J, I’m happy to pay the extra myself because I’ve done the maths, and it’s worth it, over a year.
So how would you divvy up the frequent flyer miles in a case like that?6 Feb 2018
So I agree with you TiredOldHack2 I would be well p1ssed if someone from the office decided to take away the one upside from the amount of travel I do for them..
I also book Y tickets but will book them with a reputable airline in most instances SQ here, but if the cost is outrageous I will use other airlines and suffer the consequences (MH and the amount of times they cancel flights) If I want to travel in another cabin I pay the difference and happy to do so, I am travelling a lot to Tokyo currently and happy to pay the $200 upgrade for PE flight and am flying to Barcelona next week for a conference and have done the same
This is my business and I have to make the right decisions for the company, but all airmiles and points in hotels come to me for recompense and when I employ staff they will also benefit totally
Most of these articles are written by and agreed by people who never leave their desks!12 Feb 2018
Most of these articles are written by and agreed by people who never leave their desks!
And most travel policies are written by people who never leave their desks either.
As I have said here before, everyone who imposes a policy should be forced to comply with it non-stop for a week. So the idiot who says that flights up to five hours in duration should be in economy (as was the case in my most recent former employment), who has presumably made the assumption that this will be a domestic US flight with no need for immigration or customs and the ability to stroll up to the airport counter half an hour before departure, should instead be forced to made a 4h55 international flight every day in an economy seat, complete with having to travel to the airport by public transport to get there at least two hours before departure to face enormous queues to check-in, ditto at security and quite possibly at immigration as well; then have to go through the reverse process at the other end and then – and here is the killer – have to do an entire day’s work in their hotel room every night because they can’t work on confidential documents in the public areas of an airport (no lounge memberships permitted at the company’s expense!) or in the confines of an economy class seat.
And, as I said, they should be forced to do this for a week, straight. Which also means they will have to survive on the miserable F&B allowance, stay in the cheap hotels mandated by the company (often far away from where you actually need to be), and without reimbursement for laundry.
Oh, and get put on whichever airline the company’s moronic travel managers decide regardless of elite status just to make it even less likely that lounge access or upgrades will be available, and at possibly inconvenient times.
Perhaps then they will think “Gosh, a five hour flight can actually take ten hours door-to-door, and then someone still has to do 8 hours (or more) of work, add some time for meals and that means – wow, only four hours sleep a night, plus jetlag!”.
The most moronic travel policy of all was introduced on the run-up to Christmas, only for my department, and said that prior approval had to be obtained before taking any company equipment overseas. Since they didn’t allow email on personal devices, this meant either (a) being completely out of contact while away, or (b) getting approval for holidays.
So I duly applied, setting out all my upcoming holiday plans for the coming year. No reply. I send a chaser. No reply. I query the policy, and am told that this was a company-wide policy implemented for compliance reasons. So I checked with Compliance in my own office (the Asian regional hub), who hadn’t heard of it. Nor had the heads of Finance, Operations, Tax, the COO’s office or anyone else I asked. I reported this back to my own department’s compliance group back in HQ (who had imposed the policy). Surprise surprise, no reply. So I went on my holiday, and left an autoreply saying that due to departmental policy I was unable to take company equipment with me overseas and would accordingly be uncontactable.
Unsurprisingly I get back after my holiday to irate emails from the group head complaining bitterly about how much trouble I had caused, since my autoreply had generated multiple complaints to the department. So I explained that I felt I needed to explain why I was out of contact, that I was not going to take the blame nor was I going to break policy just for other peoples’ convenience when I had applied for permission on multiple occasions, so tough. This did not go down well. In the meantime, since I suspected including multiple trips on one application was the reason it hadn’t been processed, I submitted multiple applications, each for one trip. Hey presto, a result! For my first trip – to Phuket – I got a reply! Saying I wasn’t permitted to go to Phuket, only to Bangkok, and that I had to stay in one of three approved hotels. You can imagine my patience was feeling somewhat tested at this point. Not long after my detailed reply explaining why these restrictions were completely unacceptable and saying that if they tried to impose them I would simply refuse to take corporate equipment with me, would again be uncontactable, and would use the same autoreply, the policy was reversed.
You couldn’t make it up!!13 Feb 2018
I hear you Ian, or the next best one I have had to endure not too long ago, flying with a VP of the business on a 9 hour flight, he went Business and I had to go Economy but he was expecting me to do the lions share of the work when we got to our destination and then had the brass balls to tell me he was tired….
On the flight back I told him that I would never travel with him again and if I did so I would take a rest day at the back end to get over the jet lag and misery of doing long haul in the back…
I would accept the policy totally if it were a total policy i.e. whoever flies goes in the back of the plane I get that, I have implemented that for my company but if I ever travelled Business with an employee of colleague I would fly them the same class as I13 Feb 2018
How about the people who deal with expense claims?
When I worked for a major global company, I had a number of incidents of their total stupidity but the best was after a 3 week trip to Delhi and Bombay. Some days I’d walked from my hotel to the office and on others I’d taken a rickshaw or taxi. On my return I just added an ‘estimated’ amount for the taxi transport which I think was about €20. Payment was refused because : “We need receipts.”
I wasn’t going to let it go so I sent a polite email saying : “Most taxi and rickshaw drivers in India don’t provide receipts because they can’t write, least of all in our alphabet, and don’t carry receipt books. Therefore I have submitted an estimate of my out of pocket expenses.” The reply came back that they needed receipts again.
I found a number of odd scraps of paper, scrawled a few hieroglyphics over them, scrumpled them up and left them in a jeans pocket for a few days until they were suitably grubby, and submitted them clipped together with a total amount in Rupees converted to €. Then the bimbo called me and said they couldn’t accept them because they were written in ‘Indian’ as she called it. I think after the rocket I gave her department they would have paid a F class RTW for me!
This was the company that sent me on a pointless time and money wasting 2 day trip to Rio to see a client who had already signed and didn’t want or need to see anyone from our company, the trip cost about £6000 in airfares, per diem, and hotels, but they wouldn’t pay my €1.50 bus ticket to the airport because I didn’t have the ticket. So I said I’d gone by car and claimed about €30 for mileage – of which there was also no proof. I used to do things like that just to piss them off.
This was the company who made me go to Bogota to install an application for a client which the client had indicated they didn’t want, but the messages hadn’t filtered through to my department. So I had a lovely long weekend in the hills outside Bogota (I can thoroughly recommend a trip to Colombia) and then came back F class as there were no C seats available.13 Feb 2018
I joined an organisation that agreed 3 flights a year home for me, and after the first one bought paid for and flown I claimed back for the airfare for someone in the accounts team to say that she needed the boarding pass to prove I flew??? I said of course I flew why would I buy a ticket submit the receipt for said flight and not get on the plane??
Anyway they were adamant they were not going to pay and I was even more adamant that they were and i harassed this specimen for about a week until she said I just cant trust you to have got the flight!!
Bingo… an email to HR demanding her to retract the accusation that I was defrauding the company and if not I would take it further…. Payment made next day and the excuse that it was her English she didnt understand (US expat living in Asia) !!!!!!!!!
Bet we all have expense story nightmares …..13 Feb 2018