Major US airlines cannot count on customer loyalty Thu Apr 20, 2006 1:38 PM ET Printer Friendly | Email Article | Reprints | RSS =20 By Kyle Peterson CHICAGO (Reuters) - Brand loyalty, once a key factor in all major U.S. airl= ines' strategies, has become less of a priority as carriers believe that pr= ice is what more and more customers care about. The decline in travelers who stick with a single carrier is a by-product of= sweeping industry changes triggered by the weakening of popular frequent f= lyer programs, the rise of low-cost carriers and the restructuring of major= airlines. "It certainly is damaging to the industry as a whole," said Stuart Klaskin = at KKC Aviation Consulting. "What it means is that there's this floating cu= stomer base. Every airline has to work harder to attract and retain custome= rs." The airlines with the most to lose are the so-called legacy carriers, such = as AMR Corp.'s (AMR.N: Quote, Profile, Research) American Airlines, UAL Cor= p's (UAUA.O: Quote, Profile, Research) United Airlines and Continental Airl= ines (CAL.N: Quote, Profile, Research), Klaskin said. These are the compani= es that have worked since the early 1980s to win steady customers through f= requent flyer programs. Airlines have been able to generate hundreds of millions of dollars by sell= ing frequent flyer mileage credits to banks, hotels, car rental services an= d phone companies. Victims of their own popularity, frequent flyer miles have become difficult= to redeem, simply because so many travelers are trying to do so. It takes = an increasing number of miles for a customer to get a free flight or upgrad= e to better service. "It's absolutely harder to find seats that airlines are willing to let go f= or no incremental revenue," said airline consultant Robert Mann. No. 5 U.S. airline Northwest Airlines (NWACQ.PK: Quote, Profile, Research),= however, argued that customer loyalty remains a pillar of its business mod= el and that its frequent flyer program spurs business. "Northwest remains committed to building customer loyalty through its World= Perks frequent flyer program, and it remains a core aspect of our marketin= g efforts," Northwest spokesman Kurt Ebenhoch said. "It is the platform we = use to recognize and reward our best customers."=20 CHANGING AIRLINE IDENTITIES Brand loyalty has suffered since an industry downturn in 2001 forced major = airlines to reduce expenses. Several embattled carriers adopted lower-cost = models like Southwest Airlines Co. (LUV.N: Quote, Profile, Research) and Je= tBlue Airways Corp. (JBLU.O: Quote, Profile, Research), which often sell ti= ckets for less than the majors. Some carriers have abandoned free in-flight perks in favor of charging cust= omers extra for drinks, meals and entertainment. This shift in strategy has= further diluted the value of frequent flyer upgrades. "The value of a free seat is no longer what it once was," Mann said. Bankrupt Northwest, for example, has tested an extra fee for coveted aisle = seats. AMR Corp.'s (AMR.N: Quote, Profile, Research) American Airlines no l= onger offers complimentary pillows. Most major airlines have discontinued f= ree meals on domestic flights. Meanwhile, some low-fare airlines bolstered in-flight amenities, further bl= urring the distinction between themselves and the major carriers. "The common theme here is that as the low-cost segment has moved toward imp= roving their product and offering more amenities, the major carriers as a w= hole have moved toward reducing these amenities," said Kevin Mitchell, head= of the Business Travel Coalition. "The products look almost the same." Experts say travelers are spoiled by cheap flights and that the low-fare re= volution has made price the main -- and sometimes only -- consideration for= customers. "For the first time, this industry is consumer driven," Mitchell said. "The= consumer has said very often and loudly where the price points are." Mitchell said United and Continental, the No. 2 and No. 4 U.S. airlines, re= spectively, are the only majors that still make wholehearted efforts to win= repeat customers by nurturing loyalty. Others focus on almost exclusively on low-fare competition, a move that ali= enates some long-time customers who might have booked flights without shopp= ing first, said KKC's Klaskin. "Price took precedence over loyalty," he said. =20 =C2=A9 Reuters 2006. All Rights Reserved.=20 =20 Roger & Amanda La France