Marketing Mergers Will Make Little Impact on Airline Frequency Programs

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Despite rumblings of anti-trust violations, airlines are moving ahead with plans to merge marketing programs.

With Northwest Airlines and Continental Airlines setting the standard for what some say may come to be known as marketing monopolies, American Airlines, Fort Worth, TX, and US Airways, Arlington, VA, followed suit late last month with plans to marry components of frequency programs and passenger access to each other's executive clubs. A planned alliance between United Airlines and Delta Air Lines was shelved 24 hours after it was announced. Most airlines maintain frequency program lists separate from executive club membership, which usually is a paid-for service.

Nonetheless, airlines said they are adopting that route to stay competitive but contend that most changes will be invisible to fliers.

"This is really [because of] competitive pressures based on the announcement between Northwest and Continental planning to do a number of marketing alignments, including strengthened frequency programs and combined routes," said Bill Dreslin, public relations manager at American Airlines. "Our plan initially focuses on two areas, the frequent-flier arrangement and reciprocity in the airline clubs. For both the airlines and customers, it provides the ability to claim awards on each of the airlines."

Dreslin said the initial programs are slated to be up and running by the end of the summer.

Continental, Houston, whose deal includes an equity infusion from Northwest, Eagen, MN, has not finalized plans for its marketing merger but said the initial phase will target frequency programs as well as route service.

"There is a whole lot going on in the discussion stage," said Continental spokeswoman Sarah Anthony. "Some portions will start immediately, but the full benefit of the alliance will be phased in over a three-year program. As far as the frequent flier is concerned, customers will be able to accumulate frequent-flier miles on Northwest flights and can redeem them on Continental, and vice versa."

Northwest's World Perks will be interchangeable with One Pass, creating the opportunity to fly to destinations that single carriers can't provide, she said.

The two planned mergers represent an estimated 75 million members enrolled in the four airlines' frequency programs. Although the groups could leverage each other's lists effectively, none appears willing to give up its own client base. Companies said there are no plans to share frequent-flier lists nor plans to extend point redemption beyond free or discounted airline tickets.

"Down the road, we may look at doing joint mailings," Dreslin said. "But right now, each are keeping their own lists private. American will still operate its programs for credit cards separately. Each airline will maintain its own frequent-flier program because each has ties-ins with different companies."

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