February 5, 2025 • 33 mins
When people say that someone needs no introduction, we think they're talking about View From The Wing's Gary Leff. He is one of the world's foremost experts in miles, points, and frequent business travel.
Gary talks with us about the math behind airline loyalty programs, how he comes across the strangest stories in travel, the differences between airlines and hotels when they start co-branding with partners, how airlines define their "best customers" and way, way more.
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Episode Transcript
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Matt Brown (00:07):
When people say that someone needs no introduction,
I think they're talking aboutGary Leff, our guest today.
I'm going to give it a shotanyway.
You've seen Gary's name in theNew York Times, rolling Stone,
coddington's Traveler, wsj, andhe's been on the Today Show, abc
, world News Tonight, GoodMorning America, cnn and
countless others For over 20years.
(00:43):
His site View from the Wing hasdispensed indispensable for
anyone looking to understand thetravel business and make their
own travel experience a littlebetter.
He's been described as quote atravel industry blogger with a
specialty in spanking companiesthat devalue their loyalty
programs.
Yes, I love that, but he's morethan that, way more.
He's a champion of goodcustomer service, good deals and
(01:04):
good times.
Gary Leff, oh my gosh, welcometo no Show.
Gary Leff (01:10):
Incredibly and probably way too generous, but
thank you for having me Happy tochat with you guys today.
Jeff Borman (01:17):
Now we're interviewing Gary Leff, but
please clarify for us is thisthe real Gary Leff and what the
heck is the fake Gary Leff?
Gary Leff (01:25):
There's a certain stature in having your own
parody account on Twitter thatintends to troll you.
Look, I've been a denizen ofthe Internet for 35 years.
In some dimension or another,I've got a pretty thick skin.
I have an open commenting forumon my blog.
(01:46):
People can criticize me at will.
I genuinely don't mind.
In fact, I love my trolls.
But yes, there is apparently aTwitter account dedicated to
parodying me.
Jeff Borman (02:08):
Yeah, you have such an unusual mix of content,
right.
The deepest understanding ofthe mechanics of loyalty
programs, the economics of cardschemes, credit card schemes
right.
And then straight up tabloids,right, Like a Southwest flight
attendant who was fired fortwerking and feces in the aisle
and who has to pick up acustomer's garbage.
Do you have a most favorite?
You've been doing this a longtime.
(02:29):
Is there a favorite outrageousairplane story that just you
can't stop telling at a cocktailparty or with friends?
It comes up all the time.
Gary Leff (02:38):
Well, I mean, you know, there's always going to be
the JetBlue flight attendant,steve Slater, 15 years ago, who
decided to peace out from hisjob by grabbing a beer, popping
the slide, sliding you know,sliding off right, and that
probably you know more than any.
On the other hand, though, youknow, I think, the series of
(02:59):
incidents in China where peoplewould throw coins into the plane
engines for luck or mistake theexit door, and then they're
looking for the lavatory.
The reason that these arefavorites is that they stand for
an idea of this rapidmodernization and development in
(03:21):
China.
That's sort of bringing peopleout of this clash of modernity
with a much lower standard ofliving, and so people are having
access for the first time toflying and encountering these
experiences, and they hadn'tbeen part of the culture, and so
their own idea of how theyinteract with things clashes
(03:42):
with modernity in a way, and so,through the prism of these
experiences that look so strangeto us because we're used to air
travel, they give us an insightinto how things are developing
in some really small way.
Matt Brown (04:03):
When it comes to credit cards, everybody wants my
loyalty these days.
Hotels want my loyalty,airlines want my loyalty, amex
and Chase want it, and they'reall offering a slice of
ever-changing and, I fear,ever-diminishing incentives and
rewards for my fealty.
Across all these players, who'swinning the loyalty wars in
(04:25):
2025?
Gary Leff (04:27):
I mean, in some sense , it depends on what you mean by
winning, right?
So there's a dimension in whichyou have to give Delta credit
for winning if their co-brandrelationship with Delta, with
American Express, is generating$7.4 billion in a year, with
American Express is generating$7.4 billion in a year.
On the other hand, though andthey don't tell you this, but
(04:49):
it's actually underperformingexpectation.
So when they re-upped theirAmerican Express co-brand in
2019 in a 10-year deal, they hadprojected that 2023 would hit
$7 billion.
Now it hit $6.9 billion.
It's pretty close, but what weforget is that that was before
20% inflation, right?
So knock 20% off that.
(05:09):
You're really looking at likethey hit, basically, you know
five and a half billion, not youknow, not the seven.
And so what's going on there?
And then you start tounderstand some of the things
that they're doing, like theirfree Wi-Fi, which you have to
register for the loyalty programin order to get.
What are they doing there?
They're looking to grow themember base, because they're
(05:30):
kind of topped out.
They're looking for new peoplethat they can market the
co-brand credit card to so thatthey can kind of get back,
hopefully, to some of thatgrowth, and we don't know yet
the extent to which and theydon't really reveal the data at
this kind of granular levelthose customers that they're
acquiring through these newmethods.
How much do they convert?
So are they winning becausethey have the most gross revenue
(05:53):
off their co-brand deal?
Then, in terms of winningconsumers, the bank proprietary
programs have reallydemonstrated.
So after Costco left AmericanExpress 10 and a half years ago,
there was an incredible rushfor banks to bid up the co-brand
(06:16):
partnerships.
First, american Express lockedin their second biggest co-brand
, which was Delta, at apreviously unheard of level and
that set a new bar for theco-brand negotiations, for a
consolidated airline industrywhere there were fewer players
and you had increasingly highlevels of co-brand remuneration.
But that also kind of left alittle bit less money on the
(06:40):
table to reward the customerwith.
Some of those programs became abit less valuable to the
consumer because they're soexpensive.
What the banks have really doneis demonstrated that it's
possible for them to acquirecustomers without the co-brand
partnerships through their Imean American Express membership
rewards.
(07:00):
Obviously you know dates backover three decades.
But you know Chase built theirultimate rewards and Citi has
their thank you rewards.
But we've seen Capital One, youknow, go beyond just the you
know points as rebate where you,you know, buy our fare.
But they built up their travelpartnerships in the you know.
Venture became convertible tomiles, built up their travel
(07:23):
partnerships, venture becameconvertible to miles, they built
VentureX and the businessequivalent and they've gotten
into premium travel perks.
Wells Fargo has theirautographed journey and other
surrounding cards.
We've seen big players enterthis space because it is a very
lucrative place and that theycan acquire customers without
paying those you know, payingthe airlines, paying the hotels
(07:46):
as the gatekeeper, and then whatthey've done is they've
basically been more rewarding.
So at this point you know youdon't want to put spending on an
airline credit card unlessyou're spending for status
contribution in that airlineprogram.
If what you even say what youwant, are Delta miles, for some
(08:09):
reason I mean they're generallyless valuable than other
currencies.
But if you want them, you'd bebetter off getting an American
Express card whose pointstransfer to Delta, for two
reasons.
One is those cards cangenerally earn points at a
faster rate than the Deltaco-brands can.
So you'd be earning more Deltamiles and you have the option of
doing more things, transferringthem to more places than
(08:31):
spending on the Delta card right, and the same is true for
Chase's cards with United.
Matt Brown (08:38):
I wonder if anybody in loyalty programs?
Probably not, but I wonder ifanybody who runs these programs
thinks about what I think of asthis existential conundrum.
They exist, especially thesedays.
To expand, we have to expand,we have to get more people
involved in this program and asmore people come in, the
incentives that they get forcoming in can diminish, or at
(09:02):
least it feels like they candiminish.
I think the New York Times rana piece that spotlight Delta the
issues that a long time loyalDelta customer had, because they
raised a lot of requirementsfor her to get some of the perks
and benefits she'd beenenjoying for years.
I just see there being kind ofa mathematical oddity at work
(09:25):
here.
You've got these loyaltyprograms sold on customer
service but as they grow andgrow and grow, it's impossible
to provide that level ofcustomer service that they
started with and I don't know ifthere's a solution to that.
Gary Leff (09:39):
Well.
So there's a lot of thingsembedded in this.
First, I think well, I meanDelta, the idea that they're
trying to provide customerservice through their loyalty
program.
Their base redemptions now arefor basic economy tickets.
It used to be that when you wereredeeming points, you are
having this, you know, a truereward.
(10:00):
And you were an honored guest,you know recognized for having
achieved some milestone, and now, if you don't want to spend
extra points, you get the least.
You know good experience thatthe airline has to offer when it
comes to Delta and they'repretty unique in doing that.
That having been said, theprograms are, you know,
fundamentally they are massmarket tools and they bundle
(10:25):
different things.
I mean recognition and rewardare two different components of
the same loyalty program.
So for most members it's reallyjust a rebate program, right,
you're earning points, you'regoing to redeem them and it's
not getting you much, althoughas a tool to encourage people to
join, there have beenincreasingly ways of making the
(10:45):
travel experience better, justas a member.
So the program wants themembers, so they have that
marketing relationship, not justto market the co-brand, but
certainly also so AmericanAirlines will give you earlier
boarding as a member.
And so you're less likely tohave to gate check your bag just
by being a member.
So in some sense the treatmenthas gotten better.
(11:08):
You get your free Wi-Fi as aDelta SkyMals member versus
having to pay.
So there's some elements inwhich that's gotten better.
But I think we separate out thetreatment of best customers
from the most members of theprogram, so call it the 95% 5%
(11:31):
different buckets, and so youwant the rebate component on the
one hand and then therecognition or elite program on
the other.
And how do you treat thosefolks?
And how do you treat thosefolks?
Look, delta's basically made adecision that the people they
consider to be their bestcustomers are different than who
they used to consider them tobe, and that is always a painful
(11:52):
transition, and they're not thefirst ones to do it.
I mean, think back seven yearsto when, you know, hyatt changed
their program from Hyatt GoldPassport to World of Hyatt.
There was nothing at all thatchanged in the rebate portion,
the earning and burning portionof that program.
It was only the elite program.
But the biggest thing was theyno longer earned top-tier status
(12:14):
with 25 stays rather than basedon nights, and so they fired,
as it were these people who stay, you know, did 25 one night
stays who were getting kind ofoutsized value relative to um.
You know what they were puttingin.
The people who were displacedor getting less were incredibly
(12:36):
vocal.
Like, as I mentioned, therewere problems with um, the the
program as it rolled out, andthere were messaging problems,
but fundamentally there were abunch of things that were cost
cuts in it, even for thosepeople who were achieving at the
new levels that they said werenecessary in order to achieve
(12:56):
status.
So there were a bunch of peoplewho were unhappy, but the
biggest thing was just thechanging who it is that matters,
and people.
Oh well, it's about avoiding thecrowd.
No, it's actually about drivingas much spend to the co-brand
as possible, because that'swhere the money is right.
It's not just a lot of revenue,it is incredibly high margin
(13:18):
revenue.
So an airline might be making,you know, margins of, you know,
2% to 10% or 12%, depending onthe carrier, right, but the
loyalty program revenue and theaccounting here is a little bit
tricky and each airline accountsfor it a little bit differently
.
So these aren't directlycomparable but based on
disclosures that airlines madearound 2021 when they were
(13:41):
raising, the three largestairlines raised $6.5 to ten
billion dollars a piece againstthe future revenue streams of
their loyalty programs.
They were disclosing Margins intheir loyalty programs your
Delta at 38%, american advantageat 52%.
Not actually the case thatAdvantage has that much higher
(14:01):
margin.
They're just accounting forsome of the internal transfers
differently.
But the point remains thatthese are very high margin
dollars that are coming in andso they're kind of shifting the
behavior of consumers andrewarding those consumers
differently, recognizing thatbuying an airline ticket is not
the same thing, even for thatmatter, as buying ancillaries.
(14:22):
The margin on seat fees and bagfees is a lot higher than on
the base ticket, upgrade fees alot higher than on the base
ticket.
So how do we reward the kind ofbehavior that's not just
looking at total revenue butthat's actually profitable in
terms of that customer?
Jeff Borman (14:43):
You mentioned.
A lot of this is also just theaccounting of it, right?
You did a study concluding theAmerican Airlines is actually
losing money flying and the onlyvalue, the only profit that
they make is really from theloyalty program, and I think
that's because of the creditcard reimbursement or the
relationship that their creditcard partners send to them,
(15:04):
right?
Can you explain the math onthat?
How is it that they make moneyon credit cards but not the
actual business they're in?
Gary Leff (15:11):
And so, first to be clear, they would not be in a
position to generate the creditcard revenue if it weren't for
the flying.
Okay, so it's not thesuggestion that they should just
like ground their planes, layoff everyone who you know flies
the planes right, and just sella credit, you know, as they used
to.
You know, cut the middleman,like that doesn't work.
So I mean, american disclosesall the airlines, disclose what
(15:35):
their, what their operatingcosts are per seat mile.
Right, so you take the costs of, you know, of running the
airline, their personnel, theirfuel depreciation, amortization
on aircraft gates, all of thosekinds of expenses that they have
, maintenance, and dividing thatby the seat miles that they're
(15:59):
flying, and they'll take thepassenger revenue and disclose
that across their, you know, theseat miles they fly and in
their financials it's simply thecase that the operating cost
per seat mile is higher than therevenue that they're earning
from passengers per mile.
You know they're not earning aprofit on moving planes from one
(16:21):
place to another, and so it'sthis other activity, which is
largely selling miles, which islargely selling miles to banks,
is where the profit comes from.
So American disclosed $6.1billion in sales that's not
actually all from consumeractivity in 2024, because it
(16:44):
included a bonus for signingtheir new 10-year agreement,
exclusive with Citi.
But still it gives you the idea.
You know order of magnitude.
It's probably you know it'sover $5.5 billion on an ongoing
basis and they see that growingin this new deal and that's high
margin.
And then you say, okay, ifthey're calling it a 52% margin
(17:04):
at five and a half to $6 billionand they've made less than 1
billion for the year, you knowwhere it's coming from.
And, to be fair, they're notthe only one earning a lot of
high margin revenue, but theirmore profitable peers are also
sort of still earning from theflying that they do.
But the implication of itthere's a couple of things.
(17:28):
When they decide what is andisn't profitable flying, you
need to do a really good job offactoring in how it affects that
credit card business.
So I had a conversation sixyears ago with one of the senior
executives at American who wastalking about the reason for
their cuts in New York and itwas basically these flights were
not profitable and they hadn'treally been integrating at the
(17:48):
time the sales of credit cardacquisitions and then spend on
the card into their thinkingabout their route planning and
just the way people wererewarded within the business
didn't factor that.
And he said okay, this is crazy, because if you're cutting back
in New York, what you're doingis you're cutting the relevance
of your card product in the mostimportant spend market in the
(18:11):
country and you're going to loseout on the spend.
I'm like this is crazy.
Well, they began to realize asthey, you know too, began to
better integrate revenue acrossthe company into their thinking
and into their org chart and asthey had, you know, until the
(18:34):
government fought to break it up, as they had this partnership
with JetBlue that reallybolstered their presence in New
York.
They started to see moreacquisition in the Advantage
program and more cardconversions and realized that
that does factor into theprofitability.
If you go back six, seven years,american Airlines actually had
more charge volume on itsco-brand than any of the other
(18:57):
airlines and at last year'sInvestor Day they disclosed that
now they're at number three.
So they're behind Delta andUnited now and they've lost
relevance in the Los Angelesmarket.
They've lost relevance toUnited in the Chicago market,
they've pulled back in New York,and so it's not really a
surprise that in these and theydon't have the significance in
(19:20):
the Bay Area that say United hasand so they're not seeing.
You know they focused on theSunbelt, which is growing, but
it doesn't have the sameconcentrations of wealth.
It is important to think aboutthe business in a very
integrated way and do theaccounting correctly, as it were
(19:44):
, to understand how thedecisions you're making actually
influence your bottom lineno-transcript.
Jeff Borman (19:54):
When I look at the model that the largest hotel
companies are creating, they'remodeling themselves very much
after airlines with the creditcard partners and how that works
.
The difference is airlines owntheir airplanes.
If they didn't, this is my fear.
Hotel owners are the airplaneowner in this situation and
they're not making as much moneybecause it's all going to the
(20:16):
program and it's all hitting acorporate P&L.
The revenue boost that you getin those partnerships isn't
making its way to the airplaneor, in my example, to the hotel,
because you've got a differentownership model involved.
I think it's a real existentialissue for the hotel world.
Gary Leff (21:05):
So a little bit of agreement, a little bit of
pushback I mean just on the onthe accounting there First of
all but is going to at least besomething on the order of
magnitude of your average dailyrate.
On the order of magnitude ofyour average daily rate.
So more of it flows back to theowners in the hotel co-brand
model.
Nonetheless, there is a hugedisconnect between the airline
(21:33):
model, where they own the planesas well as the marketing, and
the hotel model, where, on theone hand, you have this
marketing company, on the otherhand, you have the service
delivery, and that creates atremendous amount of tensions in
a variety of dimensions,especially for, you know, the
customer experience and thebenefit on property versus the
promises that are getting made.
(21:54):
You know, ultimately, the hotelbrand really only that's all
they have is their brand.
It's the reason why thecustomers come to them and they
can deliver those customers tothe hotel owners, and why you
want to say, you know, fly theflag of the brand is to attract
those customers.
The problem, then, is thatthere is obviously a different
(22:16):
than incentive.
Ideally, the brand owner wantsto protect the value of the
brand because, in the long run,otherwise they have nothing.
But the individual hotel wantsto benefit from those customers
without spending as much, maybeeven spending as much on their
customer who's going to berepeat guests with them, but not
(22:36):
rewarding someone else'scustomer in the same way, and so
there's going to be a tensionover what that brand looks like
over time.
Jeff Borman (22:45):
I think there are two fundamental parts of the
structure that are beingchallenged right now because of
the growth of loyalty programs.
You look at the biggestprograms that have gone from $50
million to to 200 million in asix-year, seven-year span.
What you see there?
Because of the model, they taxthe reservation, essentially
(23:10):
right.
So what used to be 30% ofpeople in a hotel?
Well, those 30, you know, as apart of a loyalty program, those
30% got taxed by the program 3%, 4%, 5% of the reservation
value.
Now, instead of 30% beingloyalty members, you've got 70%.
(23:30):
I think Hilton just said on arecent earnings call right so
that tax, the model hasn'tchanged, but you're taxing two,
three times as many of theguests at a time when occupancy
has not grown.
You've just increased the taxbase.
Gary Leff (23:45):
But what you're doing is also just shifting the
customer acquisition channel.
Right, so you're, maybe you'renot, depending on the hotel.
You may be paying Expedia less,right, and so you know, there's
a customer acquisition cost,whether it's through the chain
or through other channels, thenare you discounting as much?
What's your relative room rateIn each property?
(24:08):
You're going to have to figureout because it's a very
competitive market with a bunchof different chains and you can
flag different ways.
Even Marriott has newer forsome of their limited service,
newer, lower cost flags.
And how much are those worthRight?
Jeff Borman (24:25):
The mix of third party booking sources like
Expedia that are really highcost to hotel.
Had the mix of that decreasedas the loyalty program grew,
then I think that was thebusiness case.
But that hasn't happened is theproblem.
The other real economics herethat are kind of coming to a
head is that as people have moreand more points, they spend
(24:47):
more points than cash.
In the past people were dolingout cash or putting on credit
cards or paying with dollars.
Now, more often than everthey're using their points
because they're earning so manythrough the banking system that
rewards them and gives them goodtravel options.
When that happens a guest,instead of paying $100 out of
pocket they tend to getreimbursed at a hotel level $50
(25:10):
to that $100 instead To theguest it may seem the same To
the hotel it's a significantshave off the actual revenue you
receive.
Gary Leff (25:18):
Yeah, and so then the question is, what would your
occupancy be without that?
I mean, so is this marginalroom nights because of the earn?
In this way it's filling emptyrooms, or is this actually
displacing?
And all this matters?
But I think what's reallyimportant to understand about
(25:54):
where this growth in loyaltyprogram members comes from.
Is it driving people to bemembers?
Not that they have anyparticular loyalty to a program.
These are no longer frequenttravelers.
And so programs talk about thetotal number of people in their
(26:14):
database as their loyaltyprogram numbers, and that is not
the same as active members.
So you know having sometransactions zero to 18 months,
but more importantly, you knowmore than one transaction zero
to 18 months.
In some way you want to reallyunderstand the program.
You want to strip out all thepeople who joined one time in
(26:39):
order to get the lower rate andthen never transact again or
transact like three years.
You know, oh, I forgot, I'lljoin again because I don't even
remember my number, like to getthe lower rate.
And it's very rare that theloyalty executives talk about
the actual number of engagedmembers, let alone define what
they mean by engaged, if they do.
Matt Brown (27:03):
Time for the lightning round, gary, the
airline amenity or loyalty perkyou most treasure.
Gary Leff (27:11):
So at the end of the day, like while I you know well,
it's tempting to say you knowupgrades and obviously that
matters from an eliteperspective you know what I want
to do more you know upgradesand obviously that matters from
a from an elite perspective.
You know what I want to do morethan anything else is get where
I'm going, when I want to bethere, or as early as possible,
as quickly as possible.
So you know, I would say theability to have priority in
(27:33):
confirming standby, to get on anearlier flight if my meetings
end early.
And then number two, whenthings go wrong, better
irregular operations protection.
Jeff Borman (27:43):
Should pilots be upgraded to first class before
high-ranking loyalty members?
Gary Leff (27:48):
Many years ago, if you go back a quarter century,
it was generally the case that apilot who was deadheading so
that means that they're actuallyworking.
They're flying to their dutyassignment from where they're
based to, or from where they'veflown to that means that they're
actually working.
They're flying to their dutyassignment from where they're
based to, or from where they'veflown to, the next city.
They're going to fly, notcommuting pilots.
They'd be able to fly in firstclass.
Back then, only 10% or so 10 to12% of domestic first class
(28:11):
seats were being sold tocustomers.
There were plenty of extraseats.
It wasn't that big a deal.
In 2020, united Airlines made abig change where they didn't
want to furlough pilots duringthe pandemic.
They worked out a deal withtheir pilot union to be able to
basically schedule all theirpilots despite seniority, so
(28:32):
that they could stay current andthey'd keep flying, and so they
had to bribe their unionbasically to allow them not to
furlough pilots, and part ofwhat they did, part of what they
gave up, was saying that pilotswould have this priority when
they weren't already in firstclass on a deadhead trip.
They would get these confirmedseats and, having won that at
(28:57):
United American Airlines pilotsabout a year and a half ago got
that in their new contract.
So if they're not confirmed infirst and there's a first class
seat still available, they'll bein front of all of the
customers at the gate on day ofdeparture.
A lot of customers are saying,well, I'm sympathetic, like I
want my pilot to be well-rested,it's not a problem with this.
(29:18):
You have to understand thatthis is actually.
These hours commuting as adeadhead are part of their duty
day.
So it's hours that there wouldotherwise be in a less
comfortable seat in the cockpitand actually flying.
So it's not and it's not likethey're getting so much rest in,
you know, domestic first classeither.
I'm not sure that itmeaningfully makes a difference
(29:39):
or that anybody could crediblysay prior to these recent
changes there was a safetyconcern with they're not
commuting in first class.
I do think that when you seethis happening at the gate, it
suggests that the relative powerof employees at the company has
risen relative to customers.
I think it becomes anespecially bad look at American
(30:01):
Airlines, where they arefinancially underperforming.
Employees are making as much ormore than they are at
counterpart airlines but aren'tgenerating a return in nearly
the same way and it becomes, Ithink, symbolic or this really
bad look to say okay, you know,I'm this loyal customer.
(30:21):
I've been, I'm staying loyal.
I've been promised for thatloyalty the upgrade.
And I see, when I'm hoping forthe upgrade at the gate, it's
not going to me, it's going tothe employee.
You know it doesn't look sogreat and if they're going to do
it, maybe not do it in uniform.
I don't know.
Jeff Borman (30:38):
I thought this would be the fastest question in
the conversation.
The answer is just no.
To me, the loyalty perk that Icare about most by far is the
upgrade, and it is infuriatingas the highest level one can
achieve at American Airlines byearning that.
I get on a plane and there's acouple pilots sitting where I
(30:59):
believe I should be, but anyway,that's just my take on it, and
yours is much more elegant.
Gary Leff (31:05):
I thought it was important to sort of give the
context of what's going on.
Matt Brown (31:07):
Of course, of course .
Gary Leff (31:12):
But yeah, look, I think it's awkward at best and I
think it's a terrible look forcustomers and I think that
that's a problem for an airlinethat is financially
underperforming.
Matt Brown (31:22):
Gary, how does somebody acquire concierge key
status?
Gary Leff (31:27):
I was a concierge key member of American Airlines at
one point.
So concierge key is thecriteria for qualifying is not
published.
It's the level above ExecutivePlatinum.
It gets you really personalizedservice in a lot of ways.
I mean you may get a golf cartride between flights and a quick
connection.
You might get a car transfer onthe tarmac.
(31:49):
You're often met at the gatejust to thank you for your
business.
On domestic flights you getaccess to flagship business
class lounges.
You're top of the upgrade listand, most importantly to me, you
get what they call next flightguarantee.
So if your flight is canceledand the next flight to where
(32:12):
you're going is sold out, theywill still confirm you on it.
They're willing to bump anotherpassenger.
They're willing to pay denyboarding compensation to someone
if necessary to get you whereyou're it.
They're willing to bump anotherpassenger.
They're willing to you know,pay.
You know deny boardingcompensation to someone if
necessary to get you whereyou're going.
Depending on where you live andthe margin of tickets you're
buying, it's not strictly just astraight dollars but you know
roughly if you're spending about$60,000 a year on airline
(32:34):
tickets, that'll get it for you.
If you have a big corporatecontract, you may get a handful
of concierge key membershipsthat you hand out to your
travelers or your top executives.
The most important influencersof travel spend at the biggest
companies will get concierge key.
In fact, the most importantcustomers of the airline might
(32:57):
even be tagged do not miss amongconcierge key members, so
they're always getting thein-airport treatment.
And American Airlines, though,does factor now more than just
dollars spent on tickets, andthat's actually how I wound up
as a concierge key member for alittle while.
Matt Brown (33:17):
Gary, this is tremendous.
Thank you so much for being aguest, highly informative.
Gary Leff (33:22):
Pleasure to play, to chat with you both, gentlemen.
When people say that someone needs no introduction,
I think they're talking aboutGary Leff, our guest today.
I'm going to give it a shotanyway.
You've seen Gary's name in theNew York Times, rolling Stone,
coddington's Traveler, wsj, andhe's been on the Today Show, abc
, world News Tonight, GoodMorning America, cnn and
countless others For over 20years.
(00:43):
His site View from the Wing hasdispensed indispensable for
anyone looking to understand thetravel business and make their
own travel experience a littlebetter.
He's been described as quote atravel industry blogger with a
specialty in spanking companiesthat devalue their loyalty
programs.
Yes, I love that, but he's morethan that, way more.
He's a champion of goodcustomer service, good deals and
(01:04):
good times.
Gary Leff, oh my gosh, welcometo no Show.
Gary Leff (01:10):
Incredibly and probably way too generous, but
thank you for having me Happy tochat with you guys today.
Jeff Borman (01:17):
Now we're interviewing Gary Leff, but
please clarify for us is thisthe real Gary Leff and what the
heck is the fake Gary Leff?
Gary Leff (01:25):
There's a certain stature in having your own
parody account on Twitter thatintends to troll you.
Look, I've been a denizen ofthe Internet for 35 years.
In some dimension or another,I've got a pretty thick skin.
I have an open commenting forumon my blog.
(01:46):
People can criticize me at will.
I genuinely don't mind.
In fact, I love my trolls.
But yes, there is apparently aTwitter account dedicated to
parodying me.
Jeff Borman (02:08):
Yeah, you have such an unusual mix of content,
right.
The deepest understanding ofthe mechanics of loyalty
programs, the economics of cardschemes, credit card schemes
right.
And then straight up tabloids,right, Like a Southwest flight
attendant who was fired fortwerking and feces in the aisle
and who has to pick up acustomer's garbage.
Do you have a most favorite?
You've been doing this a longtime.
(02:29):
Is there a favorite outrageousairplane story that just you
can't stop telling at a cocktailparty or with friends?
It comes up all the time.
Gary Leff (02:38):
Well, I mean, you know, there's always going to be
the JetBlue flight attendant,steve Slater, 15 years ago, who
decided to peace out from hisjob by grabbing a beer, popping
the slide, sliding you know,sliding off right, and that
probably you know more than any.
On the other hand, though, youknow, I think, the series of
(02:59):
incidents in China where peoplewould throw coins into the plane
engines for luck or mistake theexit door, and then they're
looking for the lavatory.
The reason that these arefavorites is that they stand for
an idea of this rapidmodernization and development in
(03:21):
China.
That's sort of bringing peopleout of this clash of modernity
with a much lower standard ofliving, and so people are having
access for the first time toflying and encountering these
experiences, and they hadn'tbeen part of the culture, and so
their own idea of how theyinteract with things clashes
(03:42):
with modernity in a way, and so,through the prism of these
experiences that look so strangeto us because we're used to air
travel, they give us an insightinto how things are developing
in some really small way.
Matt Brown (04:03):
When it comes to credit cards, everybody wants my
loyalty these days.
Hotels want my loyalty,airlines want my loyalty, amex
and Chase want it, and they'reall offering a slice of
ever-changing and, I fear,ever-diminishing incentives and
rewards for my fealty.
Across all these players, who'swinning the loyalty wars in
(04:25):
2025?
Gary Leff (04:27):
I mean, in some sense , it depends on what you mean by
winning, right?
So there's a dimension in whichyou have to give Delta credit
for winning if their co-brandrelationship with Delta, with
American Express, is generating$7.4 billion in a year, with
American Express is generating$7.4 billion in a year.
On the other hand, though andthey don't tell you this, but
(04:49):
it's actually underperformingexpectation.
So when they re-upped theirAmerican Express co-brand in
2019 in a 10-year deal, they hadprojected that 2023 would hit
$7 billion.
Now it hit $6.9 billion.
It's pretty close, but what weforget is that that was before
20% inflation, right?
So knock 20% off that.
(05:09):
You're really looking at likethey hit, basically, you know
five and a half billion, not youknow, not the seven.
And so what's going on there?
And then you start tounderstand some of the things
that they're doing, like theirfree Wi-Fi, which you have to
register for the loyalty programin order to get.
What are they doing there?
They're looking to grow themember base, because they're
(05:30):
kind of topped out.
They're looking for new peoplethat they can market the
co-brand credit card to so thatthey can kind of get back,
hopefully, to some of thatgrowth, and we don't know yet
the extent to which and theydon't really reveal the data at
this kind of granular levelthose customers that they're
acquiring through these newmethods.
How much do they convert?
So are they winning becausethey have the most gross revenue
(05:53):
off their co-brand deal?
Then, in terms of winningconsumers, the bank proprietary
programs have reallydemonstrated.
So after Costco left AmericanExpress 10 and a half years ago,
there was an incredible rushfor banks to bid up the co-brand
(06:16):
partnerships.
First, american Express lockedin their second biggest co-brand
, which was Delta, at apreviously unheard of level and
that set a new bar for theco-brand negotiations, for a
consolidated airline industrywhere there were fewer players
and you had increasingly highlevels of co-brand remuneration.
But that also kind of left alittle bit less money on the
(06:40):
table to reward the customerwith.
Some of those programs became abit less valuable to the
consumer because they're soexpensive.
What the banks have really doneis demonstrated that it's
possible for them to acquirecustomers without the co-brand
partnerships through their Imean American Express membership
rewards.
(07:00):
Obviously you know dates backover three decades.
But you know Chase built theirultimate rewards and Citi has
their thank you rewards.
But we've seen Capital One, youknow, go beyond just the you
know points as rebate where you,you know, buy our fare.
But they built up their travelpartnerships in the you know.
Venture became convertible tomiles, built up their travel
(07:23):
partnerships, venture becameconvertible to miles, they built
VentureX and the businessequivalent and they've gotten
into premium travel perks.
Wells Fargo has theirautographed journey and other
surrounding cards.
We've seen big players enterthis space because it is a very
lucrative place and that theycan acquire customers without
paying those you know, payingthe airlines, paying the hotels
(07:46):
as the gatekeeper, and then whatthey've done is they've
basically been more rewarding.
So at this point you know youdon't want to put spending on an
airline credit card unlessyou're spending for status
contribution in that airlineprogram.
If what you even say what youwant, are Delta miles, for some
(08:09):
reason I mean they're generallyless valuable than other
currencies.
But if you want them, you'd bebetter off getting an American
Express card whose pointstransfer to Delta, for two
reasons.
One is those cards cangenerally earn points at a
faster rate than the Deltaco-brands can.
So you'd be earning more Deltamiles and you have the option of
doing more things, transferringthem to more places than
(08:31):
spending on the Delta card right, and the same is true for
Chase's cards with United.
Matt Brown (08:38):
I wonder if anybody in loyalty programs?
Probably not, but I wonder ifanybody who runs these programs
thinks about what I think of asthis existential conundrum.
They exist, especially thesedays.
To expand, we have to expand,we have to get more people
involved in this program and asmore people come in, the
incentives that they get forcoming in can diminish, or at
(09:02):
least it feels like they candiminish.
I think the New York Times rana piece that spotlight Delta the
issues that a long time loyalDelta customer had, because they
raised a lot of requirementsfor her to get some of the perks
and benefits she'd beenenjoying for years.
I just see there being kind ofa mathematical oddity at work
(09:25):
here.
You've got these loyaltyprograms sold on customer
service but as they grow andgrow and grow, it's impossible
to provide that level ofcustomer service that they
started with and I don't know ifthere's a solution to that.
Gary Leff (09:39):
Well.
So there's a lot of thingsembedded in this.
First, I think well, I meanDelta, the idea that they're
trying to provide customerservice through their loyalty
program.
Their base redemptions now arefor basic economy tickets.
It used to be that when you wereredeeming points, you are
having this, you know, a truereward.
(10:00):
And you were an honored guest,you know recognized for having
achieved some milestone, and now, if you don't want to spend
extra points, you get the least.
You know good experience thatthe airline has to offer when it
comes to Delta and they'repretty unique in doing that.
That having been said, theprograms are, you know,
fundamentally they are massmarket tools and they bundle
(10:25):
different things.
I mean recognition and rewardare two different components of
the same loyalty program.
So for most members it's reallyjust a rebate program, right,
you're earning points, you'regoing to redeem them and it's
not getting you much, althoughas a tool to encourage people to
join, there have beenincreasingly ways of making the
(10:45):
travel experience better, justas a member.
So the program wants themembers, so they have that
marketing relationship, not justto market the co-brand, but
certainly also so AmericanAirlines will give you earlier
boarding as a member.
And so you're less likely tohave to gate check your bag just
by being a member.
So in some sense the treatmenthas gotten better.
(11:08):
You get your free Wi-Fi as aDelta SkyMals member versus
having to pay.
So there's some elements inwhich that's gotten better.
But I think we separate out thetreatment of best customers
from the most members of theprogram, so call it the 95% 5%
(11:31):
different buckets, and so youwant the rebate component on the
one hand and then therecognition or elite program on
the other.
And how do you treat thosefolks?
And how do you treat thosefolks?
Look, delta's basically made adecision that the people they
consider to be their bestcustomers are different than who
they used to consider them tobe, and that is always a painful
(11:52):
transition, and they're not thefirst ones to do it.
I mean, think back seven yearsto when, you know, hyatt changed
their program from Hyatt GoldPassport to World of Hyatt.
There was nothing at all thatchanged in the rebate portion,
the earning and burning portionof that program.
It was only the elite program.
But the biggest thing was theyno longer earned top-tier status
(12:14):
with 25 stays rather than basedon nights, and so they fired,
as it were these people who stay, you know, did 25 one night
stays who were getting kind ofoutsized value relative to um.
You know what they were puttingin.
The people who were displacedor getting less were incredibly
(12:36):
vocal.
Like, as I mentioned, therewere problems with um, the the
program as it rolled out, andthere were messaging problems,
but fundamentally there were abunch of things that were cost
cuts in it, even for thosepeople who were achieving at the
new levels that they said werenecessary in order to achieve
(12:56):
status.
So there were a bunch of peoplewho were unhappy, but the
biggest thing was just thechanging who it is that matters,
and people.
Oh well, it's about avoiding thecrowd.
No, it's actually about drivingas much spend to the co-brand
as possible, because that'swhere the money is right.
It's not just a lot of revenue,it is incredibly high margin
(13:18):
revenue.
So an airline might be making,you know, margins of, you know,
2% to 10% or 12%, depending onthe carrier, right, but the
loyalty program revenue and theaccounting here is a little bit
tricky and each airline accountsfor it a little bit differently
.
So these aren't directlycomparable but based on
disclosures that airlines madearound 2021 when they were
(13:41):
raising, the three largestairlines raised $6.5 to ten
billion dollars a piece againstthe future revenue streams of
their loyalty programs.
They were disclosing Margins intheir loyalty programs your
Delta at 38%, american advantageat 52%.
Not actually the case thatAdvantage has that much higher
(14:01):
margin.
They're just accounting forsome of the internal transfers
differently.
But the point remains thatthese are very high margin
dollars that are coming in andso they're kind of shifting the
behavior of consumers andrewarding those consumers
differently, recognizing thatbuying an airline ticket is not
the same thing, even for thatmatter, as buying ancillaries.
(14:22):
The margin on seat fees and bagfees is a lot higher than on
the base ticket, upgrade fees alot higher than on the base
ticket.
So how do we reward the kind ofbehavior that's not just
looking at total revenue butthat's actually profitable in
terms of that customer?
Jeff Borman (14:43):
You mentioned.
A lot of this is also just theaccounting of it, right?
You did a study concluding theAmerican Airlines is actually
losing money flying and the onlyvalue, the only profit that
they make is really from theloyalty program, and I think
that's because of the creditcard reimbursement or the
relationship that their creditcard partners send to them,
(15:04):
right?
Can you explain the math onthat?
How is it that they make moneyon credit cards but not the
actual business they're in?
Gary Leff (15:11):
And so, first to be clear, they would not be in a
position to generate the creditcard revenue if it weren't for
the flying.
Okay, so it's not thesuggestion that they should just
like ground their planes, layoff everyone who you know flies
the planes right, and just sella credit, you know, as they used
to.
You know, cut the middleman,like that doesn't work.
So I mean, american disclosesall the airlines, disclose what
(15:35):
their, what their operatingcosts are per seat mile.
Right, so you take the costs of, you know, of running the
airline, their personnel, theirfuel depreciation, amortization
on aircraft gates, all of thosekinds of expenses that they have
, maintenance, and dividing thatby the seat miles that they're
(15:59):
flying, and they'll take thepassenger revenue and disclose
that across their, you know, theseat miles they fly and in
their financials it's simply thecase that the operating cost
per seat mile is higher than therevenue that they're earning
from passengers per mile.
You know they're not earning aprofit on moving planes from one
(16:21):
place to another, and so it'sthis other activity, which is
largely selling miles, which islargely selling miles to banks,
is where the profit comes from.
So American disclosed $6.1billion in sales that's not
actually all from consumeractivity in 2024, because it
(16:44):
included a bonus for signingtheir new 10-year agreement,
exclusive with Citi.
But still it gives you the idea.
You know order of magnitude.
It's probably you know it'sover $5.5 billion on an ongoing
basis and they see that growingin this new deal and that's high
margin.
And then you say, okay, ifthey're calling it a 52% margin
(17:04):
at five and a half to $6 billionand they've made less than 1
billion for the year, you knowwhere it's coming from.
And, to be fair, they're notthe only one earning a lot of
high margin revenue, but theirmore profitable peers are also
sort of still earning from theflying that they do.
But the implication of itthere's a couple of things.
(17:28):
When they decide what is andisn't profitable flying, you
need to do a really good job offactoring in how it affects that
credit card business.
So I had a conversation sixyears ago with one of the senior
executives at American who wastalking about the reason for
their cuts in New York and itwas basically these flights were
not profitable and they hadn'treally been integrating at the
(17:48):
time the sales of credit cardacquisitions and then spend on
the card into their thinkingabout their route planning and
just the way people wererewarded within the business
didn't factor that.
And he said okay, this is crazy, because if you're cutting back
in New York, what you're doingis you're cutting the relevance
of your card product in the mostimportant spend market in the
(18:11):
country and you're going to loseout on the spend.
I'm like this is crazy.
Well, they began to realize asthey, you know too, began to
better integrate revenue acrossthe company into their thinking
and into their org chart and asthey had, you know, until the
(18:34):
government fought to break it up, as they had this partnership
with JetBlue that reallybolstered their presence in New
York.
They started to see moreacquisition in the Advantage
program and more cardconversions and realized that
that does factor into theprofitability.
If you go back six, seven years,american Airlines actually had
more charge volume on itsco-brand than any of the other
(18:57):
airlines and at last year'sInvestor Day they disclosed that
now they're at number three.
So they're behind Delta andUnited now and they've lost
relevance in the Los Angelesmarket.
They've lost relevance toUnited in the Chicago market,
they've pulled back in New York,and so it's not really a
surprise that in these and theydon't have the significance in
(19:20):
the Bay Area that say United hasand so they're not seeing.
You know they focused on theSunbelt, which is growing, but
it doesn't have the sameconcentrations of wealth.
It is important to think aboutthe business in a very
integrated way and do theaccounting correctly, as it were
(19:44):
, to understand how thedecisions you're making actually
influence your bottom lineno-transcript.
Jeff Borman (19:54):
When I look at the model that the largest hotel
companies are creating, they'remodeling themselves very much
after airlines with the creditcard partners and how that works
.
The difference is airlines owntheir airplanes.
If they didn't, this is my fear.
Hotel owners are the airplaneowner in this situation and
they're not making as much moneybecause it's all going to the
(20:16):
program and it's all hitting acorporate P&L.
The revenue boost that you getin those partnerships isn't
making its way to the airplaneor, in my example, to the hotel,
because you've got a differentownership model involved.
I think it's a real existentialissue for the hotel world.
Gary Leff (21:05):
So a little bit of agreement, a little bit of
pushback I mean just on the onthe accounting there First of
all but is going to at least besomething on the order of
magnitude of your average dailyrate.
On the order of magnitude ofyour average daily rate.
So more of it flows back to theowners in the hotel co-brand
model.
Nonetheless, there is a hugedisconnect between the airline
(21:33):
model, where they own the planesas well as the marketing, and
the hotel model, where, on theone hand, you have this
marketing company, on the otherhand, you have the service
delivery, and that creates atremendous amount of tensions in
a variety of dimensions,especially for, you know, the
customer experience and thebenefit on property versus the
promises that are getting made.
(21:54):
You know, ultimately, the hotelbrand really only that's all
they have is their brand.
It's the reason why thecustomers come to them and they
can deliver those customers tothe hotel owners, and why you
want to say, you know, fly theflag of the brand is to attract
those customers.
The problem, then, is thatthere is obviously a different
(22:16):
than incentive.
Ideally, the brand owner wantsto protect the value of the
brand because, in the long run,otherwise they have nothing.
But the individual hotel wantsto benefit from those customers
without spending as much, maybeeven spending as much on their
customer who's going to berepeat guests with them, but not
(22:36):
rewarding someone else'scustomer in the same way, and so
there's going to be a tensionover what that brand looks like
over time.
Jeff Borman (22:45):
I think there are two fundamental parts of the
structure that are beingchallenged right now because of
the growth of loyalty programs.
You look at the biggestprograms that have gone from $50
million to to 200 million in asix-year, seven-year span.
What you see there?
Because of the model, they taxthe reservation, essentially
(23:10):
right.
So what used to be 30% ofpeople in a hotel?
Well, those 30, you know, as apart of a loyalty program, those
30% got taxed by the program 3%, 4%, 5% of the reservation
value.
Now, instead of 30% beingloyalty members, you've got 70%.
(23:30):
I think Hilton just said on arecent earnings call right so
that tax, the model hasn'tchanged, but you're taxing two,
three times as many of theguests at a time when occupancy
has not grown.
You've just increased the taxbase.
Gary Leff (23:45):
But what you're doing is also just shifting the
customer acquisition channel.
Right, so you're, maybe you'renot, depending on the hotel.
You may be paying Expedia less,right, and so you know, there's
a customer acquisition cost,whether it's through the chain
or through other channels, thenare you discounting as much?
What's your relative room rateIn each property?
(24:08):
You're going to have to figureout because it's a very
competitive market with a bunchof different chains and you can
flag different ways.
Even Marriott has newer forsome of their limited service,
newer, lower cost flags.
And how much are those worthRight?
Jeff Borman (24:25):
The mix of third party booking sources like
Expedia that are really highcost to hotel.
Had the mix of that decreasedas the loyalty program grew,
then I think that was thebusiness case.
But that hasn't happened is theproblem.
The other real economics herethat are kind of coming to a
head is that as people have moreand more points, they spend
(24:47):
more points than cash.
In the past people were dolingout cash or putting on credit
cards or paying with dollars.
Now, more often than everthey're using their points
because they're earning so manythrough the banking system that
rewards them and gives them goodtravel options.
When that happens a guest,instead of paying $100 out of
pocket they tend to getreimbursed at a hotel level $50
(25:10):
to that $100 instead To theguest it may seem the same To
the hotel it's a significantshave off the actual revenue you
receive.
Gary Leff (25:18):
Yeah, and so then the question is, what would your
occupancy be without that?
I mean, so is this marginalroom nights because of the earn?
In this way it's filling emptyrooms, or is this actually
displacing?
And all this matters?
But I think what's reallyimportant to understand about
(25:54):
where this growth in loyaltyprogram members comes from.
Is it driving people to bemembers?
Not that they have anyparticular loyalty to a program.
These are no longer frequenttravelers.
And so programs talk about thetotal number of people in their
(26:14):
database as their loyaltyprogram numbers, and that is not
the same as active members.
So you know having sometransactions zero to 18 months,
but more importantly, you knowmore than one transaction zero
to 18 months.
In some way you want to reallyunderstand the program.
You want to strip out all thepeople who joined one time in
(26:39):
order to get the lower rate andthen never transact again or
transact like three years.
You know, oh, I forgot, I'lljoin again because I don't even
remember my number, like to getthe lower rate.
And it's very rare that theloyalty executives talk about
the actual number of engagedmembers, let alone define what
they mean by engaged, if they do.
Matt Brown (27:03):
Time for the lightning round, gary, the
airline amenity or loyalty perkyou most treasure.
Gary Leff (27:11):
So at the end of the day, like while I you know well,
it's tempting to say you knowupgrades and obviously that
matters from an eliteperspective you know what I want
to do more you know upgradesand obviously that matters from
a from an elite perspective.
You know what I want to do morethan anything else is get where
I'm going, when I want to bethere, or as early as possible,
as quickly as possible.
So you know, I would say theability to have priority in
(27:33):
confirming standby, to get on anearlier flight if my meetings
end early.
And then number two, whenthings go wrong, better
irregular operations protection.
Jeff Borman (27:43):
Should pilots be upgraded to first class before
high-ranking loyalty members?
Gary Leff (27:48):
Many years ago, if you go back a quarter century,
it was generally the case that apilot who was deadheading so
that means that they're actuallyworking.
They're flying to their dutyassignment from where they're
based to, or from where they'veflown to that means that they're
actually working.
They're flying to their dutyassignment from where they're
based to, or from where they'veflown to, the next city.
They're going to fly, notcommuting pilots.
They'd be able to fly in firstclass.
Back then, only 10% or so 10 to12% of domestic first class
(28:11):
seats were being sold tocustomers.
There were plenty of extraseats.
It wasn't that big a deal.
In 2020, united Airlines made abig change where they didn't
want to furlough pilots duringthe pandemic.
They worked out a deal withtheir pilot union to be able to
basically schedule all theirpilots despite seniority, so
(28:32):
that they could stay current andthey'd keep flying, and so they
had to bribe their unionbasically to allow them not to
furlough pilots, and part ofwhat they did, part of what they
gave up, was saying that pilotswould have this priority when
they weren't already in firstclass on a deadhead trip.
They would get these confirmedseats and, having won that at
(28:57):
United American Airlines pilotsabout a year and a half ago got
that in their new contract.
So if they're not confirmed infirst and there's a first class
seat still available, they'll bein front of all of the
customers at the gate on day ofdeparture.
A lot of customers are saying,well, I'm sympathetic, like I
want my pilot to be well-rested,it's not a problem with this.
(29:18):
You have to understand thatthis is actually.
These hours commuting as adeadhead are part of their duty
day.
So it's hours that there wouldotherwise be in a less
comfortable seat in the cockpitand actually flying.
So it's not and it's not likethey're getting so much rest in,
you know, domestic first classeither.
I'm not sure that itmeaningfully makes a difference
(29:39):
or that anybody could crediblysay prior to these recent
changes there was a safetyconcern with they're not
commuting in first class.
I do think that when you seethis happening at the gate, it
suggests that the relative powerof employees at the company has
risen relative to customers.
I think it becomes anespecially bad look at American
(30:01):
Airlines, where they arefinancially underperforming.
Employees are making as much ormore than they are at
counterpart airlines but aren'tgenerating a return in nearly
the same way and it becomes, Ithink, symbolic or this really
bad look to say okay, you know,I'm this loyal customer.
(30:21):
I've been, I'm staying loyal.
I've been promised for thatloyalty the upgrade.
And I see, when I'm hoping forthe upgrade at the gate, it's
not going to me, it's going tothe employee.
You know it doesn't look sogreat and if they're going to do
it, maybe not do it in uniform.
I don't know.
Jeff Borman (30:38):
I thought this would be the fastest question in
the conversation.
The answer is just no.
To me, the loyalty perk that Icare about most by far is the
upgrade, and it is infuriatingas the highest level one can
achieve at American Airlines byearning that.
I get on a plane and there's acouple pilots sitting where I
(30:59):
believe I should be, but anyway,that's just my take on it, and
yours is much more elegant.
Gary Leff (31:05):
I thought it was important to sort of give the
context of what's going on.
Matt Brown (31:07):
Of course, of course .
Gary Leff (31:12):
But yeah, look, I think it's awkward at best and I
think it's a terrible look forcustomers and I think that
that's a problem for an airlinethat is financially
underperforming.
Matt Brown (31:22):
Gary, how does somebody acquire concierge key
status?
Gary Leff (31:27):
I was a concierge key member of American Airlines at
one point.
So concierge key is thecriteria for qualifying is not
published.
It's the level above ExecutivePlatinum.
It gets you really personalizedservice in a lot of ways.
I mean you may get a golf cartride between flights and a quick
connection.
You might get a car transfer onthe tarmac.
(31:49):
You're often met at the gatejust to thank you for your
business.
On domestic flights you getaccess to flagship business
class lounges.
You're top of the upgrade listand, most importantly to me, you
get what they call next flightguarantee.
So if your flight is canceledand the next flight to where
(32:12):
you're going is sold out, theywill still confirm you on it.
They're willing to bump anotherpassenger.
They're willing to pay denyboarding compensation to someone
if necessary to get you whereyou're it.
They're willing to bump anotherpassenger.
They're willing to you know,pay.
You know deny boardingcompensation to someone if
necessary to get you whereyou're going.
Depending on where you live andthe margin of tickets you're
buying, it's not strictly just astraight dollars but you know
roughly if you're spending about$60,000 a year on airline
(32:34):
tickets, that'll get it for you.
If you have a big corporatecontract, you may get a handful
of concierge key membershipsthat you hand out to your
travelers or your top executives.
The most important influencersof travel spend at the biggest
companies will get concierge key.
In fact, the most importantcustomers of the airline might
(32:57):
even be tagged do not miss amongconcierge key members, so
they're always getting thein-airport treatment.
And American Airlines, though,does factor now more than just
dollars spent on tickets, andthat's actually how I wound up
as a concierge key member for alittle while.
Matt Brown (33:17):
Gary, this is tremendous.
Thank you so much for being aguest, highly informative.
Gary Leff (33:22):
Pleasure to play, to chat with you both, gentlemen.
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