IHG Rewards Credit Card Extra Bonus Points

The IHG Rewards card I picked up earlier this year is still paying out bonus points.  The sign up offer I received was for 80,000 points after $2,000 spent (any offer less than 70,000 isn't worth taking).  IHG ran a promotion when I signed up that gave me an extra 2,000 bonus points for acquiring the card. All these points counted to status and I earned Spire Elite status which comes with 25,000 bonus points (or gift Platinum status).  I thought 80,000 points was a good credit card bonus, but I actually earned 107,000 points.  I wish other credit cards had extra bonuses like this.

I Have a Few Free Nights to Enjoy

Frequent Flyer Program Points / Miles Inflation

Airline Award Price Inflation

Inflation is a great way for governments to take wealth and reduce their debt. It happens continuously, but no one really notices, so it's a low risk political move.  By creating more currency, the government receives the full value of the new money while everyone's existing money is worth slightly less.  It's something everyone endures, but no one enjoys. 

South American Style Currency

Recent Inflation Victim

Airlines also manage a currency and create inflation. Airlines created their own currency with points programs and have been adding more currency than is being redeemed.  This creates an over supply of currency against a static (more or less) supply of awards.  The unbalanced supply and demand creates an opportunity for point inflation. Airlines manage their currency like Venezuela or Argentina.  There is constant inflation by creating more currency with fixed award opportunities.  They also engage in large and sudden devaluations periodically.  Venezuela has inflation every day, but they will also suddenly change exchange rates.  Both destroy currency value, but the gradual devaluation stings less.  Airlines do the same when they change their award charts (British Airways most recently).  Awards that cost 80,000 miles yesterday can cost 100,000 points today when the award chart changes over.  These massive changes are usually, but not always, announced several months in advance.

More Miles Pursuing Same Seats

Hyper Inflation Airlines

Airlines create new currency, point or miles, at no cost to them.  They sell this currency to partners, like credit cards or hotels and receive real money for their proprietary money.  United Airlines sold $2.9 billion of frequent flyer miles in 2013 and has about $4.9 billion of frequent flyer miles outstanding.  They expect 20% these miles to expire, so the mileage expiration policy creates $1 billion in profit.  They did not disclose how they value a frequent flyer mile.   

“Five million and 4.7 million MileagePlus flight awards were used on United in 2013 and 2012, respectively. These awards represented 7.7% and 7.1% of United’s total revenue passenger miles in 2013 and 2012, respectively. Total miles redeemed for flights on United in 2013, including class-of-service upgrades, represented approximately 80% of the total miles redeemed.” (UAL annual report)  20% of mileage redeemed was used for partner flights, merchandise awards, and other ground based awards. That’s a massive amount of miles chasing relatively few awards and creates a great inflation opportunity.

Costs More and More To Sit Up Front

44% Inflation over 9 Years

When I started collecting United miles in earnest, a round trip to Europe in business class was 80,000 miles.  Then it became 100,000.  Now it's 115,000 on United or 140,000 on a partner.  1,000,000 United miles was worth 12.5 round trips, but is now worth 7 trips.  This is a massive currency devaluation of 44% over 9 years.  Frequent flyers should be marching and banging pots in front of United's corporate office, but I doubt many realize their miles are worth so much less.  Most customers measure their balance by the number of miles in it.  This is a poor indicator of value though.  Viewing it as the number of awards you want (business class tickets to Europe in my example) is a better indicator of value. 

Program Changes Can Reduce Award Balance Value

Reducing Inflation Risk

Collecting miles and points creates an inflation risk.  The more you collect, the larger the risk.  Inflation can't be eliminated, but the risk can be managed.  Here are a few tactics to help support an inflation hedge strategy:

• Collect Points in Multiple Programs – All programs have inflation, but at different rates and different times.  Diversification reduces your exposure to a single program's risk.  It also creates more reward opportunities.
• Spend Points Regularly - A smaller point balance lowers the potential loss of value to inflation.  Also, why bother collecting miles if they are never used?
• Be Aware of Pending Award Price Changes - Don't be taken by surprise, read emails from your programs.  If a change is coming, book at the lower prices if able.  I booked a round trip to Europe before British Airways changed their award chart this year.
• Change Programs if Required - Most airlines have partners and one partner may have a more rewarding and stable award structure.  Alaska miles seem more stable than Delta miles and you can earn either on a Delta flight.
• Set Award Based Goals - Don't set a balance number as a goal.  1,000,000 United miles has a nice ring to it, but it isn't an end in itself.  4 round trips to Europe in business class is a better goal because it has a fixed value while the miles could change value.  Redeem when you reach your goals.
• Create A Single View of Your Assets – Take a look at your award balances on one screen.  Copy and paste into Excel or Gmail if needed.  Looking at your assets on the same page will help you understand where your risks are.  It also may help you be more creative with your awards. 80,000 Delta miles and 62,500 American miles is a round trip to Australia in business class.

Plane Crash Movie On My Flight

I watched a movie about airplane crashes on a recent flight.  A Yank in the R.A.F. was on TCM (free DirecTV in United first) and it was full of plane crashes and fires. In the old days when airlines picked their movies, they avoided ones with sensitive topics. It was a good propaganda film from 1941 (filmed in the UK with the Luftwaffe in the area), so I didn't notice it was about airplane failures until the end. 

United 737 with DirecTV

The funniest part of the movie was in the opening credits:
The Producers wish to express their appreciation to the officers and personnel of the Royal Air Force whose cooperation, under difficult conditions, made possible the filming of the aerial scenes in this production.

UPDATE: I also enjoyed North By Northwest and Von Ryan's Express on flights, so I guess prop plane crash movies are OK to watch on flights.

Airport Art - Moline, IL

Many airports have art displays to make the travel experience more interesting and localized (Madison, WI selling cheese curds is the best localization example).  Most art displays feature local topics.  A great recipe for an interesting exibition at CDG, but less interesting for MLI.

Airport Mural That Represents the Quad Cities

Helsinki Airport Customer Experience Management Program

What feelings do airports create?  Frustration, anger, stress, nervousness, confusion, and discomfort are common answers.  Most airports don’t see the customer experience as their first priority, but focus on operations, costs, regulations, or revenue.  Even though a lack of interest in the customer experience is common in airports today, it should be the next big area for innovation in airports and Helsinki Airport is on the leading edge.

Departures Board in Terminal 2

Helsinki Airport is in a difficult position, faced with strong competition and limited resources; they can’t outspend the Middle East governments, can’t expand their existing footprint very much, and don’t serve a giant city.  Helsinki, like most airports, cannot compete for passengers based simply on grandeur and opulence; instead it competes based on the total customer experience.  Customer experience management (CEM) is an area where every airport, no matter the size, can compete for customers. 

Terminal 2 Lobby with Self Check In and Self Bag Tagging

Finavia, the government owned firm that operates 21 civil airports in Finland including Helsinki, has the goal to own the entire customer experience.  This goal goes beyond just the 600 employees they have at Helsinki, but encompasses the customer’s entire travel experience, from booking, transit to the airport, ground experience, and inflight experience.  Their CEM goal is to create “Smooth Traveling.”  This supports the larger business goal to be Europe’s number one transfer airport. 

Terminal 1 Check In Lobby

Helsinki’s customer experience initiatives attempt to cover the complete “customer path.”  There are multiple customer types, and depending on the trip, the same individual can be a different customer type.  For example, 6,500 “first timers” (haven’t flown in more than a year) visit each day; some first timers ever go to the airport on the day before to practice.  Their needs differ greatly from frequent travels, families, pensioners, etc., but each group needs to have their needs addressed to create a positive experience.  Mindsets are further influenced by why the trip is being taken.  What influences customer experience varies greatly, so CEM isn’t a simple proposition.

One of Many Art Pieces Around the Airport

Helsinki Airport has three basic focus areas for CEM, premises, processes, and people. If these three items are done well, everything should run smoothly.  Processes are complex and difficult to observe when passing through.  Finavia has worked to redesign processes, self check in and bag tagging for example, to improve the customer experience and make things run smoother for passengers. 

Wireless Phone Charging Built into Tables

The second focus area is the premises and the goal is to create a comfortable atmosphere.  The first thing I noticed is the terminal is very quiet, just soft conversation.  There are no recurring announcements (absent are Homeland Security threat level style reminders), no one screaming in their phones, no carts beeping, and no hum from the HVAC system, luggage belts, or other sources.  The signage is large, clear, well placed, and helpful.  It is a simple idea, but not well executed in most airports.  Work centers are available and promoted with signage.  Ample seating is provided in many forms.  There are many different restaurants, shops, and large windows to look out on the field.  Power outlets and phone charging (including wireless PowerKiss charging) opportunities abound.  There is even a space with chairs designed by famous Finns to showcase Finnish design.  The airport has an open and Finnish feel to the layout and decor; creating a calm and comfortable atmosphere. 

Finish Designs' Chair Examples

The terminals are well lit and a comfortable temperature.  The WiFi is fast and free; it isn’t even advertising supported.  Free luggage carts are available curbside and by baggage claim, they look to be clean and in good shape.  The terminal building has many open spaces, long sight lines, and comfortable colors and materials.  There is a pervasive Scandinavian design idea in all areas.  T1 and T2 have a modern feel to them, while the original terminal building has hard wood floors and timeless jet set 1960's style atmosphere (even with a banner promoting the wifi and self check-in kiosks). 

Large and Clear Signage Right After Security

Employees at the airport treats passengers as guests.  The staff, regardless of who they work for, is sharply dressed and friendly.  There seems to be a positive and hospitable culture at the airport.  It also self-reinforces with coworkers complementing others when they go that extra step to help passengers (I saw this at the security screening and was dumbfounded).

Work Area, Finnish Style

My favorite example of these three focus areas coming together is the security process.  The T1 checkpoint was engaged in a pilot program to test new customer experience design improvements.  They want the security process to reflect Finnish design by including light wood paneling, more sound absorbing materials, clear explanations, and a softer feel.  They are also working to eliminate the “metal taste” from the experience by silencing the belt rollers and other metal on metal contact points in the process.

Helsinki Airport's Timeless Old Terminal

T2 uses an older design, yet still miles ahead of the standard US experience.  There are plenty of bins, free baggies at the entrance of the line, right next to recycling bins, and a sign explaining the process and what is not allowed.  The line moves orderly, the staff is helpful, sharply dressed, and pleasant.  The different touch points, bins, rollers, floor, benches, are clean too.  It’s relaxed experience from start to finish.

T1 Security Explanation Sign

Helsinki Airport tracks and measures the customer experience (measure what you want to improve).  They use a combination of feedback mechanisms (much more than just a postcard like at BOS) including customer surveys, web forms, Twitter, Facebook, and customer interviews. Time through the security line is tracked too (implied is there is an unacceptably long time, the TSA would disagree). Staff also attends seminars with airlines and other airports to share ideas.  International airport surveys are also used to independently compare different aspects against their peers.  The Quality Hunters 2 program, run in conjunction with Finnair, provided customer suggestions, 25 of which are being implemented, like the Book Swap room.  All these sources of information are used to create a comprehensive view into customer thoughts and feelings.

Book Swap Room in T2

Customer experience management is an area that all airports could improve.  It will also help airports of any size compete for customers and improve loyalty.  Passengers will appreciate the changes tthat transform flying into a fun experience, not a chore.  

I'd like to thank Johanna Metsälä, Finavia's CEM lead, for discussing the intricacies of CEM at Helsinki Airport with me.