Frequent-Flyer Programs: The Culprit Behind Bigger Business Travel Bills

The allure of free flights, airport lounge access, and other related perks has made frequent-flyer programs a fixture in air travel, regardless of whether it’s for leisure or business.

Due to the perks offered by frequent-flyer programs, travelers across the world do what they can to get the miles needed to avail the bonuses offered by their airline of choice.

The same applies for those who travel for business trips. As a result, the endless chase for miles has led to bigger expenditures for companies that are footing the bill for their employees’ travel arrangements.

According to a 2022 study titled “Reaching for Gold: Frequent-Flyer Status Incentives and Moral Hazard,” members of frequent-flyer programs who are close to achieving “elite” status tend to fly with their carriers even though there are cheaper flights from other airlines.

What else?

The study also found that flyers are more willing to book a flight with their airline of choice when someone else like their employers or another third party are the ones footing the bill.

Due to these findings, it’s no surprise that employers are paying more than they need to. In fact, the study’s authors said that if the travelers were the ones footing the bill, companies would save at least 7% on travel-related expenses.

Considering the state of the current global economy, achieving cost savings across all areas of operations is very important for companies across the globe!

In response, some industry observers argue that employers should come up with ways to mitigate the costs incurred to them by frequent-flyer programs.

Writing for the Financial Times in May 2023, Craig Coben, the Managing Director of consulting firm Seda Experts, noted that frequent-flyer programs incentivize employees to cram in as many business trips as possible. While policing this behavior is an option, Coben admitted it would be more trouble than it’s worth for most businesses.

Instead, he pointed to utilizing programs that reward points on fares paid instead of distance traveled, such as the Avios program of British Airways and Iberia Plus program of Iberia Airlines. 

Under these airlines’ “earn based on what you spend” scheme, points instead can go directly to the employers buying the ticket, and they can use them for other travel costs.

Another option Coben proposed is for employers to negotiate airport lounge access and hotel upgrades for traveling employees. After all, why would employees chase after points if some the perks they want during business trips are already provided for?

While cutting down on frequent-flyer programs doesn’t sound too good for workers at first glance, Coben explained that it “doesn’t mean forcing employees to wear a hair shirt when they hit the road.” 

Instead, he emphasized that employers “can make travel more comfortable without incentivizing employees to do it more than they need to.”

As we’ve discussed above, employers don’t need to break the bank to keep traveling employees happy.

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We hope you learned a lot about today’s topic! While the matter we discussed differs from our usual articles, we thought it would be interesting to bring this particular aspect of air travel to light.

If you have insights of your own about the matter, please feel free to reach out to us, fellow travelers!