Delta Sends C&Ds To Startups Tracking Airline Rewards; MileWise, AwardWallet & Others Affected

Delta is joining American Airlines and Southwest Airlines as the third major brand to deny travel startups access to users’ frequent flyer accounts for the purpose of tracking airlines’ miles and rewards. Startups affected include TripIt (reportedly*), MileWise, and AwardWallet (confirmed) and others. Here’s the situation in a nutshell: the airlines think your rewards data is theirs. Users think they own their own data. Imagine that!

What’s worse is that airlines are actually pissing off some of their most important customers – frequent flyers – when they do things like this. It’s a group that’s critical to airlines’ bottom line.

According to MileWise founder Nick Meyer, 25 percent of frequent flyers contribute to 7o percent of an airline’s revenue. That’s because the majority of miles are sold for cash, not accrued by members flying on the airline. Banks, which offer cards linked to airline rewards programs, are the primary buyers of airline miles. In 2010, the largest buyer was Citibank, which paid an estimated $1 billion+ for miles accrued by cardholders.

Airlines Cite Security Concerns, System Performance Issues When Startups Access Users’ Rewards

Back in March 2012, when American Airlines shut off Award Wallet’s access to users’ frequent flyer mileage, it made the case that it was a “security issue.” The airline had previously shut off access to several web services that would log into your account for you for the purpose of offering a variety of tracking tools. At the time, American said that it was concerned about the security issues that could arise from a third party having access to a customer’s username and password:

Because travelers’ AAdvantage account numbers and passwords can be used to claim AAdvantage mileage awards out of their accounts and access personal details, American will always protect this information. We simply cannot permit websites that have not satisfied our security requirements the access needed to track AAdvantage balances or any other function that is otherwise secured behind login credentials.

And here’s what Delta is now emailing to customers who are complaining about its block of AwardWallet:

Thank you for your e-mail to Delta Air Lines inquiring about blocking Award Wallet website. We regret any inconvenience.

While we can understand how you’ve become accustomed to using this tool, Delta does not have a contractual business relationship with this organization. The use of information from was unauthorized and employed automated screen scraping techniques that we don’t allow as it can hinder system performance.

We appreciate the utility of looking at multiple people’s reservations and will consider that for a future mobile release. We are also working on improving app notifications. The Fly Delta app has been highly rated by our users and we plan to continue offering highly useable information for your travel experience in the future, but we know there’s room for improvement. We will take your feedback into consideration.

Truth: Airlines Don’t Want To Lose Eyeballs, Mindshare

Don’t fall for it. Explains airline expert John E. DiScala (aka “Johnny Jet” online), Delta and others’ moves are definitely not about security issues or anything else. “The airlines just want to be in control,” he says. “They especially don’t want to lose traffic to their websites, so they can’t sell advertising and money-making travel-add ons like hotel, car, cruise, and package deals.”

Travis Katz, founder of social travel site Gogobot, agrees, saying that the airlines’ websites are free marketing channels where the airlines can convince passengers to spend more and engage more with their own brand. But it’s also about keeping the revenue for ticket sales to themselves. “This can make a big difference to their bottom line when customers book directly on their site, as opposed to booking through an aggregator (e.g. Expedia or Orbitz) where they have to pay a bounty on each booking,” he explained to us via email. “Ask Southwest – they made a choice not to list their site on any of the booking engines, and they have some of the best margins in the business.”

At the end of the day, the airlines aren’t convinced that services like AwardWallet and MileWise will send them more referrals than those they take away. It’s a short-sighted reaction, but unfortunately, one that isn’t likely to change anytime soon.

Building Brand Loyalty? Trying Sucking Less

“Rewards programs are by far the most effective tools that airlines have to build brand loyalty, and they are rightfully protective about it,” says Frederic Lalonde, CEO at travel planning startup Hopper. “This is particularly true in the U.S. domestic market, where consumers have a lot of options and pricing is competitive almost to the point of parity.”

But here’s a suggestion to the airlines about building brand loyalty: stop sucking so much. Granted, the airlines have had a tough go of it due to the recession. As their profits fell, so did their customer service. Meals discontinued. Blankets MIA. Extra bag fees. Less legroom. Overbooking. Full flights.

Breaking apart air fares into a la carte pricing works, but consumers tend to see this as price gouging a captive audience. They get angry. Angry customers make the airline reps burn out faster. (No one should have to deal with the public 24/7 like that anyway – humans aren’t programmed for it. They lose their inability to treat people like individuals or empathize.) Customers get more defensive and more surly, because they know they’re going to have a difficult time getting help from uncaring agents. Southwest, which tries to build fun into its brand, went so far as to shoot a reality show about its airline. I caught one episode where people wanted meal vouchers after being stranded. Southwest wouldn’t do it, but a group of adamant customers stayed behind to complain. They got the vouchers. Message received: bitching works. (They actually aired this on TV!)

Flying is an awful experience, and has been continuously getting worse. Airlines would do better to foster a little innovation that makes their customers’ lives better, but they won’t change until it affects their bottom line. And customers don’t always have much choice in how they fly (i.e. their company only books the lowest fares or they need specific times or routes). But when you do have a choice, you should choose an airline that sucks a little less. It’s the least you can do.

* TripIt wouldn’t confirm receipt of a C&D from Delta, but provided this statement:

In line with TripIt’s mission to make life easier for travelers, our goal is to give TripIt Pro users access to as many of their loyalty programs as possible, in one place. However, there are differing opinions among the airlines about how their customers’ loyalty program accounts are accessed by third parties. Unfortunately, this is causing service interruptions in point tracking for TripIt Pro users. We hope that together with travel industry partners, we can come up with a solution that works for everyone, and that travelers can ultimately decide who they share their account data with.

Image credit: Barron of Blog (I think)