How Frequent Flyer Programs Work

The frequent flyer program is an incentive program operated by an airline to reward customers for their continued loyalty. As a traveler, you earn free miles for the miles that you fly on a particular airline. The concept behind frequent flyer programs is that the airlines want their passengers to become lifetime customers. It is much more costly for the airlines to get new customers than it is to retain the ones they already have. So how do they reward you? The more frequently you fly with them, the greater your awards.

It all started in 1981, when American Airlines introduced a program called AAdvantage. Their purpose was simple: to reward customers for using the airline and promote future customer loyalty. American started the program by using their customer database. They tracked the members' number of flown miles and put together a reward system of "a mile earned for a mile traveled." To round out the array of services for the travel customer, American also included Hertz rental cars and Hyatt hotel stays in the program. It was an instant success. United Airlines almost immediately debuted their Mileage Plus program and upped the ante by offering an "enrollment bonus" of 5,000 miles! As expected, the other major domestic airlines soon followed suit.

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