The story starts 40 years ago, and it changed passengers’ experiences forever. Back then, the airline industry was going through radical structural changes, as a result of deregulation.
At American Airlines, the 30-something senior vice president of marketing, Thomas Plaskett, led the creation of one of the biggest and most successful competitive solutions.
His project: the frequent flyer program at American Airlines, called then what it still is now: AAdvantage, which was the first sustained, computer-assisted frequent flyer program in America; maybe the world.
“We are attempting to build brand loyalty in a commodity market,” Mr. Plaskett told the New York Times in 1982, as the newspaper marveled at “the frequent flier sweepstakes, the latest and hottest marketing game invented by the nation’s crippled airlines to buckle more people into their jets.”
Of course, if you fly on American Airlines now, or almost any airline for that matter, flyer programs are a fact of life. Points and miles are a valuable currency; in fact, they’re a huge part of the airline industry’s 21st century business model.
A few years ago, an airline industry analyst named Joseph DeNardi tried to put a price tag on AAdvantage (along with other airlines’ frequent flyer programs), arguing that they were so valuable that the airlines ought to consider them as separate entities.
DeNardi calculated that the airlines likely brought in billions in “marketing revenue” from selling frequent flyer points to banks, so that those banks could use them to entice customers to use credit cards: $1.15 billion at American Airlines, $962 million at United Airlines, $805 million at Delta Air Lines.
These were his estimates for the first half of 2018, and it’s fair to say that the airlines disagreed with his premise. But then came the pandemic, and cash-crunched airlines were in a hurry to raise money-;partly by leveraging their frequent flyer programs.
For example, American Airlines filed documents with the Securities and Exchange Commission earlier this year explaining how it planned to raise $10 billion in bonds and leveraged loans, backed by its loyalty program.
After rising as high as he could at American Airlines, Plaskett moved over to become CEO of both Continental and Pan Am, along with serving as chairman of Greyhound Lines Inc. Later in life he served on corporate boards.
HE died last month at age 77; reports said he’d been battling cancer. He and his wife had been married since 1968.
If you’re a business traveler, or if you follow the airlines (as I believe business leaders in every industry should), I think it’s worth remembering him. Maybe even offer him a toast or a prayer, next time you find yourself hurtling through the sky in a pressurized metal tube.
The innovation he pushed for all those years ago really was a brilliant idea. To the extent any airline can claim it’s not selling a commodity, it’s the brand loyalty, the perks, and the mileage currency of the frequent flyer programs that make up a big deal of it.
“That was one of the most successful marketing initiatives in that period, not just at airlines but in the entire marketing world,” Don Carty, who worked for Plaskett and later became CEO of American Airlines told the Dallas Morning News. “Tom was very much an advocate and the driving force behind making that happen.”