CNN wrote:From novel idea to big take off
July 7, 2006
DALLAS, Texas (CNN) -- In 1981, American Airlines came up with a novel way to try and keep customers loyal. It granted "free" flight miles for frequent travelers.
Now, 25 years later, there are more than 100 air miles programs globally and millions of people throughout the world are members of at least one plan. When American Airlines' Tom Plaskett came up with the idea while working at the airline's HQ at at Fort Worth Airport in Dallas, Texas, he had no idea how it would grow.
"I began to think about how, as a child I would sit at the kitchen table and put S&H green stamps in coupon books," Plaskett told CNN. "We'd take them down to the store and exchange them for a toaster or an ironing board."
He figured if people would collect stamps for a toaster, they would almost certainty trade points for a flight -- and he was right. For months Plaskett and his marketing team tested economic models and looked for loopholes that rivals could exploit. There were none, but they were still anxious. The first air miles points came with an expiry date of one year.
"After about four months the one year expiration date came off. We had determined by that point that this was a program that was working and was working extraordinarily well," Plaskett said. Soon after, other airlines launched their own loyalty schemes.
United Airlines introduced its Mileage Plus program within one week. Now there are more than 150 frequent flyer schemes. And most major airlines belong to alliances that account for 60 percent of global flights.
It now costs more miles than ever to get on board a flight. Back in 1981 you could book any available economy seat for 35,000 points. Now, you'll have to pay 50,000 points for effectively the same thing.
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