Date of Award

6-2021

Document Type

Dissertation - Open Access

Degree Name

Doctor of Philosophy in Aviation Business Administration

Department

College of Business

Committee Chair

Scott Ambrose, DBA

First Committee Member

Massoud Bazargan, Ph.D.

Second Committee Member

Farshid Azadian, Ph.D.

Abstract

Although airline alliances work fairly effectively for paid flight segments, passengers who want to redeem frequent flyer miles often encounter difficulties. Sometimes airlines demand an extensive amount of air miles to book requests for award seats to not only their partner airline customers but also their own customers. Furthermore, while the airline co-branded credit card award mile earnings and redemption rates fluctuate significantly between different airlines, passengers are not well informed about which airline co-branded credit card requires the minimum amount of credit card expenditure to fly with an award ticket to their desired travel destination.

A more useful and practical system is necessary to fulfill passenger’s expectations to overcome the problems associated with earning and redeeming frequent flyer miles on flights via airline co-branded credit cards. Grounded in consumerism theory, this research acknowledges that buyers, relative to sellers, often lack important information as they seek to make purchases. As such, efforts to help consumers make more informed choices benefit not only consumers but also the wider marketplace.

In the first part of this research, a quantitative model called the frequent flyer money saver (FFMS) analysis was used to compare the official credit cards offered by the leading carriers’ loyalty programs operating in the United States via simulation. In the second part, an exploratory structural equation model (SEM) was used to determine the FFMS ratio’s factors based on the route characteristics.

According to the results, United Airlines outperformed other airlines in terms of FFMS ratio distribution, whereas Hawaiian Airlines held the lowest position. Regarding the SEM results, the route characteristics including market share and number of passengers carried were negatively associated with the FFMS ratio.

Based on this dissertation’s findings, when compared with Hawaiian and Alaska Airlines, the members of big three airlines (Delta, American and United) offer significantly higher savings in aggregate to their customers with respect to redeeming miles for an award ticket. Tentative findings also suggest a potential relationship between route characteristics and the FFMS ratio that should be further explored.

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