I’ve gotten a ton of emails over this and have also seen a lot of discussion in other places, so figured I’d make a quick follow up post regarding my post of the rumored 2012 Mileage Plus changes.
First of all, let me say this once again — the first two words of the title of my post were “rumor” and “possible,” so I didn’t post the 2012 Bible of Mileage Plus. I was actually sent that information a couple of weeks ago. Based on United’s response, they indicated that they hope to announce the new Mileage Plus program by the end of next month. Something tells me that things will change over a two month period, so I can’t imagine the program will look exactly as I posted it (unless United is as bad as I was in college, where my rough draft was the same as my final paper, minus the spelling and grammar errors I intentionally put in the rough draft so I could show some level of improvement with the final draft).
Furthermore, they indicated that my post contained “some inaccurate information.” Of course it does, I posted only a small part of the information I was given. For example, I had posted that to qualify for status one needs to fly four segments on United. It should have said four segments on United, Continental, Copa, or Aerorepublica (who the heck are they?). My point is simply that my post contained some inaccurate or incomplete information in the interest of keeping things brief and looking at the big picture. Though they may very well have changed their minds on many things in the meantime, or never actually considered this proposal. Who knows. Regardless, cut them some slack, I’m sure this caught them by surprise.
Let me also answer a few other questions. First of all, there are a lot of questions regarding the revenue requirement, and specifically how United could track revenue. Trust me, they can. All I know is that revenue from United, Continental, and “select joint venture” partners would count towards the revenue requirement. I suspect they’re still trying to figure out what exactly that means as well. As far as booking a ticket with travel on multiple airlines goes, it’s actually quite easy for the airlines to break down the revenue to a per segment basis, so it’s something United could easily track if they wanted to.
The next point of frustration seems to be “how dare United do this on such short notice.” Keep in mind this is the 2012 program, meaning this would be what’s required to requalify in 2012 for 2013. I think that’s plenty of time, given that we’re talking about a huge merger. To many this would be no different than an award chart devaluation, in which case 3-4 months advance notice would be considered plenty.
A couple of additional points I figured I’d share, according to my source:
- Economy Plus would be limited to passengers on the same PNR, except for Global Services members
- When flying coach, Global Services members get a free meal, free drinks, free entertainment (headsets and DirectTv), and free Red Carpet Club premium drink. Diamond members would get the choice of two of those when flying coach, while Platinum members would get to choose one.
- Global Services, Diamond, and Platinum members would get a Global Entry enrollment fee waiver
Regardless of where you stand on these changes, there’s one comment I always find funny — “I bet the airlines wish they would have never started frequent flyer programs.” Really? I’d be willing to bet the two biggest legacies would be out of business if it weren’t for exactly that. Honestly, US legacies nowadays are little more than credit card companies with a fleet of several hundred private jets they’re willing to charter any day of the week in exchange for cash or miles.
And what continues to crack me up about all this is how much easier it gets to earn miles through all means except flying. Back in the day (and no, I’m not too young to use that phrase) mileage running made sense because there weren’t that many ways to earn miles other than flying. A 25,000 mile credit card sign-up bonus was huge. Now some people won’t consider anything less than 100,000 miles.
Besides, who needs to fly to earn miles anymore? Delta will sell them to you for just over a penny a mile, while US Airways will sell them to you for under 1.5 cents per mile.
I think a lot of people are considering loyalty programs too narrowly. Should the airlines be rewarding high revenue flyers? Absolutely. But that customer that spends $20,000 on a full fare ticket to Australia today for a work trip may never fly United again, and may not even have chosen to fly United. It’s the same thing as paying for airport security as part of ticket taxes. For every segment I fly I pay a $2.50 9/11 security tax. I fly about 250 segments a year. Does the TSA reward me for my business? Yeah, I suppose they do with my weekly full body massage. But at the end of the day I’m not choosing to give them my business. To many people, US airlines are no different than the DMV or a colonoscopy.
Meanwhile there might be 1Ks that spend $5,000 a year to requalify. On the surface those might not seem like profitable customers. But that doesn’t consider the fact that they might use the United credit card for all their purchases. Or do their shopping through United’s online shopping mall. Or dine at Mileage Plus Dining restaurants. Or recommend United to their friends, families, and colleagues.
My point is simply that programs should be more than frequent flyer programs. They should be more than “profitable single transaction” programs. They should be holistic loyalty programs that consider a customer’s overall profitability to a company, be it direct or indirect. Somehow telling a customer “you flew 100,000 miles with us this year, but only spent $7,500″ doesn’t give you that warm and fuzzy feeling you may have hoped for. Meanwhile that customer may have spent $200,000 that year on their Mileage Plus credit card, while someone else spent $500 more on tickets but doesn’t have a Mileage Plus credit card.
Of course it’s unrealistic for an airline to track each customer on a case-by-case basis. But the big thing they’re overlooking here is that spending $8,000 a year on United doesn’t make the customer any more profitable than without such a requirement. If I previously took twenty $250 trips per year, I would have spent $5,000. Let’s assume those are transcon trips and United wasn’t making any money on them. I was an “unprofitable” customer. Yet if the above program were put in place, if I fly double as many transcons I would clear the threshold. But guess what? I’m double as unprofitable.
Anyway, with that sermon out of the way, here’s what I’d much rather see airlines pursue, and I realize it’s ballsy, but to me it makes sense if they want to go the path of awarding status based on profitability. Just as they’re potentially considering increasing class of service bonuses for high fare classes, why not make low fare buckets earn fewer miles, be it 50% or 75%? I realize it’s something that would leave many unhappy, but to me it simplifies things. It doesn’t make it feel like the airline is saying to you “hey, give us 100,000 miles AND $8,000″ or else you’re not a valuable customer. Ultimately I’d much rather see things stay the way they are, but if they wanted to go the path of awarding status based on profitability, that approach would leave most feeling a lot less like the cost of their ticket…
Anyway, just my two cents.
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