United Airlines is upping the game in selling miles at a bulk rate and they’re now including a few other incentives, too. The latest email I received from them is offering the opportunity to purchase up to 1,000,000 miles in a single transaction. Yup, a million miles. And, as an added bonus, it includes a one-year United Club membership and Platinum Elite status for the 2013 program year. There are other options available, too, for smaller purchases:
These miles are meant to be used for recognition of employees or as gifts to others, not for personal consumption and not for resale. There is a max of 100,000 gifted to any account in a given year and all purchased miles must be distributed within the year or they are lost. The idea is that the sponsor buying the large block of miles gets a bit of a bonus for themselves while also getting the miles to give away. Not a bad idea, really, but the price point is still a bit steep, especially given that the Mileage Accelerator program sells points at a lower rate pretty reliably, even figuring in the 25% discount option.
At the end of the day, just another way the airlines are working to make money selling their most valuable product: points.
The shift towards revenue as the defining characteristic for loyalty value is picking up speed. Several smaller carriers have made the shift over the past couple years and now a major US airline is joining the efforts. Delta has announced that stating with their 2015 Medallion program year the carrier will require a minimum spend in addition to flight thresholds for passengers to acquire elite status.
The good news is that the details of the requirement – essentially 10 cents per mile – are being published well in advance of the requirements kicking in. The spend will be a factor for earning status in 2014 towards the 2015 program year. Members of the SkyMiles program have plenty of time to figure out if it still works for them and, if not, to figure out their next move. And I’m guessing not so many will be making a move.
For most passengers, the spend requirements probably aren’t all that bad. The price point is actually below the overall average fare price for tickets across Delta’s system. In other worlds, passengers who have Medallion status for less spend than that are below average in revenue to the company. It isn’t hard to understand why Delta would not want to reward those customers as much as the above average spenders. And the whole point of the loyalty programs is to reward your best customers, right?
The 10 cents per mile requirement will have many up in arms, particularly in the points & miles community. The discussions online have been rather exciting since the rumors of this change started swirling and they haven’t calmed down since the official announcement today. For customers focused on getting as much value as possible for the minimum amount invested this move is pretty much the end of the road.
It is also worth noting that customers spending at least $25k on a co-branded American Express credit card will have the spend requirement waived. Not necessarily because Delta realizes the same revenue from the CC spend but the cost of servicing that is rather lower, meaning the margins are in favor of the CC customers.
There are plenty of problems with the accounting scheme. Most of them come from not counting spend on partner travel (I don’t see only counting base fare as a problem) and setting themselves up for some very strange rollover miles situations. But the big picture of the new plan is reasonably well structured. That doesn’t mean it is great for all customers, but it is great for the ones the company wants to reward.
In reading around the webs on the change I was quite surprised to see Gary over at View From the Wing say, “I like marrying a minimum spend level with miles flown.” That’s a big change in stance and one I hadn’t expected. Personally I’ve always wondered why the airlines didn’t go this route. I know it isn’t good for me personally as a customer given my spend patterns, but I also know that I’m not the right customer for the airlines. Yet somehow they keep rewarding me.
It is simply a matter of time now before the other major carriers make their moves in response to Delta’s. It will certainly be interesting to watch this play out.
Looking at the Air Canada website today it would appear that the Tango Plus marketing name for Air Canada’s economy class fares is on the way out. Tango Plus refers to the “normal” economy fares – deep discount are Tango and full fare are Latitude – and there is either confusion over Tango versus Tango Plus or someone had an extra bit of marketing spend they needed to use up by the end of last year to get their budget numbers right. Either way, the website is now indicating that Tango Plus fares will be renamed to Flex.
UPDATE: Press release now available confirming the change.
Of course, the name “Flex” implies flexible so it is a bit strange that the fees for changes and refunds on the Flex fares are the same as for Tango fares. Then again, the Tango Plus fares were the same way so not really all that surprising.
There are still some differences between Tango and Flex, just like always. Tango has limited earning in the Aeroplan and Altitude frequent flyer programs:
And options for priority handling at the airport are increased as the fares increase:
Overall this shouldn’t affect things too much, other than possibly reducing confusion between Tango and Tango Plus fares, even if it does introduce confusion with the idea of Flex fares which aren’t actually so flexible.
Some rather sad news from the TrueBlue folks at JetBlue to start the 2013 earning year: Two programs for earning bonus points are being dropped from their arsenal.
First up, the Go Places promo expired at the end of 2012. This was a deal which earned passengers 50 TrueBlue points for checking in on Facebook or FourSquare at the airport when traveling. I never really got in to that program but I did sign up at one point and I also got the email announcing the cutting of the offer. Not a huge loss for me personally but definitely a cut to the program.
The other cut was rather less publicized (or maybe my email was lost en route) and likely affects many more TrueBlue members: JetBlue has terminated the Go Big earning promo option. This promo earned bonus points based on a tiered base point earnings (i.e. spend more cash, earn bigger bonuses) and for customers spending more than $2000 annually on JetBlue airfare the earning potential from the Go Big offers was quite significant. Alas, it is no more. Apparently the terms were too confusing to customers:
I actually can believe that it was too confusing for customers. The tier levels were progressive which meant great for earning more as you spent more but also not the easiest to follow along and predict earning. I was actually surprised a couple years ago when a Go Big bonus posted to my TrueBlue account, mostly because there was never a good way to track the earning. I think that a relatively simple status bar – similar to what was implemented for the Mosaic elite tracking – would have solved much of the confusion but I don’t get to make that call.
I’m obviously looking forward to seeing what the replacement offer is. Hopefully something with a similar potential upside for the folks spending big bucks on JetBlue.
The Amtrak Guest Rewards program is adding a new tier to its elite program. The new Select Executive status will be the highest status level in the program, requiring 20,000 tier points to qualify; the previous top tier of Select Plus was available at only 10,000 points.
The features of the Select Executive program are reasonably solid; here’s the list Amtrak is using in their promo materials:
- 100% tier point bonus on Amtrak® travel
- Select Executive Earned Upgrades
- Unlimited access to ClubAcela®, Amtrak Metropolitan LoungeSM, First class lounges and United Club locations for you and one guest, or your spouse and children under the age of 21
- Unlimited Buy and Share points
- No annual Transfer points limits
- Auto-registration for promotions
- A new priority customer service phone line for Select Executive members
Of these, priority customer service and the ClubAcela offers are also available to the Select Plus level members. And Select Plus gets a 50% bonus on Amtrak travel. The main benefits where Select Executive seem to be the upgrades – one per 3000 tier points which is 1 per 6 Acela segments – and the unlimited transferring out of points to other programs. The extra 50% bonus points doesn’t hurt either.
Getting to Select Executive status means spending $10,000 (ignoring the 100 point minimum per trip) or taking 40 rides on Acela. Not cheap at all but for regular commuters or folks with a decent Amtrak budget this is a pretty good deal. And the costs to add the few extra features don’t seem all that significant. Seems like a win all around.
Well, the bad news is that United Airlines has confirmed the new earning rates for premium cabin fares on many partner airlines. In posts today on FlyerTalk and MilePoint the company offered up an explanation and a full listing of the affected fare classes (which pretty much matches the list I had produced) and also an explanation. Apparently the old rates were a mistake:
In March 2012, when we migrated to a single system, we unintentionally increased PQM and PQS earnings for some of our partners to our former OnePass levels, instead of taking them to their intended MileagePlus levels.
While these higher earning levels remained in effect for the remainder of 2012, we are now reinstating the PQM/PQS earning rates for the following carriers and fare classes to 100% as of Jan. 1, 2013:
- Air New Zealand (NZ): A, B, C, D, E, J, O, U,Y, Z
- Asiana (OZ): A, B, C, D, F, J, Y, Z
- Croatia Airlines (OU): A, B, C, D, F, Y, Z
- Egyptair (MS): A, B, C, D, F, J, Y, Z
- LOT (LO): A, C, D, P, Z
- Singapore (SQ): A, C, D, F, J, P, R, S, Y, Z
- South African (SA): B, C, D, H, J, K, M, Q, S, Y, Z
- TAM (JJ): A, B, C, D, F, J , Y, Z
- TAP (TP): B, C, D, J, Y, Z
- THAI (TG): A, B, C, D, F, J, P, U, Y, Z
- Turkish (TK): C, D
I’m not entirely sure I buy that it was a mistake, particularly given how often they changed things around right when the initial announcement was made for the new program. Still, in a rather unprecedented move, the company has agreed to honor previously ticketed flights at the old earning rates:
We realize that some of you booked flights on these partners prior to Jan. 1 and were expecting the higher PQM/PQS earnings. In this particular case, given the circumstances, we will honor the higher rates regardless of your travel date. There are a few complexities involved with posting miles at the higher rates, so please bear with us. Specifically, if you booked your ticket through United, we will proactively adjust amounts after their initial posting (typically within a few days of when the original flight is credited). However, if you booked through someone other than United (like another airline or travel agency), you will have to contact the MileagePlus Service Center after your miles have initially posted in order to make the adjustment.
This will actually net me a few extra miles on my upcoming Bangkok-Haneda flight on Thai Airways so I’m pretty happy about that.
For members of American Airlines‘ AAdvantage program who came up short of renewing their Gold or Platinum elite status in 2012 there is some potential good news available: American will let customers buy back their status at the end of January. The program only works for customers who held the status previously and the pricing is split depending on just how close you got:
Compared to a mileage run to top off the account the rates are actually reasonable, at least for the folks who were 80% of the way there (the left column). Of course, that’s true only if you were just at the 80% number; if you were sitting 500 miles short the price might be a bit harder to stomach.
Not a bad option at all, really, though I do wince a bit at the idea of paying cash outright rather than flying the miles for the status. But that’s really just the purist in me.
What I originally thought was just a “fixing” of an obviously overly generous set of elite status earning rules from United Airlines‘ MileagePlus program on partner South African Airways appears now to be a massive change in earning rates for the new year. More than 70 different fare classes across at least 9 partners are affected by these changes. And in every case it is the premium fares – first, business, premium economy and full-fare economy – which are seeing the elite earning rates cut. When the new rules came out for MileagePlus in 2012 there was a rather generous upgrade in earning rates for premium cabins on many partners. Apparently United has decided they were being too generous and they’ve now cut back significantly.
In addition to the previously identified cuts for South African noted here the following fare classes now all earn only 100% of the miles flown towards elite qualification, down generally from 150%:
- Thai Airways: J, P, U, Y, Z, A, B, C, D,F
- Singapore Air: R, S, Y, Z, A, C, D, F, J, P
- TAP Air Portugal: B, C, D, J, Y, Z
- TAM: A, C, D, F, J , Y, Z
- LOT: A, B, C, D, P, Y, Z
- Croatia Airlines: A, B, C, D, F, Y, Z
- Air New Zealand: A, B, C, D, E, J, O, U,Y, Z (now showing only 100% again)
- EgyptAir: A, B, C, D, F, J, Y, Z
- South African Airways: J, C, D, Z, Y, B, M, H K, S, Q
These changes came without notification from the carrier, either through traditional means or through the online communities they have employees participating in. Quite unfortunate at many levels.
Also add in:
- Avianca: C, D, J
- Asiana: A, B, C, D, F, J, Y, Z
It isn’t quite a new carrier and it isn’t quite a discount carrier. It won’t involve service to new destinations and it won’t really alter the way flights are sold. Air Canada‘s new Rouge operation is launching in 2013 and there will be changes but probably not enough to help the airline-within-an-airline model succeed. Rouge is targeting leisure routes. There will be 13 destinations covered by the rouge service including three in Europe and ten so-called "Sun" destinations. The rouge fleet is small – only 4 aircraft – so most destinations will apparently not be served daily.
The infrequent service is unfortunate in some respects but it makes a bit of sense for leisure markets where there is limited demand. There are several other aspects of the service which also speak to the limited amenities associated with leisure/LCC operations. Most in-flight services will be on a paid basis. Meals will be complimentary on flights to and from Europe but the Sun routes will be buy-on-board for everything. The in-flight entertainment systems will take advantage of newer streaming media options, saving the company money. But passengers are likely going to be paying to access that content; full details on the price and systems are not yet available. Oh, and no in-seat power will be provided so hopefully the tablet, phone or laptop batteries are fully charged and long-lasting.
Where Air Canada is really cutting away at the value, however, is in the integration with their Aeroplan frequent flier program. Rather than offering earning based on the distance flown routes operated under the rouge brand will earn a fixed number of points based on the fare paid. And the earning rates are not at all pretty.
Flying a cheap fare from Toronto to Athens on rouge will net most passengers fewer than 1000 points. That same trip flown on Air Canada and other partners would net 10,000 points or more. Certainly for the very occasional traveler those accrual numbers don’t necessarily matter; there is a good chance they’d never get good value out of the 10,000 points either. But the skewing of the rates is rather severe.
Also potentially confusing is that, because it isn’t really a separate operation, the rouge flights are mixed in with the regular search results on the Air Canada site. Here’s what a search from Toronto to Athens looks like:
There is no indication that the direct flight, saving around 3 hours of travel time, comes with distinctly different services, both in-flight and on the ground. Hovering the mouse over the fare names at the top gives some additional details but not all of them. Once the flight is selected there are some additional details offered:
Still, the mixed levels of service have the potential to be rather confusing to customers.
Also, it is not clear how these flights will register with Air Canada’s Star Alliance partners. That could lead to even more customer frustration. Air Canada has confirmed that the flights will still be considered Star Alliance-operated with respect to partner benefits. So in many ways these are way better for customers of Air Canada’s partners than for Air Canada’s direct customers:
Air Canada is facing stiff competition from lower cost competitors, including Air Transat and WestJet, competitors which have a similarly limited offering to the new rouge services. But for those competitors there is no confusion amongst the customers; all the service is at that same level. And, at the end of the day, meeting the expectations of customers is more important that having the best product in the market. Air Canada is creating quite the opportunity for such confusion, a move which may ultimately prove to be the downfall of rouge.
As the end of the year rolls around and many travelers look to wrap up their year by topping off an account with a quick mileage run to hit a status tier I find myself rather entertained. Part of that is from the frantic posts and inquiries on how to get those last few miles at the best price but a larger part of it is from reading reports from other pundits on whether it is worthwhile or not. This year there are two particular stories which come to mind as I once again review the phenomenon.
First up is Chris Elliott’s latest screed on loyalty programs, explaining why they are a scam. Among the juicy nuggets Chris offers are the idea that the programs are a pyramid scheme and only those at the top benefit from them. So because of that no one should participate. He even takes lower tier elites to task, suggesting that they are causing the problems in some ways:
Some of you will say, "Hang on. I’m just a silver-level flier, but I get plenty of benefits without giving the airline all of my business. You want me to turn my back on that?"
Yes, I do. Because through your participation, you’re propping up a pyramid scheme that’s fundamentally unfair, unsustainable, and yes, fraudulent.
It isn’t particularly often that I agree with the things that Chris has to say, though I did once not so long ago. This time around, however, I think he’s gone too far. I actually think that’s only because he (once again) does a VERY bad job of presenting his position here. Yes, there are opportunity costs to the loyalty schemes. Forcing all our travel to one carrier might actually cost you more in real money than you get back in benefits. That is not so smart. But there are plenty of ways to actually get decent value from the programs at little to no marginal cost. The programs are certainly driven by marketing departments looking to skew spend from their customers. And it isn’t always smart to play along. But it also isn’t always so stupid.
The other story up to close out the year is a piece from Wall Street Journal columnist Scott McCartney, The Short Path to First Class (or get to it via google here). McCartney tells the tales of "a relatively modest investment of $4,000 to $7,000 a year" to reach top-tier status with some programs which can convert to "tens of thousands of dollars worth of business-class upgrades on international trips, plus bonus miles, airport-lounge access, domestic first-class upgrades and even perks like Tiffany & Co. gift cards."
I am not one to ascribe value to perks which I would never consider paying for anyways. Yes, the "free" business class upgrades to Europe or Asia are nice but they aren’t tens of thousands of dollars in my book. And things like lounge access or bonus miles can be realized at lower tiers, depending on the program. I don’t think it is worth $4-7,000 to get to any status level if you’re not actually flying anyways. Based on that I wouldn’t just buy the status outright so the price-point really is a different number. If you’re flying 45,000 miles anyways then the extra few hundred dollars to get to the 50K tier can see a real return on the investment. But just spending $7,000 to have 1K status so you can say you have it is pretty silly.
There is a balance to be found somewhere in the middle. There are plenty of people for whom the programs actually are a foolish investment. And there are plenty for whom the value is very real. A shame, really, that the drive to "call out" the other half leads to such bad advice being given out.