As part of the FTU event last weekend I presented a session on maximizing United’s MileagePlus program. I don’t think that there is anything particularly groundbreaking in the content, but I do think that it is a good reminder of how their award chart works (or doesn’t in some cases) and how a bit of thought can help you book some pretty incredible awards for the same price (or less!) as a more traditional award.
At the beginning of the session I asked the crowd what they were in the program for. I was quite surprised – and pleased – that domestic upgrades were at the bottom of the list. That’s a good thing in the United program as those upgrades are less forthcoming than with other airlines. Most people were interested in the awards and routing rules and I think that is still an area where United shines. Maybe too much, and I don’t expect it to last forever, but for now the opportunities truly are grand.
I’ve posted the slides online here. I’m not entirely sure that they’re actually going to be completely useful without the conversation as they’re more of an outline than a detailed analysis of what to do and how to book the awards. But I do think they can get you started on where some of the sweet spots are in the awards and how to think about the travel options so that you can get more from the trips you’re taking. If nothing else, they’re a good way to start a conversation on just what can be done.
Give them a look if you’re interested and let’s have that conversation, either in the comments here, on FlyerTalk, on MilePoint, via email or however else works for you.
Cranky Flier has a post out this morning suggesting that American Airlines really isn’t so weak in Asia. There are some interesting numbers in the post, and he does a good job of explaining how he got to those numbers. I’m a fan of that in many ways. Except for the part where I think he’s completely messing up where it really matters. He only considers flights between the US mainland and anywhere in Asia. That makes sense because that’s mostly where the business matters. But where he screws up, to me, is this assumption:
Lastly, I’m including joint venture flights operated by ANA under United and by JAL under American, because since it’s a joint venture, those flights should be considered their own. Sure, there is work to be done before the experience is seamless, but the path is there.
It is a nice theory, but it just doesn’t work. None of the three alliances have figured out the right way to run these JVs as though they are integrated operations. Mileage earning rules are mostly standardized now and fares are generally fixed. But operationally there are still differences. Ditto for things like frequent flyer benefits and recognition. Upgrades, for example, happen very differently (if at all) on partners.
The other thing overlooked is that coverage isn’t only about frequencies. Including JV partners American has service to Tokyo (NRT & HND), Seoul, Beijing and Shanghai. Both United Airlines and Delta have additional Japan destinations and United also has Hong Kong. And if the JV flights are excluded the number of gateways on the US side are notably higher for Delta and United.
American has some service in Asia. But they are nowhere close to the other two major players, especially on their own metal.
The good news from Air Canada this week is that they are going to be offering a new Premium Economy product in their longhaul fleet. Their 777-300ER will start to see some planes converted to support the new cabin layout this summer and the specs on the Premium Economy product are pretty solid. They will be 2-4-2 across, with 38" pitch and 20" width. Every seat will have power and also larger screens for the AVOD systems than the regular economy cabin. Premium meals, too, from what the carrier is advertising:
Enjoy a welcome beverage as you settle into your seat, and then make your choice between two delicious hot meals served in a china casserole with glassware and cutlery. Your hot meal is also accompanied by a refreshing salad, warm bread and dessert.
Breakfast offerings in Premium Economy include: fresh coffee, juice, pastries and yoghurt.
That sounds quite a bit like business class service. They even have hot towels on offer. And the seats look pretty nice in the press shots:
Air Canada is also rebranding the premium cabin on their Rouge flights as Premium Rouge, with basically the same benefits, though they really are just the same seats that are currently installed on those planes.
So that’s the good news. Now for the bad news. All these benefits in Premium Economy come at the expense of the regular economy cabin. Air Canada is shifting from 9-across to 10-across in the back, leaving passengers with just a 17" seat width. And if that wasn’t bad enough they are also cutting the pitch on the seats from 32" inches to 31". The net result is a notably smaller space and a LOT more passengers on board. The new config will be 36/24/398 compared to the current 77W layout of 42/307. That’s more than 100 additional seats on board and, from what I can see on the seat maps, no additional lavatories added.
About the only good bit here for economy passengers is that Air Canada will not be considering Premium Economy as part of the upgrade path for passengers. That means you can still upgrade from coach into the business class ("Executive First") cabin.
So, yeah, the Premium Economy product is nice. But at what cost? Things are not going to be fun for the other nearly 400 passengers on board. And if this kills the upgrade options, too, that’s even worse.
United Airlines is changing the way their Global Premier Upgrades (GPUs, née SWUs) are redeemed for flights on Lufthansa metal and, not surprisingly, the results are bad news. In posts online last night United offered up these details of the new requirements:
Starting March 1, when you request a GPU certificate for use on Lufthansa, we’ll ask you to provide some additional information:
- First and last name of the traveler who will be presenting the certificate to Lufthansa
- Departure and arrival city/airport of the flight segment to be upgraded (reminder: GPUs are used on a per-segment basis on LH)
- Flight number and flight date
- Confirmation number of itinerary associated with segment to be upgraded (this can be the Lufthansa confirmation number or the confirmation number of another airline/travel agency you used to book your ticket)
If day of travel changes the certificate should remain valid; if the route or passenger name changes the certificate usage will be at the discretion of the Lufthansa agents. In other words, good luck. Oh, and this is on top of the change a while back to reduce the eligible fare classes eligible for upgrade.
Yeah, the reasoning for this is pretty clear: they’re trying to cut down on resale and bartering of the certs. But it is still terribly annoying for the customers who use them legitimately. It wouldn’t be quite so bad if there wasn’t a multiple week turnaround at the request and redeposit cycle when they don’t clear. But there is.
So, yeah, another change to the MileagePlus program. And not a good one.
This past week saw perhaps one of the most significant announcements in the evolution of loyalty programs in recent years: Crossover Rewards from Delta and Starwood. The two have teamed up to change the way hotels and airlines work together to reward their most loyal customers, and the implications could be quite far-reaching across the industry. Airline and hotel programs have partnered before, but none to this depth of integration.
Crossover Rewards is focused on the elite members in each program, the type of customers which the programs work hard to attract. From time to time hotels have offered trial elite status promos to airline elites. That can build a short-term bump in customer base but it doesn’t seem to have the long-term effects that the hotels are looking for. The new Crossover Rewards program is built to be a long-term solution, not a flash-in-the-pan change to the numbers.
For elite members in either program the main bonus is getting to earn both hotel and airline points for activity on either of the partners. The only thing close to this historically was Hilton‘s Double Dip program and that meant earning airline points in lieu of extra hotel points, though it is also available to everyone rather than just to elites. Crossover Rewards allow for elites to earn points in both programs without sacrificing earning on either side; that’s a pretty significant step forward.
For top elites in both programs – Platinum elite on the SPG side and Platinum and Diamond Medallion on the Delta side – the benefits are even more significant. Rather than a one-time status gift which the customer must maintain through "natural" qualification activity the Crossover Reward program will be granting an elite-light level of benefits. For Delta Platinum and Diamond Medallion members Starwood will offer many of the same benefits as the SPG gold tier, including priority check-in, complimentary room upgrades (no suites) and free internet. For SPG Platinum members Delta will offer many of the same benefits available to Silver Medallions, including one free checked bag, priority check-in and priority boarding. It is not a full elite status – no bonus elite points or priority service other than on the day of travel – but it is definitely more than what everyone else gets. And, more significantly, the benefits are valid so long as the partnership survives, not just for a trial period.
Finally, it is worth noting that the earning rates for points on the Crossover Rewards partner are based on spend. While this is normal in the hotel loyalty world it is decidedly not in the legacy airline loyalty programs. For SPG elites the earning will be one Starpoint per dollar spend on the base fare, excluding taxes, fees and surcharges. It is not much of a surprise that Delta has the ability to track this data; they recently announced intentions to put similar metrics on elite qualification in coming years. For Delta Medallions the earning will be based on room rate only at Starwood hotels; ancillary spend will not earn SkyMiles. While not groundbreaking overall, this approach is definitely another move in the direction of tying elite benefits to revenue. No surprise that Delta is on board with that given their recent announcements regarding similar plans for 2015 Medallion qualification.
Perhaps the most impressive thing to come from this change is that there doesn’t actually appear to be anyone who will lose with the changes. Starwood has committed to prioritizing their own elites over the Delta Medallions for room upgrades and there will be no competition for Delta upgrades as that isn’t one of the benefits. Earning crossover points doesn’t cost customers earning opportunities in the main program; it is purely additive. And the other benefits – waived fees for various services and priority access – doesn’t really cost anyone else anything.
The two companies would seem to have almost nothing but upside from the changes, too. Yes, they will forgo some revenue on the ancillary fees side of the ledger. And there will be some costs to handle the points earning. But the partnership opens up a strong marketing avenue to top travelers without significantly diluting the benefits for their existing elite customer base.
This may prove to be an enhancement which is actually beneficial to both customers and companies. There are far too few of those happening these days.
Partnerships between hotel and airline loyalty programs are not particularly rare, but they are mostly focused on earning airline points for stays at hotels, and then generally in lieu of earning with the hotel directly. Starwood and Delta have launched a new Crossover Rewards program, allowing SPG elites to earn points towards their Starpoints balance for flights taken on Delta. The SPG elite status will also translate into elite benefits on the day of travel, including free bags and priority boarding.
On the points earning front, SPG members with linked accounts will earn one Starpoint for each dollar spent on Delta base fares. This correlates with the recently announced idea of MQDs and Delta’s ability to track spending on a per ticket basis. It seems that they are quite happy to leverage that new technology both for internal bits and for partnerships.
On the day of travel front, the benefits are limited only to SPG Platinum members; gold elites are excluded. The benefits include one free checked bag (up to four passengers on the reservation), Zone 1 boarding (up to nine passengers on the reservation) and SkyPriority access
and day of departure upgrades on routes where complimentary upgrades are offered (Platinum elite only).
The benefits for SPG Platinum elites rest somewhere between Delta AmEx cardholders and Silver Medallion status. That’s not to shabby at all, especially for basically no additional effort on the part of the SPG member. The only real drawback I can see is that it requires crediting the points to Delta rather than Alaska Airlines, which is how I normally roll with my Delta flights. Then again, I’m not SPG Platinum so the extra point/dollar isn’t really all that valuable to me anyways.
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.
The first – and hopefully only – announcement of changes to the 2013 United Airlines MileagePlus program came out late this evening and unfortunately it is a downgrade. The company is shuffling the fare buckets they use for awards in to first class on their 3-cabin planes, making it harder for top elites to get access to rewards in that cabin. The current version of the program has both upgrades and awards for top elites redeeming into the ON fare bucket. Other members redeem into the O bucket for awards and ON for upgrades. Effective February 1, 2013 the ON bucket will be used only for upgrades. From the announcement:
[W]e currently use the same fare class (ON) for both upgrades and Saver travel awards redeemed from MileagePlus Premier Platinum, Premier 1K and Global Services accounts. A consequence of this pairing has been fewer seats being available for upgrades.
To remedy this imbalance, we will begin using ON exclusively for upgrades into United Global First and United First on 3-cabin aircraft effective February 1, 2013. Having a dedicated fare class for these upgrades will enable us to offer differentiated availability. To accommodate this change, we will no longer offer a dedicated fare class for Saver travel awards redeemed from MileagePlus Premier Platinum, Premier 1K and Global Services accounts. Instead, the inventory once used for ON class will be allocated to O class, which will become the sole booking class used for Saver Awards in United Global First and United First on 3-cabin aircraft.
The spin is decent enough and I understand the direction they’re coming from. At the same time, it is not hard to see that this is a bit of a downgrade for the top elites in that they no longer have access to extra awards. There’s something to be said for the theory that the top elites are the only ones who will have enough miles to redeem for those seats anyways, though CC churners/expense accounts seem to build mileage balances pretty quickly, too. If this is the only downgrade to the program then I’m OK with it, mostly because I cannot see redeeming for UA first class as a matter of habit. But it is definitely a downgrade. Such is life with the loyalty programs…
It is that time of year where changes to frequent flyer programs are being announced in advance of the coming program year. For Japanese carrier ANA there will be significant changes to the accrual rates of points for flights operated by the ANA group. There are also changes to the earning rates depending on what credit card you might carry combined with your elite status level. Oh, and certain destinations will earn more elite qualifying points than others. It has become incredibly complicated from what I can gather.
Starting in April 2013 three fare classes – J, B and M – will see the earning rates improve. These are generally higher fares and it makes a bit of sense that they are getting better. At the same time there will be seven fare classes – P, V, W, S, L, K and T – which will see earning rates cut. The P fares are discounted business class seats and they will earn only 70% of the miles flown, down from the current 125%. For the cheapest economy classes the earning rate will drop to 30%. Here is a chart showing the old and new rates:
Beyond these changes there are also updates to the Premium Points earning rates, essentially earning levels towards elite status. Starting in January 2013 with the new charts all routes between Japan and Asia will earn 1.5x towards Premium Points; previously only flights to China had that 1.5x multiplier.
And then the credit cards come into play. Starting in April 2013 passengers who have elite status with ANA and who also carry the Gold or Premium credit cards:
If you don’t have elite status you can still earn big bonus points for carrying the credit cards, up to 50% for the ANA Card Premium. Oh, and there are both regular and "Super Flyer" versions of the credit cards; the latter gets more bonus miles, too:
Finally, the accrual rates for ANA Upgrade points will be changing. Currently members earn two upgrade points for every 10,000 Premium Points (a/k/a EQMs) in the prior year. The new program will have a sliding scale:
In pretty much every case the number of upgrade points earned will be increasing. That’s a good thing because the redemption rates for them are increasing, too.
Here’s the new upgrade award chart:
The domestic upgrades and lounge access rates aren’t changing. The others are all increasing. Due to the removal of first class cabins on the resort and Asia routes the ability to upgrade from business to first is going away. All of the economy to business class rates are going up by two points. The last business to first upgrade is increasing from 14 to 20. The above rates are all one way.
I believe that the changes are, overall, not too surprising. Certainly a significant devaluation for the cheapest fares but there are some give-backs on higher fares and on the upgrade points. Not the best ever, but I can definitely see how it could have been worse.
Admittedly this change will be of value to a very, very small population of customers but, as a part of the notification United Airlines sent out about the change to GPU/RPU expiry which was announced last week there was a small addendum related to Global Services members. Global Services members will now have access to United’s Global First Lounges when flying in BusinessFirst. Here’s the text of the announcement:
[W]e are pleased to announce that as a Global Services member you now have access to our Global First Lounges when you fly United BusinessFirst® internationally. Located in seven airports, these lounges offer personalized service, complimentary hors d’oeuvres and premium beverages, and are available to you prior to departure and upon arrival. The Global First Lounge is also available to you when you fly United Business® on our p.s.® service between New York’s Kennedy Airport and Los Angeles or San Francisco (prior to departure only).
That’s a nice upgrade for those customers. Then again, that United didn’t allow their top customers access to those lounges until now is a little surprising to me.