Earlier today, I quickly posted the news that United Airlines will introduce a new Premier Qualifying Dollar (PQD) revenue requirement in 2014 to maintain or achieve elite status, in addition to the normal mileage requisites. It didn’t come as a shock to me and I promised to share more of my thoughts about the change.

First, here are two things you won’t hear me say:

  • “Screw you United, I’m status matching to American!” Tick tock. It’s all but certain that American, especially with the new US Airways-heavy management team, will implement a similar revenue policy. And my bet is that it’ll come sooner rather than later (as in… similarly announced beginning in 2014 for 2015 status).
  • “How can you do this to me? I fly exclusively with you 100,000 miles+ every year!” While I’ve enjoyed the perks of easy to attain top-tier status on cheap fares (especially in 2008 and 2009), I fully appreciate that airlines should focus on rewarding fliers who contribute the most to their bottom lines. It’s been a fun ride, but I get it.

A hard-target dollar requirement tied to each elite tier is only the beginning of United’s revenue-based approach, in my opinion.

What I see happening next is that United (and other U.S. airlines for that matter) will reduce the Premier Qualifying Miles/Segments (PQM/PQS) earned on low fare-class tickets, such as L, K, G and N (I outlined the revenue fare classes in this post). It would be a double-whammy of sorts making it harder to hit the PQM target on top of PQD for status, but I bet it’ll happen eventually.

Another potential change is that mileage redemptions could turn revenue-based. While I’ve accepted my fate for the elite status changes, this would be painful to swallow. Mostly because I’m sitting on a large stash of MileagePlus miles right now and the amount required for an international first class award would likely be exorbitant compared to today’s levels (or similar to a standard Delta award today ;-) ).

My personal shining light in all of this is that I should lock-in lifetime Premier Gold (and Star Alliance Gold) status with United this year being only 16,402 miles away.

How will you fare under the new system and am I crazy for postulating it’s only the beginning?

– Follow Darren Booth on Twitter, @FrequentlyFlyin, for more airline, hotel and travel industry news, reviews and opinions.

Related posts:

United Airlines Adds Spend Requirement for Elite Status Beginning in 2014

List and Description of All United Airlines Fare Classes

Airfare Pricing Buckets and Airline Fare Basis Codes Explained

The NEW United Upgrade and Award Fare Buckets

Posted by Darren | 19 Comments

19 Responses to “United’s Revenue Model for Elite Status Is Only the Beginning”

  1. Matthew says:

    I don’t predict a change to award redemptions, other than a slight devaluation of the chart and perhaps fuel surcharges a-la Aeroplan, but I do think that the cheaper fare buckets will earn 25-50%, which will indeed be a double blow.

  2. patricia says:

    good thing is that still tons of star partners globally offering distance-based redemption (even if UA switches to revenue-based earn+burn)

  3. Jeremy says:

    I agree with Matthew on the award redemptions. For any of the legacy carriers to move to a system for redemptions and earning like Southwest or Jetblue would be pretty dumb IMO. Why? Because those programs are effectively cash back rebate systems. Loyalty goes out the window when you’re earning a percentage of the fare paid back to be used towards future travel. As it now stands for legacies, people often strive to accumulate more miles for that dream vacation. Take that away and airline cobranded credit cards carry far less meaning when you can earn similar % cash back that can be used everywhere.

  4. Seth Miller says:

    Continental had lower EQM earning on lower fares purchased via 3rd parties for a few years. They dropped it with the United merger. I don’t know that we’re headed back that direction. They don’t really need to with the hard dollar approach figured in to the math. Reducing earning on those would have been an alternative, not an additive change IMO.

  5. Time for new strategies.

  6. ken says:

    maybe you guys should stop predicting bad things because airline companies feel more comfortable with following if bloggers predict and change expectations of flyers. So if you don’t want revenue based redemption, stop mentioning it, they read blogs and collect ideas!

  7. Darren says:

    @ken: I doubt anything we bloggers mention hasn’t already crossed their minds and would be considered independently. ;-)

  8. Great points, Darren. Like you, I’ve been fearing the switch to an entirely revenue-based model for several years. Although after today I think they probably won’t pull that this year. It will be an incremental shift, but this is definitely the first step.

    Ultimately I think that extreme shift would hurt them, as people like me (who will spend the 10K to retain 1K) will BAIL to Virgin America if the programs are all essentially equal.

    What do you think?

  9. Darren says:

    @Savvy Traveler: Thanks! And yes, I’m sure the airlines will take baby steps with each new revenue change (not launching them all at once). Virgin America is an outsider for me, anyway, as I’m more concerned about my elite benefits and redemption opportunities on a global alliance scale. Virgin America and its rather limited partnerships with other airlines isn’t an option for me presently.

  10. I don’t know much about UA, did they have an equivalent to American’s Elite Qualifying Points (EQP)?

  11. Darren says:

    @Jack: Yeah, not having a Chase waiver for 1Ks is a bit off-putting… I guess they’re trying to “protect” the top-tier (not including Global Services, of course) by rewarding high spend/high travel regardless of credit card loyalty.
    @AAdvantageGeek: Indirectly yes. United has a system granting additional elite qualifying “miles” for higher fare-class purchases, but they don’t differentiate it miles vs. points as American does.

  12. Hasse says:

    I don’t mind the changes, if only the level of service (both soft & hard) matched the dollars they want from us.
    Currently United is behaving like a car dealer were the car cost $20K on friday including wheels, but the monday after you need to put another $5k on the table for the wheels and when you do, because what’s a car worth without wheels, the sales guy tells you that you are a fool doing it.

  13. Mike from Berlin says:

    Game Over! The recent developments on UA’s side plus the new change fees for reward tickets render MP into one of the most useless programs to participate in for EU residents. While we may be spared the revenue model for the time being, almost everything else just simply sucks from my perspective. The fact that most * Alliance programs in Europe are even worse is driving me towards BA’s Avios at full speed. Living in Berlin, I have to transfer anyways, going almost everywhere I need to go, so might as well do it at LHR. So, happily redeeming my last miles with them and then it’s good-bye. I’ve been a member since 1988 and I used to love UA in the 80s and 90s. They were still okay after 2000, though I preferred CO from 2000 on. Now I’m just tired of the ever “enhancing” “friendly skies”…

  14. naif says:

    i guess fuel surcharge on award tickets is next

  15. NB says:

    Oddly enough, Darren, I’m in the same boat (?plane) as you as I will earn MM this year but am sitting on a stash of UA miles.

    The reality of the situation for me was that the value UA offered through MP for the past decade was an outlier for me and made it a no-brainer to fly UA and put up with all the attendant nonsense and poor service. I always said that you would need your head examining willingly to book UA in regular Economy, rather than Economy Plus, when other airlines do everything else so much better.

    UA had to return to the norm somehow and they’ve chosen to make MP more normal – but they still treat ordinary passengers like scum and they really must address this if they are to earn the loyalty of the next generation of frequent flyers.

  16. NYBanker says:

    This is a positive development for those that actually spend a lot of money with the carriers. Many folks don’t have time to transit via several continents on a $300 ewr-sea fare.

    Did UA give a spend waiver for those with annual sufficient cc spend like DL did?

  17. Traveller says:

    virgin America, South West and Alaskan must be popping the champaign today. As UA moves more towards revenue based activities they are entering the space occupied by competitors thst offier superior products. If I was not getting the benefits of 1k i would drop them all together. They are a poor airline at best.

  18. SC Osprey says:

    Before they start on any further MP program downgrades, their biggest customer–Chase–may have some choice things to say! As I understand it, UA (pmua) would have still been its old self, had Chase not stepped up to keep Continental going through its bankruptcy, and, therefore, allow it to eventually merge with United.

  19. Darren says:

    @NYBanker: Yes, they did give a waiver to Chase CC holders, but only at the Silver/Gold/Plat level, not 1K.

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