Yesterday’s rumored changes have turned into a 36 page long thread (as of this writing) on FlyerTalk. The lack of a complete denial by United’s representative on FlyerTalk isn’t helping. A few other bloggers have written on the topic as well.
First, for some perspective, it’s worth considering my travel on United/Continental this year. I’m attending StarMegaDo3, which is going to net 4720 EQM for $750, but since there’s a bit more to the program than earning a few EQM. (If I were after the EQM, I’d fly a few transcons for that much. Booking my DEN-LAX-JFK trip home from it came out to 3337 EQM for $77.55, or 2.32CPM.) As a result, I’m willing to drop those segments and fares from my statistics. Year to date, I’ve paid United and Continental a total of $3,692.66. As a result, I’ve booked and flown 70,887 EQM, in addition to still holding $200 in travel vouchers. This brings my average CPM to 4.93, after a few recent splurges for summer travel and a trip to Hawaii. I don’t hop on airplanes for the sole sake of earning airline miles and travel almost exclusively on Friday/Sunday evenings, so spending 5cpm is acceptable to me.
At this rate, I fully expect to make the 1K tier by achieving 100k EQM for no more than $5k in cash spending.
According to the rumor, UA’s tacking on a mandatory revenue requirement to its elite tiers as well. To qualify for the top tier, “Premier Diamond,” I’d need to spend $8k, which would be easily obtained by dropping my flying on AA (which, in light of this instability with UA Mileage Plus, isn’t going to happen) or counting my spent travel vouchers ($1.8k). To defend the cents per mile target, I’d have to fly 160k miles, which is feasible for the time being. It leaves me wondering what might happen in the future when higher revenues are desired or I spend slightly less with the airline.
The changes partition would-be UA fliers into a few groups.
There’s the whales who happily and consistently pay for full fare tickets, especially those buying tickets in premium cabins. For those with significant spending with the airline, UA’s already taking “care” of them via the Global Services program. For those making more one-off purchases, the loyalty program does little to build UA’s competitive advantage. For the passenger consistently purchasing, say, international first class tickets, an upgrade certificate offers no added value and the miles little-to-none. Service and product attract these passengers.
UA also has mixed-fare fliers who travel on their own dime for personal travel and have paid business travel as well. While the shift adds significant priority to full fare tickets, a hypothetical mixed-fare traveler may buy revenue tickets for a family vacation. The two-faced nature of treating passengers as their fare for the day of travel does little to build long-term loyalty.
Then there’s the bottom feeders found on FlyerTalk who seek to minimize their spending while maximizing the miles returned, parlaying them into valuable first class tickets. While my tickets might frequently fail to cover United’s costs according to their published per seat-mile statistics, the seats could have gone empty. The marginal cost of transporting me is close to that of printing a boarding pass, possibly serving a meal in first class, and providing me with some miles which I will redeem for future travel. When a flight is oversold, I’m much closer to a real liability to the airline as involuntary bumps must be paid in hard currency rather than the travel voucher scrip that I readily accept for minor inconvenience to cut costs.
Standing around in a revenue management office hoping for the whales to fly to keep the airline profitable does not seem sustainable in the long term. OpenSkies is an exclusively business class airline that has survived for several years, but it its flights from Paris Orly to Newark and Washington don’t have to connect to a substantial domestic network. While increased fares would cull the ranks of the mileage running crowd, it drives away general members who would just as well fly Southwest for less impairing the route network further.
Meanwhile, access to Economy Plus, redeemable mileage bonuses, and checked bag allowances are being cut for lower tier elites, there’s little reason to hit the $2k/4k/6k spending requirements for these tiers.