United Airlines’ decision to count spending on partner flights only on tickets issued by United for purposes of earning elite status marks a fundamental blow to the concept of airline alliances, undermining its Star Alliance partners and begging the question, will airline alliances soon be nothing more than marketing gimmicks?
We run into the following predicament: say Lufthansa is running a sale and I buy a business class ticket from Frankfurt to Los Angeles from the German carrier for $2,500. The routing is Frankfurt-Chicago-Los Angeles and back the same way and Frankfurt-Chicago-Frankfurt is operated by Lufthansa and Chicago-Los Angeles-Chicago is operated by United. Despite being Star Alliance codeshare partners and A++ joint venture partners (they share revenue on these flights), the price of the whole ticket would not count toward my minimum spending requirement because it would be issued on Lufthansa (220) stock rather than United (016) stock. How United will prorate the cost of the Chicago-Los Angeles-Chicago (United operated) portions is a mystery to me.
Thus, United has now weaponized booking and balkanized loyalty in the Star Alliance. United has weaponized booking in trying to monopolize it, making it a condition for loyalty and essentially going to war with its partners for business, alliance partners that cannot be labeled purely as competitors like AA and Delta. And that is certainly United’s prerogative. But it undermines the implicit promise of the Star Alliance network, pursuing loyalty by siphoning revenue from other member carriers in a race to the bottom. Surely other carriers will follow.
If I were a CEO of one of the Star Alliance member carriers, I would ask United CEO Jeff Smisek to explain himself in front of everyone at the next CEB meeting. What if every carrier followed United’s lead? In the aggregate, it will drive away Star Alliance loyalty because consumers will be less incentivized to book with Star Alliance, even if the price is a bit more, knowing that the benefits are diluted. Paying an extra $100 for elite status + lounge access is a lot easier to stomach than paying $100 more only for lounge access…
What if Thai, Asiana, ANA, and new member EVA decide that if United will not “count” flights purchased on their ticket stock, they will no longer count flights booked on United ticket stock?Despite United’s notable Pacific route network out its Tokyo and Guam hubs, conscientious frequent flyers of these programs will scale back purchasing from United, opting instead for booking on their own carriers, who presumably would market their own flights more prominently than United codeshares. United thus looses revenue.
The problem is not that I won’t be able to qualify for 1K status next year. I may well be in Germany, which would exempt me from the requirement all together. The problem is United has unleashed a snowball that I fear will gain in intensity and size as other carriers contemplate retaliation. The result: the consumer is crushed, or at least in a position much worse off than before.
The “good” news is that there are rumors of a Star Alliance systemwide tool under development that would track spending in a uniform manner across Star Alliance. I have no inside information in this regard, but if it is the case, why doesn’t United wait until it is rolled out to implement its new revenue-based scheme? It is not far-fetched to wonder, for penny-wise, pound-foolish reasons, that even if such a tool becomes available United would still mandate partner tickets be issued on United stock in order to satisfy minimum spending requirements for elite qualification.
This is a sad chapter in the story of airline alliances, an indication that the future world of airline alliances will be limited to something like the three Ls—lounges, luggage, and logos. That’s not something to celebrate.