The consultants United Airlines hires to provide strategic advice on loyalty innovation and how to increase profit must have a pretty easy job…watch Delta, then copy. Once again, United has mimicked Delta in increasing elite status thresholds for 2016 in a move that makes sense in a season of record airline profits, but remains a poor strategy to win long-term loyalty.
A 20% Increase in Spend Requirement
Like Delta, United has increased 2015 spending requirements in order to earn elite status in 2016. The requirements–
- 25,000 miles or 30 segments and $3000 for Silver
- 50,000 miles or 60 segments and $6000 for Gold
- 75,000 miles or 90 segments and $9000 for Platinum
- 100,000 miles or 120 segments and $12,000 for 1K
Note that foreign addresses are exempt from this minimum spending requirement and you can avoid this minimum spend requirement by spending $25,000 or more on a United Chase co-branded credit card, though the credit card spending waiver does not apply to earning 1K status.
This does not affect spending this year or elite status for 2015. Also note that you do not want to register a foreign address unless you are actually living there – United has been aggressive in monitoring this.
“Customers who do more business with us should enjoy our best benefits.”
United’s announcement begins with a false premise. We’ve discussed before why it does not always make sense to reward customers who may spend a lot of money but are not particularly loyal. Many corporate contracts force high-spending business travelers on United, but if those travelers must fly United whether they like it or not, the generous loyalty treatment is merely superfluous. The brilliance of airline loyalty programs is was that it rewarded those passengers at the margins who made the discretionary decision to remain loyal to a certain airline (typically filling unsold seats rather than taking the space of so-called “high value” customers) when they did not have to.
United defines “more business” as not flight miles, but dollars spent, as is reflected by both its new elite earning policy and its transition to spending-based award miles next March. But that unfortunately leads to situations like this–
A Twitter Insult – current MileagePlus program is “inundated” with many members
A disgruntled small-business owner complained to United on Twitter about the new changes and United defended the new higher spend requirements, saying–
Essentially United is saying that there are too many elite members right now, despite the ranks having been thinned by years of post-merger woeful service (which, to United’s credit, has improved dramatically this year). I have no inside info whether or not there truly are a glut of elites, but the word inundated means to overwhelm or flood. I don’t think United is flooding with elites – the upgrade list and Group One may be long on hub to hub routes, but I also see cabins go out with open seats in the forward cabins all the time — including twice last week!
The term inundated is insulting and belies the point that MileagePlus is United’s cash cow thanks to Chase Bank – there is no getting around the fact that United wants to have its cake (money from Chase for miles, which are given to the masses) and eat it too (reward loyalty not on a long-term basis, but using a transactional model, to target a small cadre of travelers).
Let Them Eat Cake
Speaking of cake, the radical change in the MileagePlus program really does diminish the opportunity for the middle class to take aspirational trips around the world in premium cabins. Mileage running on United is dead starting on 01 March 2015 and even when you earn miles at a hugely reduced rate, severe award chart inflation means your miles will not get you close to what you were able to redeem just earlier this year. This was not a gradual chipping away over the years, but a swift and sudden decimation. There is really no way to legally game the system anymore, and to United’s credit, it has been clear about its intention to close such loopholes.
Look, I’m not saying United owes anyone anything (except a fiduciary duty to its shareholders and an ethical obligation to treat its employees with respect), just pointing out that this game has radically changed over the last year.
My Personal Travel Changes
I am now a MillionMiler on United and will not re-qualify for 1K status this year, ending a seven year run. With Gold status for life, a wife who like me at home, and a calculated downturn in revenue travel (awards have made so much sense on so many occasions this year), I just cannot justify re-qualifying for 1K status, especially when RDM earning will diminish so much next year on discounted economy class tickets.
I don’t think I’ve ever been a “valuable” United customer, as the airline now defines the term, but I’ve spend tens of thousands over the years on Untitled tickets and I know there are others in my boat – it just doesn’t make sense to give 100% loyalty to an airline when the benefits do not outweigh the costs. Somewhere there is a happy medium, but I believe the pendulum has swung too far in the airlines’ favor in this post-merger world, and here I am not only referring to United.
In the end, air travel will go on and is getting better. With rapid wi-fi installation across the United fleet, I can endure a few hours behind the curtain as long as I can work. While I do not think United is properly factoring in loyalty on a long-term basis, I cannot fault it for taking advantage of this very good time of economic boom, full planes, and low fuel prices to increase its bottom line even more by decreasing the benefits we have so much enjoyed over the last decade. I just wish United would not just copy/paste everything Delta does. Surely, United is still capable of innovation.