United’s new copy & paste MileagePlus program

A snarky version of Delta's SkyMiles site marked up with United changes announced today (Source: FlyerTalk- creator unknown)

A snarky version of Delta’s SkyMiles site marked up with United changes announced today (Source: Charles M. Kunz, CMK10 on Flyertalk)

It’s no surprise that United announced that it’s changing to a revenue-based frequent flyer program starting in March of 2015.

What is surprising, though, is how closely it mimics Delta SkyMiles’ proposed changes that go into effect in January 15. Jokes about it are flying around on social media sites (like the altered image above). Then there are  tweets like the one from fellow travel columnist Joe Brancatelli, “Proof positive that everyone in United C-suite wears W.W.D.D. (What Would Delta Do) bracelets.”

How similar can they be? Well, just look at the helpful new mileage calculator that United posted on its website today, and compare it to the one Delta posted in February.

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United's Mileage Plus conversion calculator

United’s MileagePlus conversion calculator posted today

Delta's SkyMiles conversion chart posted in February 2014

Delta’s SkyMiles conversion chart posted in February 2014

American

This space reserved for American Airlines :)

Many of my readers may not want to hear me say this, but I think what United and Delta (and Virgin America, Southwest, JetBlue) did makes a lot of sense and will improve the loyalty experience for true frequent business travelers in coming years. There’s little doubt in my mind that once the dust around the American and US Airways merger settles, it will adopt similar, if not identical, policies.

It never made good business sense for airlines to base programs on miles flown instead of dollars spent. That’s because airline fares are not based on distance flown; they are driven by market forces. This is why it can cost three times as much to fly from, say Atlanta to Nashville (215 miles), than it does to fly from Atlanta to New York (750 miles). As painful as this announcement is, it makes business sense for airlines to better reward their customers who spend the most…not those who fly the farthest.

To me, the airlines made a mistake when they started distributing applications for “frequent flyer” programs to everyone—even those who fly once or twice a year. That diluted the loyalty experience for the airlines’ best customers…the ones who pay the most (not those who flew the farthest). It opened the door to a wily generation of “gamers” who figured out how to snag more miles at very low fares by manipulating an admittedly imperfect system. With new, similarly mimicked spending tiers attached to elite status, those gamers can still earn mountains of miles and travel “for free” but over time I’m betting they won’t get those upgrades, shorter lines and other bennies bestowed on those who spend a lot.

The move to revenue-based programs realigns the system back to its initial premise: to reward truly frequent business travelers, those who fly 10+ times per year on non-discounted fares. I’m talking about the guy or gal whose company pays $6,000 for a business class ticket to London, or a $550 last minute fare between Portland and San Francisco.  If that’s not you, then sorry. If that is you, then get ready for things to get better. But it will take a while.

United MileagePlus

Link here for details from United

I’d love to hear your thoughts, feelings, comments and feedback about this massive change…. please leave them below! 

–Chris McGinnis

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  • china_man

    the United 2015 Premier qualification based on miles flown and PQD will stay the same so you will still qualify for *G. it’s just that you won’t earn as many miles in 2015 for cheap flights. that’s not good of course but if you say you don’t use miles to upgrade then it’s not that bad as you’ll still be Premier but won’t get as many free award flights or upgrades with miles. you’ll still have Y+ for any Premier level & lounge access if you have $5000 PQD and 50,000 miles flown but that was the previous rules not 2015 change. looks like you need 2-3 more international flights to make $5000 PQD this year

  • Hugo Traeger

    For the last several years I had decided that loyalty programs were not worth it and made my selections based on price and schedule. This year (all things being equal kind of), I decided to focus on United though they have not done much to keep my business from a service POV. I’ll see how this goes but I’ll probably be back to my old ways as none of the airlines care about the average frequent traveler.

  • http://www.loadfactor.tv Roger Williams

    Good article that makes an important point about the fundamental economics of tracking a customer’s loyalty on an airline. I always though FFPs were originally created to reward truly frequent travelers, however, Bob Crandall himself told me that was not the original objective during my interview with him last year http://loadfactor.tv/bob-crandall-loadfactor/ (VIDEO 6:03) saying it was intended retain both infrequent and frequent travelers. He attributes the situation that we find ourselves in today to the perversion of the concept by AA’s competitors, specifically the lifting of the critical one-year accrual period of the original AAdvantage design.

  • Lisa

    I agree with JanakJ. This will best benefit those who frequently fly short haul routes for which there is less competition. The majority of my trips are cross-continent between two major coastal cities on a very competitive route. My selection process tends to be airline/schedule/cost. I feel I’m being driven away from loyalty by this shift, as my popular route means frequent fare sales and a market driven down by competition.

    I would love to see airlines providing miles for delays. My time on the ground when I’m supposed to be en route has tremendous value, and I’d prefer some actual recognition of and compensation for this, in excess of a cart of snacks and beverages that will also be offered on my flight, whenever we’re eventually underway.

  • Nic

    Oh yes, now they are truly rewarding business frequent flyers….because now you don’t even need to fly to gain status.

  • philrubin

    This is exactly what UA did when AA originally launched AAdvantage 30+ years ago. Chris I agree with you that miles was never the right construct when the business and pricing strategy employed by the airlines is focused on yield. Airlines are actually making money flying people rather than (just by) selling miles to partners and that’s they way it’s going to be for the near term.

  • Chris T

    As a United Million Miler and former 1K and GS of many years, United’s service and Mileage Plus program have been diluted to the point where it does not significantly factor into my spend decision. If I make 1K again, it will be purely by accident of flight schedule and not because United has earned my business or there is X-whatever Delta does kickers.

  • Kris

    Do you honestly think many people will care? No. Absolutely not. Of course people frequenting these blogs will be basically all opposed, but we are the 1%, and the other 99% have different habits. I get shafted being that the 180K miles I earned last year would be 40K under new program, but I can’t say I hate UA for it because it is a sound business decision, if Delta did it, it is the right move /s. But really though, it isn’t a bad business decision.

  • Kris

    Well I guess United offers a better deal for top tier elites, because based on EQM required for top tier, 1Ks should get 10/$, not $11. I guess United didn’t realize DM was 125K miles.

  • http://www.travelskills.com/ Chris McGinnis

    Thanks, Judy! I expect changes as soon as the economy head south… they’ll use the programs to keep us flying, and start giving back some of the take aways…. guaranteed! — chris

  • Evan

    I totally agree. My wife and I go through phases of heavy travel and non heavy travel periods. Because of the punitive grasping nature of the changes, I don’t care anymore WHO goes somewhere, but WHAT THEY CHARGE.
    How many tickets sold by the flying Greyhounds are to corporate short term/ highest paying execs? If the revenue they generate is 33%, who accounts for the other 67% Chris?
    If those corp./ exec. late decision makers account for 75% of revenue, I’m wrong and gone.

  • Judy Serie Nagy

    I do think the legacy airlines will find out very quickly that the low-cost carriers are eating all their lunch. I completely understand that these programs are for the frequent traveller like me, so we’ll still be flying on UA because we like our perks and we don’t mind paying for them. But passengers who just want low fares will be booking elsewhere, the OTAs will thrive. I predict large changes again in 2016.

  • http://batman-news.com Réal Fortin

    I think they will end up having a lot more empty seats which will reduce their profits. The average traveler who is not getting top tier won’t see a value in the higher United/Star Alliance or Delta/Skyteam fares versus the cheaper alternatives. I only fly about 40-50k miles per year but I would always fly Star Alliance so I could get the most of my rewards and would often plan a vacation to ensure I reached the 50k. The prices of the Star Alliance flights are easily 10% more than the lowest prices available. I felt that no matter how much I liked/disliked my airline they had me by the b@lls because of my mile addition. I think I am about to be free from that addiction. It’s time to ditch brand-affiliated credit cards, get much cheaper fares, use reward cards that give 2% travel towards any ticket(which is the cheapest you can find) and break free from the airlines. The top tier perks have been whittled down to nothing an devalued with all the credit card companies offering free bags, priority boarding etc.

    Will I fly United and Delta? Maybe, if their fare is lower(doubtful) and I will collect the little “reward” that they still give out.

    It’s not a loyalty program anymore, it’s just a reward program. It is not an incentive to keep you around.

    Heck, if I can’t break the addiction I may just go all out with Aegean

  • Douglas

    But of course they do, and that is why I guess I should reconsider their 773 service! I can’t forget the ambient lighting as well! You are right Chris! :-)

  • Douglas

    Chris – great post and the cut and paste as well, my favorite. AA / US Air will be right behind. I don’t really see it as a big issue based on my work travel but also the exemption with the credit card thresholds currently with the DL AMEX. In calculating my international economy it’s slightly less but for my domestic tickets, I gain more.

    What it does finally put some emphasis on is the Mileage Run folks that often establish online presence in their ability to game the system for the best fares. This will give you great redemption miles but the status miles will be a think of the past. I do think the less elites will make overall things better, especially if you look at the overall base of HVC’s with Delta across their program not even examining just the DM.

  • Douglas

    I agree, flew to DXB and going to Asia next month, even flights within non competitive markets in the US bode well for mileage accrual towards status.

  • http://www.travelskills.com/ Chris McGinnis

    But they have stars on the ceiling on Emirates! :) — chris

  • Douglas

    I don’t see how they will lose the middle class when many of that same class are not Brand Agnostic. Those with the credit cards (DL Amex) get many waived already including the MQD levels.

    High Rev Flyers are very loyal, thinking of Delta, rollover miles and the new int’l upgrade certs, why would you not want to maintain the loyalty which can domino into future years. If you are paying for premium like I am through work on International, no doubt that makes my leisure travel better from a customer service / response and seat options.

  • Michael James

    So this program is for either the rich or a select group. I have been *G at UA for the past three years. I only fly three domestics and three International flights a year. I like the Lounge and getting Y+ on the International flights. I don’t really care about being upgraded to Business. I buy all my tickets on UA.com. I have 45k so far but only $2005in PQD. Is it my fault UA is selling tickets at their price? I buy them at their price because of the schedule. I flew IAD-MAA last month and paid $1200 for the ticket. I got mileage, ~16k. Under the new system, I will only get ~ 10k. I have always flown with UA the past many years but there is no way I will be able to get Gold next year unless I fork over the cash. Yes, cry for me but UA just lost a customer and I will go to AA until they change.

  • Douglas

    Flew EK last weekend, old 777 out of DXB, non lie flat, no meal beyond a light snack for an 8 hour flight. Hate to say it, Delta equipment and offering trumped my first and most likely last experience on EK. SQ is a different story…

  • Bob D

    I guess I think somewhat differently than the majority here. I think that maybe the reason you think the
    best customers are “the customers that fly frequently for business” is because you yourself flies frequently for business. I see those customers as captives, they have to fly whether or not they
    are rewarded they generally do not pay for travel meaning they provide nothing
    to the airline’s bottom line (yes, I know the company they work for does). Most big companies generally dictate in some degree which airline you fly. Our company requires you to go through their own travel agency which gives limited choices and requires a good reason as to why you don’t pick the cheapest. The airlines are giving fewer rewards because there is less competition and less need to reward. I know this will not be a popular opinion but this is mine.

  • http://www.travelskills.com/ Chris McGinnis

    Excellent point, Janak! Thank you. — chris

  • http://www.janak.net Janak Parekh

    Chris: you could also argue this in the opposite manner. Namely, those taking expensive shorthauls are easy to keep loyal, since they’re often using an airline because they’re hub captives. The cheaper routes are the more competitive ones, where loyalty has a bigger effect on which airline you’ll choose.

    Ultimately, the reality of today’s environment is the airlines don’t need loyalty in such a strong market, so they can only cater to their highest spenders, and if you view it in that light it’s effectively a transition from a “loyalty” program to a “reward” program. Which is what I think you’re saying, but was that the rationale for AAdvantage when it was initially conceived?

  • http://www.travelskills.com/ Chris McGinnis

    Thanks, Gary! Will be interesting to see how all this shakes out over the next year… and write about it! I’m glad there are folks like you around that can dig into the details that I can’t see! — chris

  • http://www.travelskills.com/ Chris McGinnis

    Thanks, Global! I guess the good news here is that these changes are going to drive smarter business decisions on the part of the airlines… AND passengers. With less to lose by switching, airlines with superior products, like VX or EK, are sure to benefit. — chris

  • http://www.travelskills.com/ Chris McGinnis

    Thanks, Kirk… I think that, too will change in time…

  • Nick

    The thing is they don’t fill planes with high revenue flyers, they wish they did but they dont. They will lose the middle class here. It makes no sense for the average flyer to show any loyalty to Delta or United now. And those high rev flyers were never that loyal to begin with. If you’re paying for premium cabins you don’t need the upgrades nearly as much.

    They need the PQD requirement to keep you on the treadmil, thats definitely not going to change any time sooon

  • Kirk

    Gary, what you wrote makes zero sense to me. “it’s a proxy for the amount of your life you spend with the airline in their metal tubes.” Airlines DON’T want you to spend time in their tubes, so why should they reward it?? All the time that you are taking up a seat, that’s a seat they cannot sell to someone else. They want you to pay lots of money and spend as little time as possible onboard. If they wanted you to spend time in their tubes, then when you book a flight from SFO to DEN, they would fly west (ie, the wrong way around the world) just to have you in their tubes longer. That’s just nonsense.

  • Kirk

    Of course PQMs are still based on distance and not dollars, because that’s what Delta does. United’s management isn’t smart enough to do anything on their own. Now the real mystery to me is why anyone still flies United.

  • Lack

    “With new, similarly mimicked spending tiers attached to elite status,
    those gamers can still earn mountains of miles and travel “for free”
    but they won’t get those upgrades, shorter lines and other bennies
    bestowed on those who spend a lot.”

    Actually, they still will. Upgrades, shorter lines and other bennies are still based on flown miles (both on DL and UA). And those who spend a lot, but don’t actually spend so much time in the air won’t.
    They might (or may not, if their spend is less then 20 cpm) get the same miles as “gamers” AKA people who sign up for a credit card.

  • Global1st

    People fly UA & DL for award programs that they tied are to the hip with, network and safety…while VX and EK for the experience…choices!

  • http://www.travelskills.com/ Chris McGinnis

    Hey Net: I hear ya about the Premier Qualifying Miles and I see that as the next step in the evolution of the programs… it certainly makes business sense. We’ll just have to wait and see — Chris

  • Gary Leff

    “It never made good business sense for airlines to base programs on miles flown instead of dollars spent. That’s because airline fares are not based on distance flown; they are driven by market forces”

    Actually it makes more sense than it seems at first blush. Not perfect, but it’s a proxy for the amount of your life you spend with the airline in their metal tubes.

    “will improve the loyalty experience for true frequent business travelers in coming years.”

    Except that the break-even point for mileage-earning in Delta’s and United’s program has been set at twice the per mile fare that the airlines set revenue-based requirements for elite status! And both airlines have CAPPED the mileage you can earn on a paid ticket, so the highest revenue’s skies aren’t the limit.

    So even if you buy the theory the execution isn’t what’s promised by the narrative.

    And speaking of narrative, Delta has one but United does not… Redemption/accrual changes months apart without a clear explanation of what they’re trying to do..

    Delta is willing to lose customers over this. United has already lost theirs, so perhaps they wind up in the same space.

  • http://www.twitter.com/dkmashino dkmashino

    I think it’s great! But as a Delta loyalist, I’ve gone through the psychologies of “processing” such a change. I’m at the point now that I lament not having this program apply to all the Europe biz class fares I flew in the past 2 months.

  • netopiax

    I had the same thought about copy&paste and the graphic at top is hilarious! I also agree with you, Chris, that basing miles earned on dollars spent makes perfect business sense for the airlines. The people who are likely to be mad about this are likely to be the airline’s least profitable, or unprofitable customers.

    That’s why I can’t figure out the rationale for having PQM (premier qualifying miles) continue to be distance-based in 2015. The base spend requirements help weed out the mileage runners, but I spend $20K/year buying last minute fares all over the West and end up with only 75K miles flown. Someone who flies from coast to coast twice a month at $500 a trip, will make 1K and be way less profitable.

    My opinion is they should just base the whole thing on profitability and be done with it.