United Adding New Revenue Requirements: Premier Qualifying Dollars

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Airlines are big copycats. This can be good for the consumer when one airline has a fare sale and others match, but it can also be bad when one airline adds a fee or reduces benefits and others match. Earlier this year, Delta announced they would be adding a revenue requirement to re-qualify for elite status known as Medallion Qualifying Dollars. At the time, there was a lot of speculation as to whether other airlines would soon be following suit – and today we have our answer: a rep from United posted on Flyertalk that the airline plan to do the same, introducing Premier Qualifying Dollars. Creative name, huh?

United is adding Premier Qualifying Dollars.
United is adding Premier Qualifying Dollars.

Here are details from their Flyertalk post:

Starting in January 2014, Premier qualification for members living in the United States will include a minimum annual spending level. We will track this new requirement with Premier qualifying dollars (PQD) – dollars spent on most United tickets, including partner flights, and Economy Plus purchases. The changes will not affect Premier qualifying miles (PQM) or Premier qualifying segments (PQS). The new criteria will look like this:

  • Premier Silver: [25,000 PQM or 30 PQS] and $2,500 PQD
  • Premier Gold: [50,000 PQM or 60 PQS] and $5,000 PQD
  • Premier Platinum: [75,000 PQM or 90 PQS] and $7,500 PQD
  • Premier 1K: [100,000 PQM or 120 PQS] and $10,000 PQD

A minimum of at least four paid flights operated by United, United Express, or Copa Airlines will be needed to qualify for any Premier status.

For 2014, the PQD requirement is waived for Premier Silver, Premier Gold, and Premier Platinum qualification for members whose address with MileagePlus is within the 50 United States or the District of Columbia and who spend at least $25,000 in Net Purchases in 2014 on a MileagePlus co-branded credit card issued by Chase Bank USA, N.A. There is no PQD waiver for Premier 1K qualification.

These changes apply to 2014 qualifying activity for status through 2015 and do not affect your 2013 qualifying activity for 2014 status.

In terms of Million Miler status, according to the FAQ section, this change will not affect any lifetime Premier status. However, if on an annual basis, you qualify for a higher status level than your lifetime status, these qualification requirements will apply; and this program change does not affect how you earn lifetime flight miles, Premier qualifying miles (PQM), or Premier qualifying segments (PQS).

More information can be found at the special site United created to explain this update.

My Thoughts

In short, I don’t like the more revenue based elite system, but I can live with it as long as redemptions don’t move to a revenue-based model (which would make premium cabin redemptions extremely expensive).

At first glance, these seem pretty similar to the Delta Medallion Qualifying Dollars requirement. The same spend threshold is required for Silver, Gold, and Platinum status. However, when it comes to their top-tier 1K status, only $10,000 PQD are needed, as opposed to Delta Diamond which requires $12,500 MQD (makes sense since 1k is at 100,000 EQMs and Diamond 125,000).

Similar to Delta, having one of United’s MileagePlus co-branded credit cards and spending $25,000 will get you out of the PQD requirement, but only for Silver, Gold, and Platinum Premier status. At this time, it appears there is no waiver for the Premier 1K qualification. There’s no mention of whether this will also be true beyond 2014.

Also, similar to Delta is that these new requirements are only for those members who reside in the United States. Those outside the states are exempt from the PQD requirement. Now might be the time to move to Canada!

When it comes to what counts toward the spending, only the base fare and carrier-imposed surcharges will count, as well as Economy Plus purchases. The flights must be flown by United, United Express, or Copa Airlines or operated by a Star Alliance or a MileagePlus partner airline and issued on a United ticket (ticket number starting with 016).

Currently, United hasn’t announced any changes to award redemptions such as switching to a revenue-based system like Southwest, Virgin America, and JetBlue currently have in place, and I don’t think that’s likely to happen anytime soon, only time will tell how this will affect award mileage accrual and the redemption value of miles.

I value United miles as some of the most valuable mileage currency out there at about 2 cents apiece thanks to the airline’s large route network, good award availability and the ability to redeem those miles on the airline’s 27 (EVA just formally joined today) Star Alliance partners.

However, by putting spending requirements in place, there is an inherent devaluation to those miles since you now have to spend a certain amount of money in order to get the benefits and privileges of elite status as well as accruing miles toward that status and to use for award travel. The airline has put those requirements in place to attract high-paying customers like business travelers – especially with the $10,000 requirement for 1K’s – but most of us don’t fly the highest fare classes and since you can meet the spending qualification for elite status (at least for 2014) with co-branded credit card spending, that undermines the exclusivity that an airline’s highest-paying customers likely expect as well. Obviously the airline calculated that keeping high-value customers and retaining possibly fewer of them was worth losing “cheap elites” who buy the lowest fares and will likely jump ship to another airline.

It takes a big commitment to an airline to double down and focus all of your flying and credit card spend on that airline – especially when United’s domestic fleet is still in desperate need of an overhaul and is still in the process of adding now-standard amenities like WiFi to its planes, not to mention its generally terrible customer service.

I personally don’t like using an airline co-brand card in general because I don’t like to put all of my miles and points in one basket. I may fly United and its partners, but I accrue tons of Chase Ultimate Rewards points, which I can then transfer to United when it comes time to redeem so I have lots of options. That’s especially true because the sign-up bonuses for Chase’s Ultimate Rewards cards are consistently higher than United’s bonuses on its cards – even this week, Chase launched a limited-time offer on the Ink cards with 60,000-point sign-up bonuses on the Ink Bold and Ink Plus, that beat out the best non-targeted offers on the United Explorer card – not to mention their lucrative category spending bonuses, which United co-branded cards only offer on United purchases.

Update: The current offer for the Ink Plus and Ink Bold is 50,000 points after $5,000 spent in 3 months

While disappointing, I can’t say I’m surprised by this move. I focus more of my flying on American and Delta and recently got a Delta Platinum Amex in my efforts for 2014 elite status requalification, but I also just got the Explorer card through a targeted 60,000 mile sign-up bonus and will be considering whether it’s worth it to rack up the spending on it to requalify for United Platinum status for next year.

What are your thoughts – will this affect your loyalty to United?

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