Travel Tuesday Top 10: Ways That Elite Status Is Evolving
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With both past and impending airline mergers, ongoing economic uncertainty and the ever-changing airline industry, elite flyers have found their programs changing a lot within the past couple of years. “Sure bet” complimentary first class upgrades are becoming harder and harder to come by as airlines strike a balance between giving away the house and monetizing first class cabins. Here are some of the most significant airline elite status changes.
1. Elite Status Becoming More Tied To Spending: Recently Delta announced they starting in 2014 they will require Medallion members to meet minimum spending requirements in order to qualify for elite status in addition to flying. US-based Medallion members will need to buck up and either spend $25,000 dollars a year on a Delta American Express credit card in order to maintain their status, or spend the following amount of money in addition to accruing regular Medallion Qualifying Miles/Segments: Silver $2,500; Gold $5,000; Platinum $7,500; and Diamond $12,500. Jeff Robertson, VP of SkyMiles claims, “Adding a revenue component to the SkyMiles Medallion program ensures that our most valued customers receive the best program benefits and a more exclusive experience.” I suspect we’re going to see a lot more requirements like this in the future with other elite programs where status is tied not only to the amount you fly, but the amount of money you spend either on the airline itself or on a co-branded credit card. While not a set revenue requirement, Air Canada’s Aeroplan recently instituted that at least 5 segments or 10,000 elite qualifying miles must be flown on Air Canada flights in their new Altitude program.
2. More Airlines Are Creating Status Programs: Although they’ve been traditionally considered “discount” carriers, some airlines that have until now eschewed elite status programs have gotten into the game as well, including Southwest, JetBlue and Virgin America. Clearly airlines see revenue opportunities in awarding their top customers benefits, though these airlines aren’t giving away nearly as much as the legacy US airlines. Last summer, JetBlue launched TrueBlue Mosaic that awards frequent fliers who fly 15,000 base flight points (these are the 3 points per $1 you earn on fares–so $5,000 spend) or completed 30 flight segments and have earned at least 12,000 base flight points ($4,000 spend) in a calendar year. Benefits include a free second checked bag, free Even More Speed access, early boarding, an earning bonus of three TrueBlue points per dollar spent and more. Virgin America launched their Elevate elite status program which has two levels: Silver and Gold. Perks include priority check-in, security clearance and boarding, points-earning bonuses (25% for Silver, 100% for Gold), free checked bag allowances (1 for Silver, 3 for Gold), complimentary space-available upgrades to Main Cabin Select. Southwest created its A-List program back in 2009, and to qualify you must fly 25 qualifying one-way flights or earn 35,000 Tier Qualifying Points in a calendar year. Like the points for both JetBlue and Virgin America, Southwest Tier Points are tied spending on airfare (you earn 6-12 points per $1). All three programs tie their points-earning and elite status to spending, so in a way, Delta from point number one above is actually following in the footsteps of these airlines.
3. Elite Status is Becoming More Tied To Credit Cards: While most cards don’t offer elite status outright, depending on which card you get and how much you spend, you can earn most if not all the required elite miles to attain elite status. For example, the Delta Reserve card awards cardholders with 10,000 Medallion qualifying miles with the first purchase, and 15,000 more MQM’s if a member hits $30,000 in spend within the calendar year – that’s enough for Silver Medallion status on Delta – plus an additional 15,000 MQM’s if they hit $60,000 in spend during the same calendar year. Not only that, Reserve cardholders get priority in the Medallion complimentary upgrade program- going against a Medallion at their level and in the same fare class, a Medallion with the Reserve card gets priorirty. The Delta Platinum Amex offers 10,000 MQM’s for $25,000 in annual spend, and another 10,000 MQM’s for $50,000 in annual spending, for a total potential of 20,000 MQM’s. On American, the only card that helps toward elite status is the Citi® / AAdvantage® Executive World Elite Mastercard®which yields 10,000 elite qualifying miles after $40,000 in purchases each calendar year – just under halfway to Gold status. The US Airways MasterCard offers 10,000 Preferred Qualifying Miles after cardmembers hit $25,000 in spending each year, almost halfway to Silver status. This is a fairly new phenomenon in the credit card world, and I predict that we’ll see more and more cards out there offering not only bonus award miles but also elite miles as a way to attract new customers.
4. Status Challenges Instead of Matches: It used to be that airlines would flat out match your status based on your status with another airline. However, times have changed and most airlines now will offer a status challenge instead where you’ll have to fly so many miles in a given time period to keep the status. I personally had quite the status match tale, when United said they would originally match me status when I inquired, but then only offered a challenge. Luckily I was able to get them to honor what they said in the initial email, but my story is still the exception. Check out my full post on Airline Challenge Information to see the details on each airline that offers a challenge and who is eligible.
5. Stripping Away Low-Tier Perks: There used to fewer tiers when it came to elite status. For instance United and Delta used to have three levels and now they each have four levels. Thanks to airline consolidation (Delta/Northwest and Continental/United) and subsequent route trimming, there are a lot more elites out there at various levels competing for the same perks, and one of the negative consequences of all this consolidation is the diluting of elite benefits at the bottom of the pyramid. The most glaring recent example is how United stripped many of the valuable benefits of Premier Silver members- such as not allowing them to select Economy Plus seating until only 24 hours before departure (vs. at booking in the past), and they have also reduced the number of free bags Silvers can check to just one bag. Delta has followed suit in that Silver Medallions can only check one bag and can only access Economy Comfort seats at check-in instead of during the booking process.
6. More Options to Buy Status or Elite Qualifying Miles Outright: Currently US Airways is the only domestic airline that allows anyone to buy status (including top-tier status) outright. For example, if you’ve never stepped foot on their planes, you can buy Chairman’s Preferred (their top status) for $3,999 (though that drops to only $2,999 as long as you have at least 1 Preferred Qualifying Mile), but for the past two years, Delta has a run a promotion where you can buy up to 10,000 Medallion Qualifying Miles near the end of the year to reach your elite status or for rollover if you’ve already hit an elite status threshold. They have limited this to 10,000 MQM’s per year, but if these buy-miles promos are popular, you can bet we’ll see more of them in the future.
7. Upgrades Are Becoming Harder for Elites: Many elite members who purchased coach fares (even discounted coach fares) would stand at least a decent chance of being upgraded in advance at their respective levels and time windows. Recently, however, many airlines have successfully began selling discounted first class fares (sometimes for less than business class fares), resulting in fewer free upgrades in advance. With the glut of elite members after airline consolidation as well, it’s also now not uncommon to have upgrade lists with 50+ elite members competing for limited space. On the Star Megado, United CEO Jeff Smisek talked about selling upgrades and how the airline needs a balance between Premier upgrades and paid upgrades. He said the airlines need to be able to sell some of those seats up front to be profitable. Some airlines are also prioritizing cardholders of its co-branded credit cards above non-card-carrying elites as well – taking non-flying loyalty into account. However these upgrades are being processed, one thing seems certain: elites are getting short-changed. However, airlines are business (and not terribly profitable ones at that) so expect this trend to continue as they try to sell upgrades to bring in as much cash as possible.
8. Benefits with Hotels and Other Travel Partners: Just last week, Delta announced a new partnership with Starwood to provide both Delta Medallion and SPG elite members more benefits.The program, called Crossover Rewards, begins March 1, 2013, and provides elite members of both loyalty programs reciprocal benefits. SPG elite members will receive bonus Starpoints on purchased Delta fares as well as receive priority check-in, priority boarding, and waived baggage fees. High-level Delta Medallions will receive one SkyMile per $1 of eligible room revenue, elite check-in line access, free in-room high-speed internet access and late check-out. I think this partnership is smart – both Delta and Starwood have strong American Express ties and will probably end up generating more loyalty through Crossover Rewards. I also think that, though Starwood has no plans to develop a similar partnership with other airlines at this time, other hotel chains might get into bed with other airlines in order to create even more loyalty among their most profitable flyers and guests. I wouldn’t be surprised to see other airlines and hotel brands who share the same credit card issuer, team up to share information and encourage their members to drive business to partners through strategic marketing initiatives.
9. Harder To Use Systemwide Upgrades: One of the major benefits of top-tier airline elite status is systemwide upgrades. Even though domestic upgrades are complimentary, many airlines award top flyers with upgrade certificates that allow international upgrades, and that’s when these vouchers come in handy. However, in many cases these are getting both harder and more expensive to redeem. American and US Airways both allow these certificates to be used on any fare class – American awards Executive Platinums with 8 per year while US Airways Chairman’s Preferred members get just 2 (although they can bring along a companion). United 1K’s get 6 of these per year, but they are only valid on mid-tier economy tickets in a fare class W or higher, while Delta restricts their usage to super-expensive Y, B and M fares which are sometimes even more expensive than just outright buying discount business or first class. As more US airlines update their international premium class offerings to be in line with top-notch international competitiors and start selling them competitively, the ability to use systemwides has not only become much more difficult already, but is bound to get even harder in the future.
10. Maximizing Alliances and Partnerships: When Aegean Airlines joined Star Alliance in 2010, Global Traveller pointed out a somewhat backdoor way to get Star Alliance Gold status (the same as you would attain by hitting Gold, Platinum or 1K with United) by banking Star Alliance miles on airlines like United and US Airways to their partner Aegean Airlines, which only requires flying 20,000 miles in a year to attain gold status and offers a very protracted expiration timetable so that in some cases, the status you earned in 2012 would last through 2015. A lot of United and US Airways loyalists who were having trouble meeting the Gold level requirements of their home airlines decided to chuck it all and bank their miles to Aegean instead in order to hit a higher overall alliance status level, and if you did hit Gold you still get benefits on United and US Airways like a free checked bag, priority reservations, boarding and check-in, and lounge access when traveling on a Star Alliance carrier. As US airline program elite levels multiply and benefits are diluted, we’ll see more and more people looking for loopholes and back doors like this one as they search for ways to hit higher status levels and regain some of the benefits they have lost – as well as considering alliance-based benefits that are sometimes richer than those attained with loyalty to a single US-based airline.
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