How airline elite status extensions could backfire
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We're living through unprecedented times in the world of loyalty programs, as most major hotels and airlines have extended their respective elite status tiers due to the ongoing coronavirus pandemic. These announcements have come in waves: Hilton started the trend for hotel programs — followed by World of Hyatt, Marriott and IHG Rewards. On the airline side, Delta kicked things off, followed closely by United and then Alaska, American and Southwest).
As these updates were released, we received dozens of emails and messages with one general attitude: "It's about time!" While it's understandable that loyal travelers were interested in what would happen to their hard-earned elite status, this impatience with the announcements was a bit baffling — and potentially concerning.
However, I'm not sure that these announcements won't have unintended consequences.
Here's a look at why these elite status extensions may backfire on the airlines that have announced them.
One popular way for airlines to poach elite travelers from competitors is through a status match or challenge. If you're unfamiliar with how these work, many airlines will offer temporary status to members who are interested in shifting their loyalty, and once they fulfill any flying obligations — which are typically much lower than the standard qualification thresholds — they'll enjoy status for the rest of the year.
If you're an elite traveler right now, your status is locked up for the rest of 2021 — even if you take no flights and spend $0 with your preferred airline this year. This gives you a perfect opportunity to test the waters with another airline once travel starts to return to normal.
For example, if you currently hold Delta Platinum Medallion status, you could initiate a status challenge with United. As long as you fulfill the PQF and PQP requirements on or after July 1, 2020 — which is pretty much a given, now that non-essential travel is all but halted — you'll have Premier Platinum status through January 2022.
Then, instead of focusing your energy on requalifying for your current status — and since most airlines haven't announced incentives to keep you traveling this year — you can spend the latter part of 2020 meeting these requirements, putting yourself in the enviable position of having two high-tier statuses as you plan travel in 2021.
Now, there's nothing to say that completing a status challenge will completely shift your loyalty, but what if you jump to another carrier and realize it offers a better overall value proposition? Suddenly that elite status extension — and the requalification pressure it removed — has given you a chance to test the waters, and it could result in a new preferred carrier.
Along these lines, I think American may have the most to fear. With the announcement that Alaska has restarted its partnership with AA — and will be working toward full Oneworld membership by the summer of 2021 — it's entirely possible that some American elites are eyeing Alaska status, especially now that you can earn elite-qualifying miles on both airlines. While we don't yet know what American and Alaska will provide in terms of reciprocal perks, your travel experience on an American-operated flight might be similar for both Alaska MVP Golds and American AAdvantage Platinums.
And with Alaska miles worth significantly more than AA miles based on our valuations, the second part of 2020 might be a great opportunity to lock-up status with Alaska as it moves toward Oneworld integration.
Lower credit card spending
Many airline loyalty programs allow you to boost your elite-status qualification prospects with cobranded credit cards. In fact, you can straight-up earn Delta Medallion status without ever setting foot on a plane. If you typically use spending on cards to help qualify (or to help snag a higher tier than you'd earn with just flying), these status extensions may lead you to spend elsewhere.
For example, consider the Delta SkyMiles® Reserve American Express Card. After the overhaul of the Delta-Amex card portfolio in January 2020, you can earn up to 60,000 Medallion® Qualification Miles (MQMs) every year — 15,000 MQMs for every $30,000 you spend in a calendar year (up to $120,000 in total spending). In some cases, you might choose this card over one that offers a better return on your spending, simply because you value those MQMs — and the Delta Medallion status they can help you earn.
Now, with your 2019 earned status safe through January 2022, you have no reason to sacrifice higher credit card rewards in the pursuit of MQMs. You could swipe your Chase Sapphire Preferred Card for everyday purchases and earn more valuable — and flexible — Ultimate Rewards points, or you could use another American Express card to earn Membership Rewards points.
The same holds true with the following:
- Southwest Rapid Rewards Priority Credit Card and Southwest Rapid Rewards Premier Credit Card: Earn 1,500 Tier Qualifying Points (TQPs) for every $10,000 you spend annually.
- United Club Infinite Card: Earn 500 Premier Qualifying Points (PQPs) for every $12,000 spent, up to 1,000 PQPs per year — though this is being quadrupled from May 1 through Dec. 31, 2020.
You may choose to spend less on these cards now that you don't need to worry about qualifying.
Abandonment of loyalty entirely
Finally, there's a risk that some travelers may use the later part of 2020 to arrive at a startling conclusion: that loyalty to a single airline is no longer worth it. If you aren't a hub captive in a metro area like Atlanta, you probably have a choice of carriers with which to fly. Do you deliberately choose more-expensive or less-convenient itineraries, just to travel with your airline of choice? Now could be a time where you select that nonstop JetBlue flight over a connecting American itinerary, or book that cheaper Southwest flight over United.
For a business traveler who logs 100,000+ miles every year, there's likely value to be had from sticking to one airline — be perks like upgrade certificates or club access. However, you can enjoy luxury perks by simply carrying the right credit card in your wallet, and this may be an appealing option for low- and mid-tier elites.
This strategy won't be for everyone, but 2020 may very well be the year where some members stop irrationally pursuing elite status.
The coronavirus pandemic has had a massive impact on the travel industry, from airlines suspending operations and cutting capacity to hotels operating at historically-low occupancy levels. We've also seen many airlines and most hotel programs extend elite status for their members, and while this may seem like an easy win, it may come back to haunt these travel providers.
Status match or challenge opportunities could lead to permanent shifts in loyalty, and these extensions could shift credit card spending to non-cobranded options. And it's possible that some could test the waters of being a "free agent" traveler, booking whichever airline offers the best combination of price, convenience and rewards.
Many travelers are cheering the announcements of these elite status extensions, but airlines should take care to ensure that they continue to keep their most valuable members' loyalties as travel (hopefully) begins to return to normal in the months to come.
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