Is this the end of the runway for frequent flyer programs as we know them?
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I’m just going to say it — United Airlines has killed frequent flyer programs as we know them.
It has announced such a massive shift to its own program that when the changes kick in come January 2020 for earning elite status in the 2021 program year, I’ll barely recognize it.
Yes, JetBlue and Southwest have long had revenue-based frequent flyer programs. But this is different. This is one of the big three U.S. airlines that has 16-hour flights around the globe. Like, really long flights.
Now that United’s MileagePlus program has announced this move to becoming all about the dollars, expect American and Delta to follow. Or at least watch this very, very, very closely. The airline industry is copycat in nature.
If you don’t know what I’m talking about, start here, but essentially United has removed miles from its MileagePlus program.
What is a frequent flyer program that no longer awards its members elite or redeemable miles based on how far they fly? Well, it’s not exactly a frequent flyer program. It’s a big spender program. It’s a rebate program. It’s a “show me the-money and I’ll show you some perks” program. Perhaps it should be called United DollarsPlus, because that’s functionally what it now is on all sides of the coin. That’s of course United’s choice to make, but let’s not mince words about how massive a shift this is for travelers from the previous few decades of frequent flyer programs.
How we got to the end of the road
Not clear on how big a change this is? Here’s a quick flight down memory lane.
Until 2014, United awarded status tiers and redeemable elite miles based on how far you flew. For the last five years, United has also had a spending component tied to its frequent flyer program. This means you couldn’t earn elite status just by lapping the world on some cheap tickets — well, unless you lived outside the U.S. and were exempt from that spending requirement.
Way back in those dark ages of 2014 when a spending requirement was first introduced to the program, low-tier Silver status only required $2,500 in spending to go along with the 25,000 miles of flying. Top-tier 1K status required $10,000 of spending to go along with 100,000 miles of flying. For this year, just five years later, the spending portion of those equations is $3,000 for Silver status and $15,000 for 1K. That’s about to look like a bargain.
2015 brought United’s massive move to awarding redeemable miles based on how much you spend instead of how far you fly. Beginning that year, non-elite United members were awarded 5 redeemable miles for every $1 spent on the base fare of a ticket, and top tier Premier 1Ks earned 11 miles per dollar spent. If you scored a $300 base fare to Europe (before taxes and fees), as a general MileagePlus member, you were now only earning 1,500 redeemable miles on that ticket instead of say 5,000+ miles you might have actually flown on the ticket. That’s still true today.
Then earlier this year, came the announcement that beginning next month, United is doing away with award charts for the flights it operates. Starting on Nov. 15, award flights cost whatever United says they cost on any given day as the price will be “dynamic”. Expect inexpensive fares to cost fewer miles and expensive fares to require more miles. Partner award flights continue to have an award chart — for now.
You better have some business travel
The march to where we are today has been at least five years in the making, but United has now all but closed the book on its frequent flyer program being about flying. The airline doesn’t care how far you fly, it just cares what you spend — and you’re going to have to spend a lot for them to take notice. Or rather, your company is going to have to spend a lot, because the only winners in this scenario look to be business travelers on pricey last-minute tickets.
The airline says that it expects its elite ranks to grow under this new spending program, which honestly surprises me. The annual spending requirements for Silver status are going up by $1,000 to $4,000 — plus 12 segments (takeoffs and touchdowns). Assuming you live at a United hub and largely fly on nonstop flights, that’s six United round-trips per year, but you’d need to have an average base fare of $666.67 on those trips. That’s hard to do, especially as a leisure traveler.
If you don’t fly that often, you’re going to need to spend $5,000 per year just to earn the first elite status tier.
While I’ve had all of United’s published status levels at some point, the last few years I’ve earned Gold status. To do that again next year, I’ll essentially need 12 round-trip flights on United and $8,000 in spending — again, coming out to an average of $666.67 in base fare per trip. The other option is $10,000 in spending if I can’t hit the 24 Premier Qualifying Flights requirement.
That’s $10,000 dollars per year spent on United (and its partners) to earn mid-tier status. Just a couple years ago, $10,000 was the spending requirement for top-tier status.
I fly a decent mix of business and personal flights on United and I easily meet the spending requirements under the current program. I am not someone who just hops on cheap fares to rack up miles, but using the numbers from this year’s trips, it’ll be very tight to again earn Gold status in the new program. I’ll need not only fly an average of one nonstop round trip United flight per month but also spend $8,000 over the course of the year. If you don’t have 24 segments with United, Gold requires $10,000 in spending. If I didn’t have some business travel, I’d have no shot at hitting those numbers — and I’d venture a guess that I’m not the only one.
I’m not even going to talk much much about the higher tiers because only the 1% or business travelers will spend $12,000 to $24,000 per year with one program to unlock those levels.
Credit cards won’t help you much
When I first saw United’s changes, I was not happy, but I had hope that cobranded credit cards could become a very important piece of the equation, because it’s common for credit cards to help you earn elite status across most programs. Currently, $25,000 in annual spending on many of the United cards exempts you from the elite status spending requirements up through the Platinum status level. But the credit cards will not be a lifeboat in this new program.
You’ll get just 500 PQPs with $12,000 in spending and an additional 500 PQPs with another $12,000 in spending on the cards. Those PQPs will only count through earning the Platinum status level, though some legacy cards will count the PQPs through the 1K level.
But really — $24,000 in annual spending on a card only gets you 1,000 PQPs? That seems very weak.
Some Delta American Express credit card holders can essentially charge their way to top-tier status. It isn’t easy, but it’s an option at least.
My local frozen yogurt shop has a rewards program that looks a lot like this one. You earn one point for every dollar you spend on yogurt and toppings. Once you spend $75, you get a $5 credit on your next cup. The difference is that the whole family’s spending can count on your one ice cream account, but it’s a rebate program where everything you are given is tied to what you spend. You sign-up because you might as well earn some free dessert, but it’s not particularly fun or exciting. It’s not a game, it’s not a puzzle, it’s not something that encourages you to spend more or come in on Saturday to get that one extra cone before the end of the week to unlock more sprinkles.
Travel is obviously a little different than a local ice cream shop, but these changes turn what was an absolute star in the frequent flyer world and make it sort of sad. And that makes me a little sad.
Travel is an adventure, and while I’m not a fan of doing mileage runs myself, I do appreciate the journey it takes for a traveler to earn elite status. There’s a story for every mile flown. There’s something exciting — and almost romantic — about figuring out how it all fits together and where else you need to go to unlock the perks or awards you want. But with one carrier, no more.
Now, United is fine with you saving the stories you have for every mile flown and telling it to someone else. What they want is just your money, lots of your money. By the time we reach 2020, United MileagePlus will be primarily revenue-based when it comes to earning miles, redeeming miles and unlocking elite status. In my world, that’s a big deal, and not in the good extra sprinkles sort of way.
Featured image by Alberto Riva / The Points Guy
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