Industry watchers have been awaiting a decision from United related to Delta's decision to switch from miles to money for loyalty tracking. The answer has arrived: starting in March 2015, United will transition from using mileage flown to fares paid for its loyalty program.
This change also offers the opportunity for another datapoint to integrate into flight search for OTAs and metasearch companies, as discussed in the recent FlightView report, where 79% wanted better price grids and 29% interested in additional datapoints on site.
This new strategy aligns the airline's financial interest more closely with the loyalty program, creating a better incentive for business travelers to pay higher fares for loyalty. This also further segments the market to ensure that only the highest cash value travelers earn loyalty status on the airline, and requires further differentiation among airlines to gain loyalty: WiFi, amenities, service and other technological improvements are needed to keep frequent fliers coming back.
Of course, alignment with an airline's financial interest often means dissatisfaction on the part consumers, even if the airline claims that "members will be rewarded for their travel spending on United."
Mileage runs will become a thing of the past, as the ability to qualify for elite status with a 25,000 miles run costing only $1300 will be eliminated. This sets an actual fixed monetary cost of Premier membership, thus eliminating a popular and decades-old practice of travel hacking to loyalty status.
United had started along the path last year, with the introduction of the "PQD," or Premier Qualifying Dollars, metric. This metric was aimed at ensuring a base of dollars spent for Premier-status qualification, and continues to be in place as the core of the loyalty program.
Qualifying for elite status still requires an annual base spend, and so the change to fare-based points does not actually affect qualification for Premier. This is a very important distinction, as earning loyalty still requires a base mileage amount, and the already-existing spend requirement. Of course, the wording on the FlyerTalk forum by the United representative suggests this may change in the future, emphasis added: "These changes will not affect the qualification requirements for 2015 Premier status."
Other qualifications of the new 2015 United loyalty program:
- Fare-based mileage accounts for all United and United Express tickets starting with 016
- Mileage will still be the means of tracking loyalty for Star Alliance partners with tickets not starting with 016
- For fare-based mileage, the maximum earned miles will be 75,000 per ticket
- Class-of-service and loyalty status bonuses will be included in the miles earned per ticket
No analysis yet on how much this change will devalue the average return per mile in the United MileagePlus loyalty program.
NB: United Airlines image courtesy Shutterstock.