The times they are a changing, and there can be no denying now that the frequent flyer industry has entered a new era, one in which the focus has shifted from loyalty and is now aimed directly at revenue.
Continental announced that, beginning Jan. 1, 2004, it will change the way in which members can earn elite status. The new policy will give preferential treatment to members who purchase higher fares, and will significantly diminish the ability of those flying on discounted fares to maintain their status.
Specifically, OnePass members flying in the higher fare classes will earn 150 percent of mileage flown, to be counted toward elite status, and/or two segments for each segment actually flown. Those flying on the lowest fares, however, will earn just 50 percent of actual miles flown toward elite status and will receive zero segments.
The following chart outlines OnePass’ elite status earning criteria, as well as mileage-earning criteria for 2004:
|Fare Class Flown||Base Mileage Earned (%)||Elite Mileage Earned (%)||Elite Segments/Points Earned|
|J, C, A, D, Z||150||150||2|
|H, K, B, V||100||100||1|
|Q, S, T, L||100||50||0|
As was the case with SkyMiles, OnePass members will still earn full mileage to be used for redemption purposes on any fare class — only elite status earning will be affected.
And the new elite-earning rules aren’t the only changes that will go into effect in 2004.
Continental is also increasing the redemption cost of its one-way, one-class domestic upgrades by 50 percent, from 10,000 to 15,000 miles. And OnePass members who redeem for awards in K class, or in H class in BusinessFirst to Hawaii will now be required to pay a non-refundable service fee of $200, in addition to the miles.
To ease the blow somewhat, Continental has built in a sort of buffer period. From Jan. 1 through Dec. 31, 2004, members who purchase their tickets online at http://www.continental.com will still earn full elite status, even when flying on a lower cost fare.
So, the big question is, how will members react? Obviously, the reduced elite earning ratios only affect those members who fly on Q, S, T and L fares — the elite earning criteria for everyone else either remains unchanged or improves. The increased upgrade redemption cost impacts all members, but then again, how many are spending their miles on domestic upgrades in the first place?
It would seem that Continental has studied SkyMiles’ members’ reactions to the Delta changes closely. When Delta made its changes, members were upset about the diminished elite earning abilities for low fare flyers, but what really sent them into an uproar were the cuts Delta made to its elite Medallion program. Continental, on the other hand, has made no cuts to its elite benefits (at least not yet). OnePass members who are able to achieve elite status under the new guidelines will be privy to exactly the same benefits as are currently in place.
The question remains, will OnePass members see the changing elite qualification standards as a necessary evil and be content in the knowledge that the elite benefits themselves have been left untouched, or will there be a backlash similar to what has been experienced by Delta?
One thing that will significantly influence the degree to which the changes are accepted is the manner in which OnePass communicates the news to its members. Continental has an opportunity to shed the cloak of spin worn by so many others in the industry, and to address its members honestly and intelligently. If it takes this opportunity to say, in effect, ‘Times are tough in the industry, this is what we need to do as a company to remain in business, and we are doing our best to provide great service to our most valuable customers,’ it’s our guess members, though disappointed, will be generally understanding and supportive. We acquired this news before its release and do not know the manner in which members were informed.
Whatever the member reaction, it is clear that a paradigm shift has occurred in the frequent flyer industry. Revenue has officially dethroned loyalty, and only time will tell what shape the new kingdom will take. Continental’s changes signal an acceptance of the policies Delta initiated nearly a year ago, and you can be sure others, namely Northwest WorldPerks, aren’t far behind.
There is one more interesting aspect concerning these changes, and that is the very early release of the announcement. Typically, changes such as these wouldn’t be announced until much later in the year, or even early in the next year. So why would Continental make the announcement when it did?
One theory is that the announcement from OnePass serves as a form of invitation to the other programs to make similar changes — sort of like saying, ‘Come on in, the water’s fine.’
The response to this overture will be known in very short time.