Forbes Article On New Mileage Plus Earnings Scheme

Discussion in 'United Airlines | MileagePlus' started by chitownflyer, Feb 18, 2015.  |  Print Topic

  1. chitownflyer
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    chitownflyer Silver Member

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    Below is a great article link showing how the new Mileage Plus program's revenue based earnings scheme is going to result in a major reduction of earned redeemable miles for many passengers.

    http://www.forbes.com/sites/andrewb...g-its-mileageplus-program-winners-and-losers/

    I like how the article points out redeemable miles earnings will be based upon the price of the ticket. As well as the high yield fare bonus, it is the distance flown that determines the Premier Qualifying Miles and the resulting United elite status. Why not just make status based upon spend, if RDM earnings are based upon it anyways? Just make the elite status equal to the PQD levels of each status level. You can't have your cake and eat it too.

    I think UA made a major error in copying DL's SkyPeso's revenue based redeemable mileage earnings scheme. DL is the instigator of a scheme that destroys the traditional frequent flyer loyalty program. It is regretful to see United's Mileage Plus become DL's accomplice in copying everything their "friends in ATL do." Perhaps the last founder of the frequent flyer program will keep its AAdvantage and thrive from the potential DL & UA misguided decisions.
     
  2. genemk2

    genemk2 Gold Member

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    Regretful to some, maybe. But our very own @Steve GadFly loves the new changes. He even agreed to buy me tickets using his new found stash of miles. Thanks, Steve!
     
  3. snod08
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    snod08 Gold Member

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    I forgot to hit him up for some tix. :)
    is it too late to ask now?
     
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  4. genemk2

    genemk2 Gold Member

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    Get in line!
     
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  5. Flyer1976
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    Flyer1976 Gold Member

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    *Sneaks in behind Genemk2 in line* OH Hello! :p
     
  6. Hartmann
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    Hartmann Gold Member

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    Yay? I mean, yes, it is great for some who fly shorthaul, expensive tickets. For those of us who fly longer flights, sometimes for a premium, we'll lose miles on this. Looking at ~$40k in spend, it's 440,000 redeemable miles, which is fine with me, it's just less than I would have earned based on my travel patterns for the same spend. So, great for some, not so great for others.
     
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  7. genemk2

    genemk2 Gold Member

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    Yup, agreed. Some win, most lose.
     
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  8. legalalien
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    legalalien Gold Member

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    So...why are these decisions misguided, and why shouldn't airlines destroy the traditional frequent flyer loyalty programs?

    I'm not trolling; I'm trying to understand why everyone thinks these changes are bad? I mean, I understand why they are bad for leisure travelers and especially bad for mileage runners. But airlines are in business to make money for their shareholders. If you were running an airline, why wouldn't you go after high-revenue customers and why would you worry about the loyalty of those who shop on price?

    Traditional frequent flyer loyalty programs were developed in a very different era. Deregulation and proliferation of LCCs and ULCCs have given travelers access to a wider variety of options and pushed prices down. The rise of data analytics means the airlines know a lot more about our buying habits than they used to, and can tailor loyalty programs to the passengers that help make money, not just fill the seats.

    It's the new reality. As much as I want to accumulate 50k miles flying 3 sub-$700 round trips (counting elite bonus) to Europe and redeem them for a $7k business seat award, I know that it isn't a sustainable model for the airlines. They have to adapt, and so do we.
     
    Last edited: Feb 18, 2015
  9. davef139

    davef139 Gold Member

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    Everyone here wants as much as possible for as little as possible regardless of how bad it is for the company. And likely they do not work for United, so it isn't "their" company doing down the crapper.
     
  10. legalalien
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    legalalien Gold Member

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    That, I think, is rational behavior for a consumer. Rational behavior for a business is to maximize profitability and minimize expenses. :)

    I am much more upset that United has copied Delta's changes to the loyalty program without first copying enhancements to in-flight service and reliability.
     
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  11. chitownflyer
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    chitownflyer Silver Member

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    To preface, I have never earned 1K status via $3000 in yearly spend whether acquired via SIN runs or multi segment US transcons. For those whom qualified under these circumstances, more power to you and glad you enjoyed the ride. I do understand the thought behind rewarding those whom spend more on tickets more miles, but this should NEVER be done at the expense of other customers by rewarding them fewer miles than they currently earn. It is now far easier to earn miles via credit card sign up offers and credit card spending. With respect to rewarding high spenders, DL and UA both capped the maximum number of miles earned from a ticket at 75,000, regardless of spend, so they do not really want to reward even their best high yield customers too much.

    Most of my spending has been in the $12K yearly range, primarily on international travel. United has one of the best global networks, and the incentive to have stayed loyal to United is its Mileage Plus program which offered flyers excellent redeemable miles earnings benefits and elite benefits as a 1K. Under the new earnings scheme, many flyers will earn 40 to 60 percent fewer miles than they currently do with a distance based flight program which awards members double RDMs for 1Ks.

    If you disrespect your elite customers, you can not take their continued loyalty for granted.
     
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  12. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Why? Are you saying that the number of miles awarded previously was exactly appropriate? Or because it's bad customer service to ever reduce a benefit?

    If I were to start an airline today, there is no way I would create a loyalty program that rewards time-in-the-tube. And so while I personally am losing benefits in these changes, when I am honest with myself I am neither surprised nor can I really be too upset.

    Signed,
    Former UA 1K MM
    Current AS 75k (playing the game while it lasts)
     
  13. Dublin_rfk

    Dublin_rfk Gold Member

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    True and well said.
     
  14. Dublin_rfk

    Dublin_rfk Gold Member

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    No I don't think the program was perfect and I don't like the changes.
    I do remember the early days with usair. Days when the premier pre-board group was sometimes half the plane. I expect the changes to "thin the herd" and greatly reduce award miles earned. But I find this to be slightly better than keeping an large number of elites and jacking up the number of miles needed for an award ticket. With no change to my traveling / earning pattern I expect to greatly benefit award mile wise and just scrape through and maintain 1K status this year.
     
  15. Hartmann
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    Hartmann Gold Member

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    This.
     
  16. NYCUA1K

    NYCUA1K Gold Member

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    Is repeating the same old worn out arguments considered trolling? If so, well, let me troll with you by addressing the above with my own worn out arguments, verbatim, and then let's move on:
    "I have never been able to buy the notion that excuses the airlines' bad practices by saying that "they are in the business of making", especially when ticket costs are rising while service quality is tanking. Well, passengers are also in the "business of making money"! That is why most get up early in the morning to go to work or whatever!

    The airlines make money by offering a service and real people must fly (consume the service) in order for there to be profits. It is a reciprocal relationship. If the service is poor and the ticket costs remain high (which happens when competition has decreased as it has following the many mega-mergers), then the flyer is getting the short end of the stick!!!

    It is a fallacy to keep magnifying the importance of premium fares as the prime determinant of commercial airline profits. Everyone who keeps saying this must read this piece that I have linked to quite a few times before, which explains the calculations that go into the setting of ticket prices:
    You Paid $400 for Your Flight. The Person Next to You Paid $250. Here's Why That Makes Sense—and Benefits Everybody.
    Without folks in the back of the plane, premium cabin fares would be exorbitant and there would be less flexibility in scheduling (read the piece). One striking sight when I travel on Asian carriers within Asia is how empty premium cabins usually are. Being generally frugal, most folks in Asia would rather travel in Y than spend the money to fly in premium cabins. With complimentary elite upgrades also being scarce for most FF loyalty programs in the region, premium cabins are usually half empty or even completely empty (I was once the only passenger in F on a CA flight from TPE to PVG!!!) And yet, Asian carriers do make money...by filling Y cabins without needing to jack up the ticket costs!"


    Do you see that every one of your assertions had been previously addressed? Isn't there a new angle to all of this?

    P.S. I can suggest a new angle. Let's start reporting our actual experiences with the revenue system as it is approaching...it seems to me that would be more constructive at this point since it is inevitable. ;)
     
    Last edited: Feb 18, 2015
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  17. genemk2

    genemk2 Gold Member

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    I don't think it's misguided. I lose out with the new scheme, but I think it makes sense.
     
  18. 8MiHi

    8MiHi Silver Member

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    All Loyalty Programs are games. From the start FF programs were set up to give away perks and seats to good customers. These rarely cost the airline much back then as premium cabins were often empty and load factors were in the 65% to 75% range. The system allowed us to game it and the airline often encouraged that gaming. I for one loved that aspect of it all and will miss it since I considered myself above average at playing the game (yes I should be a resident of Lake Woebegone).
    With load factors up considerably, the game has changed and we are learning the new rules.
     
  19. legalalien
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    legalalien Gold Member

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    No, I don't. You mistake the need to fill the seats on a plane (which is real) for the need to earn loyalty of passengers who fill those seats. The truth is, customers that buy $250 tickets (vs. $400 tickets, using the numbers from the above article) have no loyalty to any airline. They have loyalty to their own wallet - they're in business of making money, that's why they get up early in the morning and go to work, etc. - and they choose the cheapest tickets regardless of who operates the flight, or - especially - what the frequent flyer program looks like. So, airlines don't need to reward people like that; they just need to make enough seats available at $250 to fill the the planes up. Award miles are an expense. The airline that awards fewer miles has lower cost, and therefore can offer more seats at $250 while still being profitable. Simple as that.

    You and I have a choice of airlines. If we all vote with our wallets and start switching from Delta to American, I'm pretty sure revenue based earning charts will go away. Though I won't hold my breath waiting for that to happen. As I mentioned before, airlines have a lot of data, and I'm afraid it shows what you and I don't want to hear: loyalty program is not very high on the list of priorities when people outside of this group shop for tickets.

    I ran numbers for the last 2 years. As a UA 1k flying just over 100k PQM, close to 120 segments, and spending $16k-$18k PQMs, I will break even or lose slightly under the new rules. Am I disappointed? Yeah, I am. Am I surprised? No, I am not. I understand why somebody who flies 4 TATL r/t in C is a more profitable - and therefore more valuable - customer than I am.
     
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  20. flyforawg

    flyforawg Silver Member

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    Time in the tube is a reward of repeat business and enduring what is generally a mildly unpleasant experience that increases with the duration of time. Anyone should be able to do an hour or so standing on their head. Get up to 6 hours in coach on a transcon and it's not so pleasant anymore. Reward me with the points for the distance I fly which is proportionate to the discomfort I experience.

    Reward people for money spent and you're simply milking corporations for funds since the only ones paying top dollar for flights are top execs and companies with lax controls on their expenses. Most of the many people I know who fly are restricted to coach and lowest cost with a small margin to account for schedules or preferred airline. Exceed that and break the rules and the flight won't book without permission which won't be given.

    The extra money isn't being poured into a better hard or soft product and hard working people who help to run the airline are losing their jobs in a race to the bottom of the labor pool. I fail to see what a company like UA is doing with the extra profits other than enriching the executives. Maybe slim line seats are that expensive?

    Taking points from the average middle of the income spectrum business flyer and giving to the wealthiest upper middle income to upper income flyers doesn't make sense to me. In this case all the big spenders should be fleeing AA in droves in the rush to the revenue based airlines. Should be interesting to see if there's any evidence of this.
     
  21. NYCUA1K

    NYCUA1K Gold Member

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    Alright then, you can keep fighting that battle and pontificating. I will just move on and deal with what is going to happen whether we like it or not...

    G'night!
     
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  22. legalalien
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    legalalien Gold Member

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    That's what airlines have been telling us: there isn't loyalty to be taken for granted to begin with, and few (or not enough) will pay more for tickets because of a better frequent flyer program. Their conclusion is (presumably) based on data. MP and FT discussions seem to be based on emotions for the most part.

    Why? You need to get from point A to point B that is 6 hours away by plane. Airline offers to take you there for $X. You agree. Why should you be rewarded for that? :confused:

    Loyalty programs are supposed to reward customers for choosing one business over others. If, as you say, most people do not have a choice, they do not deserve to be rewarded. Am I missing something?

    Actually, in case of Delta money is being poured into a better hard and soft product. United's mistake - as mentioned above - isn't copying Delta's rewards program, but doing so without corresponding improvements.

    Have you seen AA's year-long promotion awarding extra redeemable miles to premium cabin customers? There's your answer: AA execs are concerned enough about premium customers fleeing to revenue based airlines to create a promo to minimize the impact.
     
  23. flyforawg

    flyforawg Silver Member

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    I think your question presumes I think anybody should be rewarded. I won't address that to avoid going off on a tangent, but within the context of the existing world of flying, there are currently two types of rewards. Of the two types, I think it makes more sense to reward based on distance due to the discomfort as opposed to spend. I won't try to persuade anyone to my way of thinking. It's my personal value proposition and belief. It also ties into not rewarding the already super wealthy or those who waste other people's (or companies) money. Just not a fan of the rich getting richer when it comes at the expense of someone else's bottom line.
    I think you did miss this point. It's not that they don't have a choice of airlines, they don't have a choice of the amount. We can't choose to upfare to Y or B and spend $800 more than the lowest cost logical fare. If you have the ability to spend your company's money like that, the airline is rewarding you to defraud your company in order to enrich itself. I think its a dirty game and wasteful. The only time we get locked out of an airline is if one has a significant price advantage over another which rarely happens (in my case never) since they all watch each others' fares and keep them pretty close. Also, most of us don't get to purchase F and are only allowed there on upgrades. The poor not for profit folks I know aren't even allowed to do that.

    As for hard product, I'm keeping comments in this thread specific to UA so I stand by the hard and soft product comments. Will be interesting to see if DL can lead the way and others will copy their approach. Are there enough old planes out in ROW for the other airlines to do so? :p

    You make a very good point. I have seen and had forgotten, but time will tell. We'll all have to wait a couple of years to see if they need to keep the high end bonus or maybe AA even joins the race to the bottom.

    Boy this multi thread posting is a pain in the rear. :D
     
  24. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    So what's wrong with those people who intentionally torture themselves with segment runs, mileage runs or intentionally convoluted routings? Should they have their heads examined? ;)
     
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  25. chitownflyer
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    chitownflyer Silver Member

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    Providing an incentive for repeat business makes for a better and more reliable customer base.

    Losing elite level customers whom go Kayaking or purchase whatever is considered the best valued product is not a recipe for engendering loyalty.


    I concur with you on the comparison between United and Delta, at least Delta is making the efforts to improve their hard and soft products and has operational reliability. Who is the winner? Our friends in Atlanta.


    AA is also currently offering a promo for double RDMs for travel between the US & Germany on AA, US, and AB. http://www.aa.com/viewPromotionDeta...r-germany-double-mile-offer.xml&_locale=en_US
     

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