Which Flyer Deserves More Miles? You Be the Judge!

Sometime in the early 1980s I came across an old paperback book in the basement of the house where I grew up. It was worn, and I have no idea how many decades old it was at the time. It was called You Be the Judge and contained interesting ethical dilemma stories that called on you to sort through right and wrong.

I Googled for it but only found a series by the same name from the last decade.

I thought we’d try something like that here. I’m going to describe two customers, and ask which one should United award more miles? You be the judge.

Fast forward to the end of 2015, and let’s review the travel for the year of Mary and John.

Customer 1: John

John is an investment banker out of San Francisco. His bank is based in Minnesota and has a corporate agreement with them. Most of his travel is paid premium cabin to Minneapolis and New York, but he likes to fly Virgin America when he can.

He’s putting together an important deal in China and has to fly to Chengdu. His admin puts him in business class on United, since they have new non-stop service 3 days a week there. It was a 3-day advance purchase Z fare and cost about $7500.

The 787 was great, the flight over was half empty, and he was reasonably rested when he got to China. He made great progress towards closing the deal, too! There’s going to be a huge round of financing, and he’ll make a ton — for himself and his bank.

He also took one United flight to London in business. The company’s deal should put him on Virgin, but he needed to make a morning meeting and United’s earlier flight let him do it (it’s earlier than the first of the two BA flights also). That flight cost ~ $6300, with no discount. He took the Virgin flight back, though.

That’s it for his United flying for the year.

Since his admin added his MileagePlus number to the reservations he earned 69,000 miles. The admin is a bit of a mileage junkie, unbeknownst to him, and will keep on top of the account and make sure his miles don’t expire… though feels it would be much easier to track the United account with Award Wallet, but that’s the story for another post…

Customer 2: Mary

Mary works in the Midwest as a mid-level manager for a large Agribusiness company. She’s doing well, and on the road more than she’d like. Fortunately her husband doesn’t travel for business and can make it to all of the after school activities for their three kids.

She puts all of her travel on United, at least as much as she can without drawing too much ire from her accounting department. She squeaks by with just over 50,000 miles a year all domestic, almost all flying through Chicago with the occasional trip through Houston. It’s a lot of planes, too, with 70 flights for the year.

When United costs a bit more than American or Delta, she’ll go with United because she likes her status and she likes economy plus and the occasional upgrade. She tells her bosses that they’re benefiting too because she gets free checked bags (even though she never checks a bag — too good a traveler for that) and because she won’t waste as much time during bad weather disruptions as her status gets her to the top of the waitlist.

Mary tries to get the best fares she can, she’s careful, but with an average fare of 12 cents a mile she easily makes the minimum revenue to keep her Gold status. But just in case she puts all of her family’s expenses on her United Explorer card; about $2250 per month.

When the kids were off of school for the Christmas holidays, she and her husband took the kids to Disneyland. She even found three award seats with her miles, helping make the trip affordable for her family! Naturally the kids flew on awards, she saved a paid ticket for herself so she could earn miles, and her husband’s ticket was paid too.

As a United loyalist Mary buys all her tickets on the United.com website, but her company makes her use a corporate card to do it. She buys flowers for her mother when FTD has a good MileagePlus bonus offer, and since she’s busy she buys as much for her family as she can online — always going first to the MileagePlus shopping mall.

Mary’s 50,000 miles of flying cost $6000 and earned her 48,000 miles thanks to her Gold status. She flew about the same miles in 2014, and earned 75,000 miles for it.

Is that the right distribution of miles between the two of them?

Let’s stipulate that:

  • A frequent flyer program can’t be designed just around two customers.
  • These flyers may – or may not – be typical.

End of the year John earned 69,000 United miles from flying, and Mary earned about 48,000. Sound about right?

You be the judge in the comments. Let’s hear who you think a frequent flyer program ought to award with more miles, and why.


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. wait where does the 30k for Mary come from? didnt you say paragraph above she earned 48k miles? confused.

  2. IMO, John deserves more miles, since he (or his company) gave UA $13,800, while Mary only gave them $6000. I don’t have a problem with UA rewarding people who give it more money.

  3. So hypothetical Mary is lying to her employer about the how her status benefits them since she doesn’t use free bags? And she is spending more of her employer’s money for this so-called gain when in fact she is doing it for the upgrades and better seats and deceiving them about the so-called benefit? Plus she is possibly wasting more company time flying a connection than flying nonstop, possibly reducing her work hours’ productivity?

    This hypothetical Mary is no worse than an employee gaming the new revenue system to buy a more expensive base fare, something you railed on a couple of days ago. You should condemn hypothetical Mary’s behavior just as strongly and say employers shouldn’t stand for it.

  4. UA should be rewarding Mary. John was going to buy those tickets regardless of the structure of the MileagePlus program. Mary, however, is making the decision to stick with UA because of her status, and is driving incremental revenue to the company that they otherwise wouldn’t receive.

    You’re at risk of losing Mary and her incremental revenue if you don’t reward her appropriately. You’re not at risk of losing John for those two flights, regardless of what you do to your frequent flyer program. Therefore, your frequent flyer program needs to focus on the Mary’s of the world, and not the John’s (in this scenario).

  5. The real ethical dilemma is that if John was a 1K he would have maxed out his earning on that trip to CTU.

    My big problem with the new system is that sure Joun comes out ahead in the mileage game but he flies so infrequently he has no loyalty. In fact his choices are based on the soft product of VA but the timing unfortunately did not work out. It’s the people flying week in and week out that you are looking to retain. With the new system you are alienating a lot of customers who are filling the majority of your seats.

    Essentially if John had gotten zero miles he still would have flown UA to make the meetings. Mary on the other hand, she would be all the wiser over the year.

    Finally it leads me to what I would have liked to see. I do think that the old system was scewed. It did not reward high value enough. At the same time the old system was not broken, people loved it and it wasn’t because folks were flying too much that the programs had to get devalued it was be because people were earning so many ancillary miles from things like CC purchases and bonuses. To me, I wish UA had tried something along the lines of RDM=(PQM+PQD)*elite bonus. There you have the best of both worlds.

  6. @AS I’m describing some people and adding some details (like John’s Chengdu flight being empty) that run counter to posts I’m making. That’s on purpose to make this interesting!

  7. Just wondering,

    Did Mary and her husband get upgraded on the Disneyland trip, leaving the screaming kids in Y?

  8. Also you might want to revisit your math.

    Hypothetical John spent $13800 and earned 69000 miles. Hypothetical Mary spent $6000 and earned 48000 miles from flying, plus 27000 from credit cards, plus whatever from shopping portal bonuses.

    She is already ahead and she’s doing it in a way that is detrimental to her employer. She will be less ahead after the realignment but still ahead.

    The real question for United should be, how can I capture the paid first and business class travel for hypothetical John. He lives in SFO, buys expensive tickets. I want more of his business, more than I want more of Mary’s. Can I attract his attention with the new mileage program because under the old formula he wasn’t paying attention to me?

  9. Andrew is spot on. This is why UA will lose my incremental revenue. Ironically, I am going to give all of business to DL, not because of their generous mileage program, but because they have the best domestic product and are pretty generous with F-class SDC (especially as a Diamond). I am also going to go ahead and ditch AA/US since there is no doubt in my mind that all three of the legacy carriers will have revenue-based earning come 2016. Lastly, with so few “needed” EQMs in 2015, I can burn lots of miles on domestic travel before they are even further devalued.

  10. Gary, your scenario is “spot on” and illustrates clearly why loyalty doesn’t pay. As succinctly stated elsewhere, the FF programs are devolving into “rewards incentives”.

    Customer loyalty is no longer what it once was. And is it any wonder, when businesses show little if any appreciation for customer goodwill?

    Thanks for the post.

  11. Reward John. He’s spending more money, ostentibly on higher-margin tickets. And since he’s made of cash, always gets premium seats (and thus isn’t concerned about earning upgrades), and his admin is doing it anyhow, he’s more likely to be fickle. Who really cares who you’re flying when you’re getting business class anyhow? John’s loaded and probably buys paid business for personal trips too. So he’s gonna need a pretty strong incentive to stay loyal rather than just go the path of least resistance (buying the most convenient flight or best service, since cost is no object).

    Mary isn’t a decision maker. Eventually her boss will sniff out what is up and will reprimand her for it. Since UA is running high load factors, they’ll replace her revenue with a bunch of one-off $200 tickets to individuals who are flying to see Grandma in Iowa.

  12. @Andrew

    I agree. We have other services providers to focus on the johns of the world.

  13. Ok number one. Don’t play ethical games with the devil because in the devil’s world, he always wins, regardless of fairness, morality or any other superimposed ethical logistical game. And yes the demonization of people’s business practices if perfectly valid in the United States and around the world.

    Number 2, if forced to play this game. Here’s where it goes. Because the problem with the entire scenario is not in finding an answer to the moral dilemna presented but actually in the facts themselves.

    In case 1, you are rewarding an individual for something a corporate entity has done. Therefore since the Supreme court has recently ruled for purposes of political contribution and so on, corporations are “people” so therefore it follows that since the subject in question did not pay for his ticket rather a corporation did, he should be ineligible for any miles. The corporation according to the United States Supreme court is the correct recipient of the earned mileage. And since we all know that the airlines are very strict about Names on tickets and changing them etc.

    In case 2, Mary should receive the miles she has earned according to the terms and conditions offered her at the time her tickets were purchased. The issuing authority has reserved the right to alter the program wherever they see fit and her purchase was primarily for the travel itself and any such rewards offered should be considered a bonus.

    If she completed the travel on the expectation that her future reward would or could be worth more than the cost of her current outlay, that’s on her because she is an adult who we are assuming of the intellectual capacity to enter into a valid contract. The problems you have arising in today’s day are age I would think surround issues such as non refundable fares, and failures by the issuing party to live up to their end of the bargain.

    As far as revenue is concerned, you’re at risk of losing either of their revenue due to the fact that the Internet has tremendously changed the need to travel for most of us, and instead of looking at it as a customer moving to a competitor, what you really need to evaluate is how many people will simply just tell you they don’t want to ride the bus anymore. Airlines already purport to market 6 “non stops” a day or other nonsense when we all know that for better or worse they’ll cattle call those into 2. There’s no requirement for transparency on the end of the airline. They can sell you whatever they like and change the deal whenever they see fit. They are the one’s who came up with this crazy pricing structures . 47 different fare codes and the like.

    Nobody and I mean nobody cares about their back door deals or how yet another douche bag who didn’t get enough love as a child needs to feel important by playing silly passive aggressive nonsense.

    The thing you’re lacking in the entire structure is very simple and it’s what has been missing for the past decade or so. True competition. Rather than companies competing on the strength of their offering or dedicating their resources to making their business the best it can be day in and day out, what you have going on is yet another misallocation of valuable resources.
    Which basically explains America and in some respects it’s airlines since circa 2000.

    Union groups and the like are actively engaged in preventing competition for the express purpose of price fixing. Yes you can disagree with this statement because you disagree with semantics. It’s what’s going on whenever you actively attempt to prevent a business entity from entering your market to compete against you.

    And what makes matters worse when called on the carpet, these same scoundrels will attempt (possibly successfully) to hide behind a flag.

  14. Mary is the more important traveler to United. She should be rewarded more because the miles make a difference in who she picks to fly.

    But my real question is about the even more casual traveler. The one who picks United to fly on the trip to Europe or Mexico, despite its higher price, because of the miles. My question is whether that traveler will now pick the flights strictly on price.

  15. But this just leads to a cycle of increasing marketing expense to retain “loyalty.”

    John is NOT making decisions about his travel. His admin is NOT making decisions based on mileage, spend or otherwise. Therefore, it is not in the best interests of UA to reward him AT ALL.

    Even if you could give him incentive to continue choosing UA and win his loyalty on those few flights per year, at what cost? By the time you’ve given away enough to get the attention of this high-spender and earn his loyalty, you’ve probably given away his value, which means you’re lighting money on fire.

  16. If John will buy the same tickets without any benefits from the frequent flyer program, it’s a waste of money to award him any miles. A benefit he doesn’t use and doesn’t care about won’t change his behavior, so I’d say if he’s the customer United wants, yeah, they’re doing the right thing to stealth-dump the mileage program.

    As for Mary, it’s sad that her $6K is not considered real money, but United is not suddenly going to wake up and think $6K a year is worth chasing. She should get another job and let the good old boys at her old company find out how much fun it is to fly 75K miles a year and still get treated like ****. I too noticed that she was engaged in unethical behavior to remain loyal to United, and while I do NOT support it, it’s well documented that employees who feel badly treated are much more likely to steal from their employers than employees who are well-treated. People can apparently justify it to themselves that they’re owed the perk if they feel they’re being abused.

    Of course, that isn’t United’s problem, and they’re getting money from Mary they wouldn’t otherwise get…but it’s clear United doesn’t appreciate the fact that she may be risking her future for very little return.

    These examples seem true to life but they also seem to make the whole idea of frequent flyer awards a little icky, don’t they?

  17. Mary for sure. John will pay those $$ to united no matter what. Loyalty is what’s driving revenue from Mary. This is ecnomics 101.

  18. Jon is clearly (to me) the more valuable customer, with the potential to be one of their very best customers.

    However, rewarding Mary with miles is going to keep her loyal. Rewarding Jon with miles doesn’t sound like it’s going to change his travel patterns. Free companion flights on his full-fare tickets might… so might a phone call about the benefits of GS status.

    Better plan would be to give Mary miles and a few drink tickets and to advertise PS offerings to Jon.

  19. Additionally, from what you describe, Jon is not a savvy traveler… most likely he will not be using his miles in an optimal way. He sounds more likely to pay the high mileage rate (180k miles RT) for a first class ticket to Hawaii than to redeem for BR C to SIN.

  20. Keep flogging the idea that the low margin customers are more valuable to the company because they shift tiny, incremental amounts of revenue around. Maybe they are, but there simply aren’t enough of them to actually justify building a program around.

    Your unending series of posts along these lines come across as pandering to your readers, trying to convince them that the airlines owe them more than is being delivered. And in most cases that’s far from the truth. On the plus side you keep your readers, I suppose, but setting people up with false hopes and expectations doesn’t really seem to be doing them any good in the long run, does it?

    Why not do a better job of explaining to people why the airlines are behaving the way they are and why it actually just might be smart business. Because it is. Even if you don’t want to piss off your readers by admitting it.

  21. So giving him additional miles that will be poorly (if actually) redeemed, results in very little downstream cost to United. It’s like giving free drink tickets to a Mormon.

  22. @Wandering Aramean this post actually isn’t staking out a position on which model is better. As I’ve written elsewhere, empirical question but it could make good sense for Delta to make the changes they’ve made (and considering where they were starting from). I do not think it is nearly as smart a move for United as it is for Delta, whether or not it’s good for Delta.

    There’s a ton of sloppy thinking in the case for this, even if it’s ultimately the case that a shift in benefits from one customer group to another could make sense.

    But there’s no pandering here, Seth, not everyone who disagrees with you is evil or stupid…

  23. A classic example of begging the question (in the correct meaning of that phrase). Given a choice between one customer who (by definition) will purchase a product without incentive and another customer who (by definition) requires an incentive to purchase the product, then _obviously_ the incentive should go to the customer who would not otherwise purchase the product.

    The whole premise contains the following flaws:

    1. That customers divide neatly into two categories: one with no interest in incentives and other making their purchase decisions based entirely on incentives.

    2. That United can tell the difference between these two types of customers based on their travel profiles.

    One could just as easily change the definition of the problem such that John’s purchases required the incentive while Mary’s didn’t. Place Mary in a United hub and give John the choice of a couple of more-or-less equally convenient flights to make his meetings and the equation is reversed. There are plenty of scenarios either way.

    Given that United has to make the incentivization decision in the absence of the knowledge you specify about which customer must be incentivized to purchase then I think it’s pretty clear that John is the customer they want — more dollars earned for less service provided.

  24. Not impressed Gary. A cheap “1% vs. the common man” scenario? Really? I’d expect this from Lucky et al. but somehow I always have higher expectations of your posts. Sigh.

    Obviously the readership of this blog (including myself) is meant to identify with Mary’s situation. The Johns of the world are too busy to play the mileage game, and since they’re flying premium cabins already there’s no reason they would. You make that point yourself in the scenario – it’s John’s admin who keeps on top of his miles. Still, it’s Friday morning and I want to avoid my Inbox a bit longer, so I’ll play along. Here are my thoughts:

    John is a high-margin high-value customer, the kind any airline wants to attract. Despite living in a UA hub, they’re not his preferred airline. He’s willing and able to choose his carrier based on factors besides price, so UA needs to entice him with product features that add value for him such as in-flight wifi and access to a lounge business centre. He’s the target demographic for UA’s p.s. service.

    Despite the 69,000 miles he earned, Mileage Plan is clearly not providing enough benefits to incentivize his business. What can UA enhance to change that? At the same time, it’s his admin who makes the bookings and tracks the miles, so maybe she should be the one MP is targeting (the way meeting organizers can earn miles at some hotel chains). I seem to recall there was a program long ago that let secretaries earn rewards for booking their bosses on certain airlines.

    Mary’s a different kettle of fish. She’s a frequent but low-margin flyer. Her 70 flights/50,000 miles only cost $6,000. After accounting for the associated operating expenses, the net profit for UA was probably pretty low. Mary is also quite savvy when it comes to miles. Unlike John, she actually redeems her miles, adding further expense for the airline. UA wouldn’t want to lose her business, but the cost of actively trying to keep it may outweigh the benefits.

    At the end of the day, Mileage Plan is not good enough to incentivize John. UA needs to improve either its product or the MP program if they want his business (and they do). Mileage Plan does incentivize Mary, but she’s such a low-value customer that UA needs to figure out the bare minimum they can offer to keep her business.

    Fortunately (for UA, not for Mary) Delta is already leading the race to the bottom, so as long as MP is no worse than SkyMiles she’s unlikely to jump ship since she’s already invested in UA/MP. There’s a short-term risk of her moving to AA/US, but that will be eliminated when they merge and the new AAdvantage program adopts the same structure as UA/DL (and it will). Unfortunately (for UA, not for Mary) AA/DL offer a better overall product, so UA can’t afford to devalue quite as deeply as its competitors or it risks losing business (which is why DL has managed to thrive for years despite having the worst program).

    Conclusion – UA is giving too many miles to both John and Mary. They will continue to devalue Mileage Plus over time. Neither John nor Mary will alter their travel habits because of the changes to the program. UA knows this. So do the other airlines.

  25. @MrAOK: “…about the even more casual traveler. The one who picks United to fly….because of the miles. My question is whether that traveler will now pick the flights strictly on price.”

    That’s a key question. Many FF readers are regular flyers for whom the FF programs were designed. I would estimate, what, 50% of flyers? And the remaining 50% being casual flyers?

    What percentage of each group is going to remain loyal to ANY airline, if mileage accrual continues to degrade, and awards continue to devalue?

    If no airline has a superior FF program, then the majority of consumers are going to be swayed by price and product–not mileage accrual, nor eventual (and ever-diminishing) award value. So the loser, as Gary states, will be an airline like UA, compared to the ahem! better DL.

    The winner in the revenue-based awards is a very limited minority group–and that doesn’t even include John, above. Is this minority group so valuable that the remaining majority loyalty to any particular airline is of little or no merit? Apparently the bean counters think so–but bean counters deal with numbers, and not people, per se. The general public has been long conditioned to expect more for their purchasing dollars–an (over)entitlement attitude I don’t foresee changing any time soon.

    Interesting to watch the transformation the FF program as we know it. Rewards will be out there, just not through flying. And my loyalty will be to whichever entity–not airline, but entity–provides me with the rewards which best suit my needs.

  26. @Wandering Aramean

    Burr in the saddle, eh? You remind me of the neighborhood cat who used to come around and poop in the sandbox when I was a kid. For whatever reason, he didn’t like his own litter box.

    The problem with the airline business is they have insanely high fixed costs and relatively little marginal costs for carrying an additional passenger. I think Gary’s covered this topic before so I won’t get into it further.

    What he didn’t say in so many words is that there’s no good (or even accepted) way to determine what an unprofitable customer is in this business. One day, he’s pure profit, the next day he’s part of a money losing flight. Makes no sense, really.

    Sure you can spout off about RASM and CASM, but those are just accounting terms that tell you nothing about my profitability. My RASM can be through the roof, but likely meaningless if I’m flying on empty flights.

  27. @ kimmie a: Businesses will appreciation when customers stop expecting a BMW for the price of a Kia.

    @ Ethan: “It’s like giving free drink tickets to a Mormon.” LOL. So much LOL.

    @ Wandering Aramean: Actually, the world is full of Marys. In fact, I’d bet they make up a significant proportion of passengers on most flights. Individually they only represent tiny amounts of incremental revenue, but en masse they can have a significant effect on the bottom line. Unfortunately, they (we?) tend to overestimate their importance, so the trick is to make them feel valued even though they’re not. That’s customer service 101, not something the airlines are particularly good at.

    From a program perspective, you need to give Mary the bare minimum to keep her business and no more. As long as all your competitors do the same you’ll be fine. Again, the airlines are just slower to figure this out than other sectors. I don’t know why they don’t just get McDonalds or Starbucks to run things for them.

  28. I see John’s travel as covering the cost running the business, as it is a corporate account and UA can fairly well count on the revenue. Mary’s travel is profit, since it is not guaranteed and when she does it is for low ticket fees.

    I think they need to reward both John and Mary, just differently, as UA needs both to thrive.

    Having the tier based system helps a frequent flier program reward the right people. The lower status levels (Silver and Gold) should have more benefits geared toward the low cost ticket crowd (boarding before general, free economy plus seats, free bags, a percentage multiplier to boost miles), while the upper elite levels (Platinum, 1K, GS) should be geared toward the higher spend crowd (board first, upgrades to first/business, free meals, free lounge access, plus all benefits of lower levels).

    In the case outlined above, their would be a ceiling for each of the two categories, where cross over is not as likely. John would be invited to start his status at Platinum level to entice more business and could work up to GS. Mary would start at no level and work her way to Gold (along with the leisure traveler, mileage runner, and other low cost ticket customers).

    This way, the program addresses both needs. UA gets the high spend of the corporate account and full paid Business/First class tickets, while at the same time, they get the incremental business of non-corporate accounts and infrequent fliers.

  29. @ kimmie a: I’m sure on some level the airlines would like to get rid of programs altogether (aside from the profits, of course). I work in a hospital, and we always say we could run this place much more efficiently without patients. I imagine it’s the same for airlines and passengers!

    Still, would it really be so bad if people chose flights based on price and product alone? That’s the whole argument in support of competition and capitalism.

    As an aside, I completely agree with your comment about the overentitled attitude among the general public today. Mary’s paying to ride the bus but expecting a private jet.

  30. United doesn’t make money off of Mary. Because of better yield and load factors, they would have sold her seat anyways, with or without her loyatly.

    United needs to try to get the Johns of the world to pick United every time. They are not going to accomplish that with hard product or service. So their only option is the mileage plan. I worked for a company that paid business class, and had agreements with American and Delta, but I put most of my flights on United whenever I could, especially international.

  31. I thought Mary chose UA because of Economy +, higher priority on waitlists and other benefits of being an elite. That’s not changing with UA’s new MP, right? So, why reward her with miles as well? And Ethan makes a great (and funny) point.

  32. @Arcanum

    But Mary ISN’T paying to ride the bus, she’s buying the ticket for a flight at a price that the airline is willing to sell it for.

    And does Mary really expect a private jet? Me, I want to get there on time with sufficient leg room. I’m not sure how much of the traveling public is expecting much different.

    The peeps who actually do carry their own weight fly private jets.

  33. I personally agree with your recent set of posts. I believe that UA should not change. I also have a hunch, that this may backfire on them.

    Look at the Mary’s. In the future, (and it may take a couple of years to sink in) she is not going to be so PRO United. She is not going to use her Mileage Plus card as much nor choose the UA flights.

    As well, Mary is probably going to not “advertise” UA to all of her friends, in fact she might do the opposite and recommend that they don’t fly them.

    One argument about giving the other person more miles that you haven’t hit on is John is probably going to waste his miles much more then Mary. John would be more likely to let his miles expire. John would probably be more likely to book any old flight with his UA miles, even at the non-saver level then Mary. Mary, understanding the UA system would probably have the ability to better utilize and benefit from the UA program.

  34. i get why airlines want to change their structure since with the existing (and now previous) model, there are some fundamental flaws.

    + no recognition of how much money one spent to get to elite status. i’ve known folks who had to pay $800 to just fly DFW-ATL last minute and just earning a partly 1462 miles.

    + no differentiation between activity on partner airline or your own metal. I have a friend who flies 5-6 trips a year on BA metal DFW-LHR-DEL/BOM, all paid by his company in economy, credits them to AA and is earning executive platinum. this is not really loyalty to AA though this can be mitigated by using MQDs

    the new model also kind of sucks since it significantly reduces the number of miles a loyal flier like mary gets. And fewer miles = fewer rewards for being loyal.

    The future seems to be just buy what works best for price and schedule and just buy the economy comfort seat or cheap upgrade outright rather than staying loyal and getting status.

  35. @Wandering Angryguy….Seth thanks for reminding us that although your positions likely have merit and are worthy of debate you are not worth patronizing for the many travel services you offer because like United; Who wants to do business with a jerk?

    As for United, they want John but don’t have the service or amenities to offer him. Changing their hard product and service levels doesn’t fit with a wannabe LCC airline trying to save money over cashew contracts. Heck, if they even invested in IT or a secretary program to identify the John’s of the world and talk to them about GS program and eligibility they could potentially bring him into the fold. Will that happen with United? No way.

    As for Mary, I do believe that’s who they want to target as they put more and more seats on 737s to everywhere, who fills them? Who fills them in the next economic downturn? Most of the time when I’m actually on UAL, there are at least 30 elites or more. Aren’t most of those Mary?

    I’m a combo of Mary and John. Some C class no notice international travel and some domestic purgatory. United doesn’t incent or offer me miles or upgrades relevant to my $30-40K in annual airline spend. Even out of Denver I go mostly to AA. OK…United can have my $5K/25K miles for direct flight convenience but I am moving that more to WN and AS.

  36. I’m not sure anyone deserves miles as such. They deserve good service, and the PQM counts can be useful for an airline to figure out for which customers they need to go the extra mile.

    But redeemable miles are an artefact and nobody deserves them. To the extent that they avoid taxes, they are a privileged artefact. To the extent that they are a rebate to an individual at the expense of his or her employer, or to the extent that they are a reward for credit card churners paid for in inflated prices by people who don’t play that game, they are an unethical artefact. But the only thing that either Mary or John deserve is a comfortable, safe and on-time flight with the level of service for which they paid.

  37. Three thoughts:
    1. Incenting the margins is based upon a person’s schedule and paying attention to the FFP, not on how much they spend. I think that’s perhaps the key thing Gary is missing. Gary, you make a very good economic case for incenting the margins, but miles flown are just as bad a differentiator/indicator as dollars spent for figuring out who would instead fly UA if given miles.
    2. IME, the wealthier, busier travelers have no clue–don’t have time to have a clue–about FFPs, so the FFP does less to incent them. I’ve flown beside a number of UA GSes in domestic F that had no idea they were GS, had no idea of the benefits, didn’t even know they had SWUs and could upgrade to F on their paid C, etc, etc. Trying to incent these clients using an FFP is pretty close to a losing proposition, IMO. At the very least, you’ll get a lower percentage effectiveness than the general population.
    3. Because United has such a much poorer soft and hard product than the competition, switching to revenue-based is going to hurt them more than DL (or even AA). The fat cats have already switched to VX, JetBlue Mint, or most likely Delta. More miles won’t lure them back. The mid-range value traveler who buys coach tickets, the occasional F ticket, but most of all is chasing status, is the only person that’s going to be incented by an FFP, IMHO. If UA wants to win back the fat cats, throwing miles at them isn’t going to work; improving CS and inflight product will.

  38. They both get what they deserve for flying UA.

    Personally I think Mary is a fool, she would be much better off with Southwest – maybe even pickup a companion pass so one of her family members could fly free all year plus A-list benefits would be worth more than she gets on UA. Of course this would not occur to Gary, who advises everyone as if they should be planning annual vacations to the Maldives.

    As for John, he is lucky to have a good admin. A nonstop international flight is worth far more than connecting flights. Also it will be super easy for him to keep the UA miles from expiring as opposed to the hard expiration he might find on UA’s partners.

    As for United, the program makes perfect sense. UA makes a lot more money off John’s 3 flights than Mary’s flights. UA needs customers like Mary but they know she will fly UA anyway until she discovers WN. So no need to overincentivize her…

  39. Interesting to see that most people believe that well-heeled travelers aren’t interested in the miles-and-points game. My impression is the opposite — that you have to have a certain amount of money and time flexibility (of the sort that an 8-to-5, two-weeks-a-year employee isn’t likely to have) to play at the game. Certainly many of the people from Milepoint I’m able identify personally are quite well off.

  40. Based on this story I believe both people should be getting the same miles.
    Thats why I bank with American Airlines.

  41. Based on your examples if the purpose is to influence purchasing habits, neither.
    Mary seems to be interested in the benefits of elite status and even the reasoning for using the Mileage Plus card has to do with that and not actually accruing miles.
    Giving her more miles will not change her purchasing decisions, the only way she’s going to change is if United devalues her status.
    In John’s case, he isn’t the one picking his travel and his United flights were based on convenience, again giving him more miles will not change his purchasing habits, the only way he will fly United more is if the premium cabin service is better.

    The real challenge is to find an example of someone who would be motivated to choose their airline solely based on better mileage earnings via flying. I think the airlines have realized that the number of people in this category is low which is why they think these changes will not impact them.

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