Lucky passes on some pretty specific speculation about the combined United-Continental frequent flyer program for next year.
I’ll quote substantially from his post, and though while I don’t claim to be entirely in the know on this my understanding has been that the details of next year’s program aren’t final or fully decided and wouldn’t be until after Labor Day — so this may not be completely right. Although it certainly resonated with some things I’ve heard about in terms of the direction they’re going.
Let’s start with the good news (and trust me, there’s not a whole lot of it for most of us).
Class of service bonuses:
Class of service bonuses for full fare tickets and paid premium cabin tickets will go up substantially, ranging anywhere from 125% for Y, B, and M fares, to 250% for F and A fares.
And now the bad news (get some popcorn, folks):
Status level names and qualification criteria:
(a) 25,000 elite qualifying miles AND $2,000 revenue AND 4 United segments,
(b) 30 elite qualifying segments AND $2,000 revenue AND 4 United segments,
(c) $5,000 revenue AND 4 United segments
(a) 50,000 elite qualifying miles AND $4,000 revenue AND 4 United segments,
(b) 60 elite qualifying segments AND $4,000 revenue AND 4 United segments,
(c) $10,000 revenue AND 4 United segments
(a) 75,000 elite qualifying miles AND $6,000 revenue AND 4 United segments,
(b) 90 elite qualifying segments AND $6,000 revenue AND 4 United segments,
(c) $15,000 revenue AND 4 United segments
(a) 100,000 elite qualifying miles AND $8,000 revenue AND 4 United segments,
(b) 120 elite qualifying segments AND $8,000 revenue AND 4 United segments,
(c) $20,000 revenue AND 4 United segments
Change in status benefits:
– Economy Plus can only be selected at time of check-in
– Only one free checked bag weighing up to 50 pounds per passenger on reservation
– Upgrade window goes from 48 hours to 24 hours before departure
– Mileage bonus goes from 100% to 50%
– Upgrade window goes from 72 hours to 48 hours before departure
– Mileage bonus goes from 100% to 75%
– Upgrade window remains 72 hours before departure
– M fares no longer offer instant upgrades for Platinum members
– Upgrade window goes from 100 hours to 96 hours before departure
Change in upgrade priority:
I’ll leave the exact details for another time, though the idea is that with the exception of Global Services members, full fare tickets clear first (so a Silver on a full fare ticket outranks a Diamond on a lower fare) and mileage upgrades with co-pays outrank systemwide/confirmed regional upgrades, which outrank complimentary upgrades. With this, there’s a possibility that fare restrictions will be eliminated on systemwide upgrades.
Let’s assume for a moment that this is roughly correct.
My biggest problem is the timing of the announcement, that it hasn’t been made yet. Customers fly all year based on the value proposition offered by the mileage program, if they give their loyalty there’s a suite of benefits they can expect. But it sounds like the program could be pulling the rug out from under a large number of customers who have been giving United-Continental their flying in good faith. I’ve always maintained major changes should have substantial notice, or else they’re basically a bait-and-switch.
Now, I do like substantially bonusing premium cabin fares. Several international programs offer generous bonuses for paid first class, from 300% to as much as 625% (with british midland for a gold that has already requalified). I’ve never understood the pittance that most US programs award for premium fares.
What I don’t like are:
- Economy Plus at check-in only for Premiers. Ouch. Again, they make it harder to get premier and then devalue the one true benefit of premier. (Ben mentions one free checked bag only for Premiers, but that’s not a new change, it actually went into effect several months ago.)
- Full fare upgrade priority. This was a huge pet peeve of mine against flying Delta. As a Northwest Platinum flying Washington National – Salt Lake City shortly after the merger I remember being around 30th on the upgrade list three times in a row at the gate. I’ve assumed plenty of government fare silvers for instance trumping me.In many markets it won’t matter a great deal (though not suprising they’re shortening the upgrade windows, so that last minute higher fare purchasers will jump to the top of the queue). But depending on how they treat government fares as full fares this could kill Mileage Plus from the perspective of a non-federal DC-based flyer. And Dulles is a hub.This change, I believe, is the most concerning of all. We need to shout from the rooftops, I am not my rate or my fare!
A customer is the same person every time they board one of your planes or check into one of your hotels. We’re either valued or we’re not, loyal or we’re not. Setting a minimum spend for benefits defines what you see as loyal, though I grate at punishing people who buy the lower fares that you offer — taking seats that you think would otherwise have gone empty, and providing true revenue at the margin.
But once you’ve done that, you decide who you want to consider loyal and worth treating well, treat them just as well every single time whether on a leisure fare vacationing for the weekend or on a last minute full fare business trip, when the plane is nearly sold out and is going to go out full either way.
United even implicitly understands this. The launch of the new Explorer credit card from Chase brings with it upgrades on award tickets, a valued, loyal customer is the same important person to the airline whether buying tickets and earning miles, and on those times when they spend the miles they’ve earned.
Prioritizing full fare bottom tier elites over mid-fare top tier elites is, I believe, a mistake. Though I’m unlikely to convince the powers that be at Mileage Plus.
For myself, as a DC-based flyer and if government fares are treated as full fare in this scheme for jumping the upgrade queue, it will make the program very unattractive.
- Dropping mileage bonuses below industry standard. Ouch. And when you’re making the status levels harder to qualify for?
- Mileage upgrades with co-pay outrank certificate upgrades outrank complimentary upgrades. The upgrade process is already too complicated, it’s now insanely more so if the upgrade instrument matters first, and then status, and then fare, and then perhaps time in the queue? A non-status member spending miles would trump a 100,000-mile flyer (who has met minimum spend criteria for status!) when looking for an international upgrade? That totally inverts the entire upgrade process for the airline, it devalues the benefits given to their top tier elites making confirmed upgrade instruments highly risky.
Taken together, the changes restrict elite status to higher spenders, but then they tell elite members that their loyalty isn’t as important as someone spending more money on a given trip.
The upgrade changes push the airline further towards the transactional “how much is this one flight worth to the airline?” when an upgrade co-pay from a once every three years flyer beats an upgrade certificate given to their most loyal flyers.
But that’s consistent with the theme of giving upgrades to full fare 25,000 mile flyers over mid-tier 100,000-mile flyers.
It seems to make little sense to me to do both, to say that you only award status with a minimum spend but then to say that we value the spend on an individual trip most. Do one or the other (though I’d argue for neither). But do not do both.
Of course, these changes are still just speculation and may not be exactly how it all turns out. Since the changes haven’t been announced yet (again, hardly fair to folks flying based on a promise of what they can expect to get next year!) there’s still an opportunity to shift direction.
The key takeaways for any program here are:
Treat your members with respect. Don’t bait and switch. Offer them a value proposition, stick to it, and give plenty of notice before changing the value proposition.
Reward customers to give you incremental business that you wouldn’t otherwise get, filling seats or beds that would otherwise go empty. Incentivize at the margin. Rewarding high spend that you would get anyway doesn’t actually help your bottom line.
Treat your customers just as well, every time they walk in the door or onto the plane. Because they’re the same person, and won’t understand why they’re suddenly less important when they’re spending their hard earned miles or taking a trip with a spouse on their favorite airline and want to introduce the person they care about most to the airline or hotel chain they care about most. Don’t laugh, for many people on the road a lot and loyal to a brand, it’s an intensely personal relationship. Remember: I am not my rate!