United will stop counting how far you fly for earning elite status. United will no longer have 25,000 mile, 50,000 mile, 75,000 mile and 100,000 mile status.
Instead – starting in 2020 for customers earning status for the 2021 program year – United will count how many flights you take and how much you spend. And if you want to earn status without taking a lot of flights, just spend more.
Historically elite status wasn’t “how much have you spent” but “how much of your total available spending are you giving me?” The old metric of miles flown was imperfect, but a proxy for wallet share. As spending alone takes on greater importance someone flying a couple of pricey business class tickets a year, while giving most of their business to another carrier, will earn status. Someone slogging out all of their travel with a carrier may not.
The question, of course, is whether United’s move will mean that fewer passengers wait around for a less convenient flight time to stick with the airline, or whether they’re willing to take a connection to fly United when another airline has a non-stop. And just as importantly, whether customers stretch to spend more on United to earn status, and whether that makes up for any business lost.
Two Ways to Earn United Elite Status Going Forward
United will offer two ways to earn status – spend and a minimum number of flights, or just spend (with a minimum of 4 United flights).
- Premier Qualifying Points (PQPs) is the new qualifying dollars. One US dollar spent is equal to 1 Premier Qualifying Point.
Premier Qualifying Points are earned the same way qualifying dollars are earned today (base fare and seat fees) plus they’re adding paid upgrades and MileagePlus upgrade award co-pays.
Travel partner flights (non-016 ticket stock) will finally count towards qualifying spend, as it does for both Delta and American. They’ll take the number of redeemable miles earned for a flight and divide that by 6 to get the number of qualifying points earned for Star Alliance partners and by 5 for their ‘preferred partners’ Lufthansa, Air Canada, ANA, and Copa. And since non-United tickets will count towards required spend, international customers will no longer have the spend requirement for status waived.
- Premier Qualifying Flights (PQFs) replaces segments. There will no longer be fare class multipliers. A flight is a flight is a flight. One takeoff and landing is a qualifying flight, except for award travel and basic economy fares which don’t earn flight credit.
Today United’s spending requirements are $3000, $6000, $9000, and $15,000 for Silver, Gold, Platinum and 1K.
Here are United’s new levels. Two things to note:
- Qualifying Points will be easier for international flyers to earn on partner tickets, but the amount of spend required goes up.
- As revenue for the airline gains in importance and actual flying lessens in importance, the number of segments required for status will go down.
|Premier Qualifying Points (PQP) +|
|Level||Premier Qualifying Flights (PQF)||Premier Qualifying Points Only|
|Silver||4000 PQP + 12 PQF||5000 PQP|
|Gold||8000 PQP + 24 PQF||10,000 PQP|
|Platinum||12,000 PQP + 36 PQF||15,000 PQP|
|1K||18,000 PQP + 54 PQF||24,000 PQP|
$8000 spend to earn mid-tier Gold status and basically never get upgraded seems like a lot to me. So does $18,000 for 1K – notably the spend requirement for customers is going up, and the airline isn’t giving any more benefits to customers.
United created a video to explain the changes:
Spend on United’s Credit Card Becomes Less Useful
Plenty of members have been spending $25,000 a year on United co-brand credit cards for a waiver of the minimum spend requirement for elite status (up to the Platinum level). That spend waiver goes away with these changes, since spend with United comes front and center.
United credit card customers will be able to earn 500 premier qualifying points after $12,000 in spend each year, and another 500 premier qualifying points after $24,000 in spend, for a maximum total of 1000 PQPs that count for status up to the Platinum level. This credit card spend won’t help earn 1K status, which – given the most you’d have been able to earn is $1000 out of the required $18,000 spend – seems petty to me. (Legacy Continental Presidential Plus Mastercard cardholders will remain on a separate system.)
United is unhappy with Chase. They want Chase to pay them more for the relationship. They worry that Chase is making inroads with their Ultimate Rewards cards whose points transfer to United miles. (Two years ago United’s financials suggested to me that MileagePlus revenue growth was largely coming from these transfers.)
However United has a long-term deal with Chase and Chase has no reason to pay more without getting something in return. I have to think that once there’s a rapprochement between the two that the cards will become more valuable for earning status again, as well as for earning upgrades.
How United Explains These Changes
I spoke with Luc Bondar, United’s Vice President of Loyalty, to understand what’s behind these changes. He shared that their goal is to make the program “much simpler and transparent for customers” and follow what they’ve seen from “other travel industry leaders, some of what we’ve seen in the hotel space.”
He believes that “distance is no longer a good proxy to measure a customer’s loyalty” that perhaps it was “when programs were first introduced” but that the industry “has been transformed with the introduction of different price points that allow customers extraordinarily cheap fares to fly extraordinarily long distances, and qualify based on low levels of spend while receiving a high volume of benefits at the same time there are many customers who today are flying frequently and often short hops, spending a lot of money but not qualifying for top levels.”
It seems to me of course that these ‘different price points’ that are actually new (American Airlines introduced Super Saver fares in 1978) is basic economy, and United already restricts elite qualifying using those fares. Moreover the notion of qualifying on low levels of spend went out the window with the introduction of minimum spend requirements for status. (United even refused to allow the credit card spend waiver to help customers earn 1K status.)
At the point that spend is all that matters, it becomes less about actually choosing United over other airlines. I asked Luc why not just allow customers to buy status outright? His answer is that they “want to reward customers who fly United.” Indeed they have a minimum of 4 flight segments on United for earning MileagePlus elite status, regardless of spend.
Bondar tells me that they expect this new elite status structure to “increase the overall size the of premier population” – apparently there are plenty of people spending a lot of money with the airline but who aren’t flying enough to earn status – so the change will “rebalance across program tiers, doing a better job making sure the best most loyal customers are 1K, Platinum, and so on down.”
He recognizes that “any change is never going to keep everyone happy, customers today have gotten used to doing a mileage run at the end of the year, to almost gaming the system, seeing how little could they spend and still qualify.” His narrative comes back around to eliminating gaming though of course year-end segment runs may still be necessary and the minimum a customer could spend for 1K is well known: $15,000.
In the end their “goal is to make sure [they’re] lining up customers into the right tier as effectively as possible, while many will move up there are also customers that will move down. Those movements will be a better reflection of [a customer’s] loyalty to United, the value they give to us” and in turn the value they receive back from the program.
Will Other Airlines Match?
Delta and American Express just relaunched their co-brand cards effective at the end of January including a change to how spend on those cards earns elite status miles. Delta would be hard-pressed to follow United in the near-term, and Delta isn’t known for following United (it’s the other way around).
If I’m betting on an airline for American to follow it’s Delta, not United.
So if I had to guess both Delta and American retain miles as a piece of how you continue to qualify for elite status. They certainly could raise the minimum spend requirement for status, of course. Currently both Delta and American have $15,000 as their minimum spend for top tier, though of course Delta makes it much easier to earn that via credit cards.
United Boldly Revamps What is Considered Loyalty
On the one hand a straight appeal to spend feels crass, in an Ice Cube Gangsta Gangsta sort of way. On the other hand it’s also extremely honest. The airline is being clear on exactly what they value from a customer. Bondar is right that this is simpler and more transparent.
With this change United goes a step farther than competitors. American and Delta award miles based on the cost of a ticket just like United does. All three have inched towards revenue-based redemptions. Until now all three had minimum spend requirements for status. United is the first to pull off the veneer entirely. Spending is no longer just a check to make sure the lowest revenue frequent customers can’t earn elite benefits. Now spend alone is all that’s needed.
Customers who are being fired with this move – who may have hit a $15,000 spend requirement for top status, flying domestically without travel on partner airline tickets, for instance – will be unhappy. United’s bet is that they’ll have more customers giving them more spend than they’ll lose.
I guess the question is, though, now that points aren’t earned based on how far you fly and elite status isn’t earned based on how far you fly, when they give up the name MileagePlus?
[…] that is, dumping distance miles as part of the elite equation. If you missed what happened you can peek at VFTW post this morning for the details (it’s ugly). The really funny thing is United has, much like […]