Classic mileage running, where you fly to earn redeemable miles that can be used for future free trips, has been dead for a long time. The low fares and lucrative bonuses on offer 16 – 20 years ago meant that it could (occasionally) make sense, but the last vestiges of it more or less ended with mileage accrual based on fare paid.
The ‘purist’ mileage run was one where you didn’t actually do anything where you were going. It wasn’t an extra weekend trip for leisure. If you left the airport at all it might be to cheap overnight accommodations. But the whole point was to keep the cost per mile down as low as possible. I was never a purist in this regard.
Even with frequent flyer programs ‘evolving’ it still made sense in recent years to go on that occasional end of year mileage run for elite status. There was a time when leisure travelers did mileage runs to earn status completely. While that’s largely in the past because elite status itself isn’t as valuable as it once was, if you were going to fly 95,000 miles on business during the year then it often made sense to take an extra 5000 mile trip to get over the 100,000 mile hump. That’s because the 100,000 mile status level was worth that much more than 75,000 mile status, and the extra benefits would be useful over that whole next year.
When I spoke to United’s Vice President of Loyalty Luc Bondar about United’s move to revenue-based elite status he mentioned the end of the end of year mileage run.
- He talked about the program no longer rewarding those who spent very little, as little as possible, to earn status. However that went out several years ago with the introduction of minimum spending requirements for status. Just a year ago United increased its minimum spend requirement for 1K status to $15,000.
- He talked about no more end of year trips for status. But that’s not true at all with the new program – they just replace long distance trips for short segment runs. If you need a couple of flight segments for status, you’ll fly Houston – Dallas instead of Houston – Tokyo, or you’ll cram as many segments into a trip as possible (Washington Dulles – Pittsburgh – Chicago O’Hare – Kansas City – Houston and back) or you’ll go on a qualifying dollar run using a cheap partner business class fare.
There’s this notion that someone, somewhere might be getting real (‘excess’) value from a program – more than they deserve – and that this must be stopped at all costs!
It’s worth remembering how United used to think about mileage runs, and mileage runners. Randy Petersen held a chat on FlyerTalk with United program executives in 2001. Here’s what they said.
Randy Petersen Ohhhh, good question…..
Robert Sahadevan It’s allowed in the program. Have at it!!!!!!
Randy Petersen Straight from the boss….. I guess that’s an endorsement to fly….
Jim Davidovich We appreciate loyal customers!!!!!
Several years ago, before United CEO Jeff Smisek insisted that MileagePlus go revenue-based, one of the program’s managing directors laid out the reasons why the wallet share of lower revenue frequent flyers is important to the program and the airline. (Incidentally he’s now a Vice President at Alaska.)
- A flyer may buy one expensive ticket because you are the only airline who flies non-stop on the route. Does it make sense to reward them? You’re essentially just lighting money on fire giving them rewards if they’re going to pick your airline anyway.
- In general a high revenue passenger is probably better for an airline than a low fare one. But a high fare passenger may trade off with another high fare passenger (for instance they both buy the last seat available on a flight). That high fare customer wouldn’t actually be profitable in an economic sense (opportunity cost basis).
- On the other hand a low fare passenger may fill empty seats and be pure profit – or they may ultimately displace a high fare passenger and be very costly if the airline didn’t get their revenue management right.
- Low fare customers may also engage with an airline’s ancillary products. Base airfare isn’t the only contribution to revenue that matters, and other products are often higher margin than the actual airline seat.
- Meanwhile third party partner customers are profitable too. A member who carries an airline’s credit card and uses it, credits points for their non-air travel to the program, and uses their shopping portal may be a highly profitable customer.
- The program needs to try to influence incremental business. You may reward a high spend customer but not get additional business you wouldn’t have otherwise have gotten. But you might be able to move the needle with some of your other customer segments.
Do you remember when people felt so attached to an airline brand that they paid more money to spend extra time flying, just to demonstrate enough loyalty for when they’d fly in the coming year? It’s hard to say there hasn’t been something lost.