Why Higher Spending Requirements Put Elite Status on a Collision Course With Itself

Status does a great job motivating customers who buy coach, or at least fly coach a substantial portion of the time – for instance the road warrior whose company will spring for business class internationally once or twice a year but has a rule of 6 hours or more for premium cabin so domestic trips are mostly out up front.

Status does almost nothing to motivate someone who buys all premium cabin tickets.

  • They don’t need the upgrade, they’re already up front
  • Free checked bags already comes with their fare
  • They don’t really need the bonus miles, most miles aren’t earned from flying anyway.
  • They don’t need economy plus seating

The ability to gift status to a loved one could be nice. As the threshold for earning status approaches a level where it’s obtained mostly by people who do not need it it isn’t going to be a significant motivator.

The basics of any loyalty program are reward and recognition. There’s points (for instance, earn something when traveling on your employer’s dime and direct your employer’s money to the travel provider so you can pad your own mileage account) and there’s status (better treatment).

That better treatment is only a motivator for customers who aren’t buying that treatment on the travel day anyway.

Programs were designed to get customers to take a less convenient flight – perhaps travel a couple of hours later or take a connection – in order to stick with their preferred carrier. But will someone buying all premium tickets do that anyway? It’s the person striving for something, trying to make their travels a bit better, that road warrior traveling in back most of the time where programs can move the needle on their spend and earn incremental business.

With increasing levels of spend, elite programs are on a collision course with themselves, headed towards irrelevance where they precisely target the customers whom they cannot influence. At $24,000 spend alone for 1K status it will be interesting to see if United reaches the point where they draw a circle around members who earn status without trying, and don’t give the airline incremental business as a result.

To be sure there will be program members spending $24,000 in a year on all coach tickets, and spending $18,000 while flying enough segments. That’s not the question. But when the program loses relevance to a large portion of its membership it’s no longer driving business — it’s incurring cost without benefit. The program may well be less useful to United as it drives to focus more heavily on its top spenders.

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. I have spent over 20k with Delta this year already and will turn Platinum this weekend. I buy exclusively premium cabins (First and D1) when I can. I have also spent alot of money in Change Fees, because although premium, I do not fly on fully refundable fares. I would like the airlines to look at this as well, I would like to see the fees be at the current level for the lowest level status flyers and then less at each status bump until completely waived at the highest status, that would be an incentive for me in lieu of same day upgrades.

    Also if I could upgrade from a coach fare at time of booking, that would be incentivizing for me, I don’t want to sweat it out waiting till same day or 48 hours before, etc. but if they gave it to me at booking that would be great. Look, they are changing their programs, why can’t they also change or tweak their perks?

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