oliver2002

Prologue:
In the course of the summer we came to know from various sources that LH M&M was planning to do some major changes to the program starting in 2014. Since some of the changes seemed rather exotic and some sadly very plausible, we approached our contacts at M&M to ask if they could confirm these rumours. M&M agreed to update us in a conference call, but was very clear that they did not want to break the news about the changes on any online media in advance. Their primary aim continues to be the direct communication with their customers via M&M direct mailing and the website.

Below is the summary of our two hour background talk. As you can imagine we asked a lot more questions and received a lot more answers.

As far as direct communication on FT is concerned, I bought up this topic on Wednesday when I visited LH HQ. As noted in the other thread, there is a certain interest to do this, but LH is careful to avoid the situations established corporate lurkers like UA Insider face from time to time. So standby for 'more exciting news you will like'.

oliver2002

Since the last major change to Miles & More (M&M) in 2012, a number of additional small adjustments have been made to the program. Effective January 1, 2014, some rather extensive changes will occur, especially with respect to mileage earning in economy class. Oliver M. (flyertalk.com) and Ralf S. (vielfliegertreff.de) took the opportunity to speak with Harald Deprosse (VP M&M) and Andreas Koch (Director M&M) about the changes and the associated objectives.

oliver2002

After last year’s rather painful adjustments to business class mileage credit, we now have another round of changes, this time for economy class. What should the M&M membership expect?

We regularly review how our offerings match the current trends in order to be competitive in the future and attractive for our customers. This includes of course the M&M program. Our goal is to stengthen the loyalty of our customers to Lufthansa and the M&M airline partners. The mileage credit for economy class has already been somewhat dependent on the booking class for a few years now. Due to the development of broad price ranges within the individual booking classes, we see the need to refine the differentiation. Ultimately, we would like to insure that a customer who pays more for a flight also earns more miles.
It is important to us that every flight continues to be eligible for mileage credit. However, the mileage earning in the lowest booking classes will be reduced. On longhaul flights the booking classes Q, S, V & W will only earn a credit of 50% instead of 100% effective January 1, 2014 and the classes E, K, L, and T will be reduced to 25% instead of 50%. On the regional routes more tickets will receive only 125 fixed miles and the standard rate of 750 miles will be reduced to 500 in some cases.

oliver2002

Surely some frequent flyers will consider flying with a star alliance partner who has not been (yet) affected by these changes?

For flights on our partner airlines we will (similar to the adjustment of mileage credit for business class in 2012) also adjust the levels of mileage earned. The exact timing depends on the airline and the respective contractual terms. Of course we will communicate the respective changes with appropriate advance notice.

oliver2002

What will happen with mileage credit for tickets that were booked before the notification of the mileage credit changes?

As in 2012, we will offer an appropriate waiver upon request. Those who purchased tickets for 2014 before September 19, 2013 can request a credit of the difference in mileage credit as per the rules that were valid at the time of purchase.

oliver2002

Will the rules for upgrades change with the adjustment?

The booking classes affected by the change will continue to remain upgradable on the long- and shorthaul flights. Only tickets in booking class T, which were upgradable on shorthaul flights, are no longer available for upgrades on any route effective January 1, 2014.

oliver2002

What implications do you expect especially for the status customers?

Our analysis shows that our status customers travel predominantly in higher booking classes. As such, we expect that for the majority of our important and good customers the consequences of the changes will be minimal.

oliver2002

Aren’t these changes just another part of the cost saving measures?

The upcoming program changes represent sensible enhancements to the program. The M&M program requires a structure appropriate to the economic environment, and especially the cost/benefit ratio must be considered. It is Important for us to improve the attractiveness for our most important target customers — the frequent flyers who fly primarily with the fully integrated partners of M&M. In the future we want to expand benefits according to the volume of flights on these airlines.

oliver2002

Which benefits can these customers expect?

What we can say at this point is that we want to strongly incentivize flights on all fully integrated partners starting January 1, 2014. To some extent we already do this for Senators and HON Circle members with additional e-vouchers upon reaching certain milestones. In 2014 we want to reward all status customers beginning with Frequent Travellers, including Senators and up through HON Circle members with additional benefits once they fly more than the minimal required threshold miles for attaining the respective status. As far as is technically possible, we intend to offer a choice of various benefits at each level. We are currently exploring a rich range of possibilities, and hence ask for your patience and understanding until we are able to announce the benefits that will be introduced over the course of 2014.

oliver2002

Won’t the partnerships inside the star alliance lose some value due to these changes?

As a matter of principle, we will continue to honor our obligations to the star alliance. However, within the M&M program we want to reward all status customers in the future even more if they decide to fly with fully integrated partners. Other frequent flyer programs have similar incentives.

oliver2002

Other airlines offer lifetime status after reaching a million miles and not just an unpublished benefit of a lifetime Senator status for members that have reached retirement age.

The introduction of a similar benefit is currently not planned for the M&M program.
But you bring up an important topic: it is relevant for us how long a M&M member has held a certain status in the program: it is an expression of a multiyear loyalty to us beyond the respective validity of status. We therefore plan to introduce a reflection of the lifetime achievement on membership cards. Further details about this will be announced towards the end of the year.

oliver2002

Starting January 1, 2014, SWISS will exclude general M&M members as well as frequent travelers from redeeming first class awards. Can we expect a similar step for flights with Lufthansa?

The decision to only offer first class award tickets on SWISS to Senators and HON Circle members was internal to SWISS. This decision, just like, for example, the different treatment of upgrade redemptions, lies within the individual scope of each fully integrated airline in the M&M program.
At this point of time Lufthansa does not intend to follow SWISS with these measures.

oliver2002

Can M&M members expect another round of substantial changes with the introduction of the premium economy in 2014?

The exact details how premium economy will fit into the M&M program have not been evaluated so far and are not yet determined. Certainly the ticket value will be taken into consideration and differentiated like in the other class of travel. We are not currently planning to re-evaluate the existing booking classes: this was already done in the business class on September 1, 2012 and the economy class will be adjusted on January 1, 2014.

oliver2002

The interview was done in German and the final version is in German. It was translated into English by me and proof read by N1003U (^ again for the quick help!). When in doubt, the German version counts. I have attached it for reference to this post.

SMK77

You just have to love these folks at Lufthansa: long-standing membership is so important that we will now print it on the card but other than shiny Service Stars no benefits will be included.

I also had a good laugh at how important it is to directly communicate the changes to customers. Unthinkable that the lurkers would already give a heads-up to the community (notwithstanding resource issues!).

While I published the changes first, I haven't heard from LH officially and I thought that HON should be the first to know. Love my Lufthansa! I really do.