Box5

Now that Delta and United are converting to a miles awarded based on the ticket price, how will that affect us or you?

I think that I will abandon Delta or United unless I have an expensive ticket. For example, if I fly to Europe in business class, the price based system awards far more miles.

Will that send economy class passengers to American and high priced ticketed passengers to UA and DL, unless they want to maintain elite status with AA?

That will put pressure on AA to change.

stinger101

I think a majority of flyers don't even think about mileage earning. People on this board are in the crazy .05%. My 2 cents.

6P&E

It's probably only a matter of time before AA also moves to a revenue-based system as well. During the merger with US they seem to be maintaining the status quo, but once the merger is complete I expect the change.

My travel is mostly international. Therefore, the issuing carrier for me is often not UA as the validating carrier is the first international segment. I have flown J to Baku and Ljubljana a couple times this year on *A carriers but UA does not get the revenue, LH and OS were the ticket issuing carriers. In the past the mileage and class of service would have been enough for me to qualify for at UA Elite levels.

It's harder to qualify for UA Elite when you travel to places UA doesn't serve.

UA900

I think AA has an advantage as long as they don't copy DL and UA. Unlike DL, UA hasn't made any corresponding service improvements. AA however is trying to copy DL's service improvements and can easily gain the edge through AAdvantage now.

Should be same level of ease as before if you switch to 016 ticket stock since that gives you PQD regardless of *A carrier, no?

Doc Savage

Everyone will go to dollars based mileage.

MQDs will increase.

MQSs will increase.

Fewer "saver" awards will be available.

There will be a slow creep in all of these categories.

bhrubin

I completely agree. AA is bound to go revenue-based; the market will likely give them little choice.

The alliance structure worked for you up until DL and UA went revenue based and stopped giving status credit for flights not providing your airline the revenue. Enjoy the fact that you got to enjoy the previous alliance structure, and now you, like everyone else, has to deal with the new reality. It isn't crazy that DL and UA want to only reward those who spend on their own airline, after all.

True. But it's fairer to HAVE UA elite status when you spend more on UA than others. UA and DL were giving away status to too many flyers who spent money on other Star or SkyTeam airlines. Now only those who spend with UA and DL get the benefits of status. We may not like it, but it makes sense--common sense and business sense.

Elite status is becoming harder to achieve. That's a good thing for elites who actually spend money with their own airline. As with all things, there are winners and losers. In the new revenue based approach, the winners are the ones who spend on their own airline.

Miles are easier than ever to earn--but no longer from flying. Now the miles are easiest to earn from credit card spend, because the airlines earn plenty of money from that spend. Big credit card spenders are the chief beneficiaries now, and those who play the manufactured spending game also benefit.

Times change. Business has to change with it.

6P&E

I agree with all you say. And let's be honest, elite status doesn't really mean much to me if I am booked in J or higher. I'm not looking for an upgrade and the perks that go with it. AA bent over backwards for me recently on an ORD-PEK roundtrip-- I had no status, but I was booked in P. I experienced flight delays on both outbound and return and AA did all they could for me to mitigate the inconvenience.

The perks of elite should go to those who are the best customers for that one airline. The system has been awfully generous and the change does make sense.

Best customers can be defined as those who buy a few premium fares each year or those who spend the same or better by flying the same airline time after time.

boss315

Always nice to see the positive...known I'm crazy for many years!

cmd320

They are? Every service change since US took over at AA has been a negative one from what I've seen...

DL will find new ways to irritate its customer base by further devaluing Skymiles on a multi-annual basis. It will continue offering a homogenized, mediocre product while making subtle changes to further increase its already excessive profits, all the while using its marketing department to mislead people into believing they are receiving some kind of industry leading product.

UA will do exactly what DL does only 3 months later since... well lets face it, they haven't had an original thought for the better part of a decade now.

AA will begin to resemble US more and more as services are cut, more seats are added to aircraft, employee morale falls, and profits soar due largely to a lack of competition. AAdvantage will remain in place in its current form for the next year, but after that it's anyone's guess and I wouldn't personally throw all my eggs in that basket again this year.

Overall, the only winners will be shareholders and upper management. Everyone else will be a loser.

Tchiowa

I agree. The change only makes sense. The airlines don't deposit miles into their bank accounts. They don't pay their expenses with miles. They don't pay employee salaries with miles. They don't report their profits in miles.

This is a business. Business relies on revenue. If you reward people to fly a lot but fly cheap that's what you will get. If you reward people for spending money, that's what you get.

Phoenixtinct

I generally have no problem with airlines trying to reward their "best" customers regardless of how they definte that. However, what UA and DL are doing is not that - Awarding miles based on spend and status is capped at a certain amount of miles - why cap it when you're trying to reward those "best" customers? Under the current system, there are no caps, when it's distance-based as opposed to spend-based. So, that's clearly a devaluation. Also, despite however many miles the high spenders are getting, both Delta and United have increased the award levels, so those capped miles can get you less than they have in the past. You can say you can care less about miles since you travel paid Business but then the question becomes - why is the airline awarding you something you have little use of?

Furthermore, the minimum spend for the various levels and the requirement to have flights ticketed on the airline's stock is too restrictive. Both Delta and United, however gigantic in size they are - can't encompass the entire globe and despite maybe covering most (if not all) continents, they provide service from the US to those places but no intra-Europe or intra-Australia or intra-South America, etc. service. So, for a global traveller, one airline cannot meet all of their needs. Thus, both DL and UA are part of global alliances, however, you can't penalize customers from trying to utilize those alliance carriers. If they want to award status to people who fly mostly DL and UA, they can implement that differently - have at least 50% of the flight on their metal or have a lower requirement for DL and UA metal flyers and higher for ones that are mixed. Certainly, there are options to do that without restricting to spend on what DL and UA can ticket. And they push choices to them and their JV partners. Well, I don't like when my choices are limited - let's say AF/KL, AZ and LH are not in the best of shape lately, so I'd be hesitant to book with them after the numerous strikes this year.

Furthermore, the spend requirements for the lowest levels are hardly justifyable - spending 3,000 or 6,000 or 9,000 per year on airline-ticketed stock excluding taxes and fees on top of any additional travel you may have to take that cannot be ticketed through them barely resemble benefits that are worth pursuing. Silver as the lowest tier has hardly any benefits worth spending $3,000 or more - maybe a free bag but no lounge access or any other worthwhile benefits. You certainly are better off to hold on to that money and buy as needed throughout the year - it will be cheaper. Gold comes with the lounge access and more free bags - extra legroom at booking - I've done the math - purchasing those benefits as subscriptions through United or getting a card with an annual fee comes out to be many times cheaper than $6,000. Again, not worth pursuing. At Platinum, you have some regional instruments and no fees on award travel, so that may be worth considering but at $9,000, not sure it's even in my range. And finally, the top tiers - Diamond and 1K - that's where the programs really make sense - the number of systemwide upgrade instruments alone justifies the spend requirement, however, if we go back to the premise that one flies purchased business, those instruments can be useless. So, not really sure the change that DL and UA made were really benefiting any customers but themselves primarily.

I have Platinum with UA and flying on an international aircraft I was not able to be upgraded - with something like 24 seats. Why jump through hoops when status is useless unless you're at the top? And one final point - people who supposedly obtained status through DL or UA but didn't fly them much - they also couldn't have used much of the benefits offered with those tiers - same day changes, standbys, upgrades, etc. - those are tied to flying that carrier - if you're not, DL and UA are not giving out anything. The rest are alliance-wide benefits that fliers can easily obtain through another program for much less. Aegean just revamped their FFP and you can reach Gold at 24,000 miles only - and once you do, they grant you 4 upgrade certificates. Far lower than what UA wants - no spend requirement - and the benefit of lounge access when flying domestically in the US - something DL and UA ask their elites to pay for - to the tune of several hundred a year.

I'm sorry but I don't see how blanket statements like "there will be winners and losers" in every scenario applies here - clearly, the winners are DL and UA - provide less for more. And I'm pretty convinced that all fliers are the losers - whether by increased spend or through benefits that are useless to them.

lhrsfo

Like pretty well everyone else here, I have been adversely affected by the changes and I would prefer that they had not happened. However, I believe we also have to be realistic: the previous programs were far too generous. Buying exclusively economy tickets and flying ten times a year between the UK and the West Coast, UA gave me E+, 1K status and six upgrades to Business per year, although the latter required more expensive tickets, so were priced at perhaps $200 each. I could have looked at BA or VS but neither program would have given me any of those three things - I would not even have qualified for top tier status. Strangely UA still offers those three things (as I'm exempt from PQD).

But the point is that the US programs were real outliers in their generosity - a symptom of a loss-making industry with too many competitors. That's changed and inevitably the programs have too. They will start looking a lot more like the non-American programs.

RustyC

I wouldn't be so defeatist about being able to push back on the DL and UA changes, as those programs and others have made changes before that they've had to rescind. DL backed off of LUser, for example, and US had to reverse a decision to award 50% on some of its own fares.

The bet is that this time it's different because we're down to three legacies and they've all tried to cut their way to profitability (since when is that a viable LONG TERM strategy?!).

But with FF progra,s we're talking about probably the most successful loyalty and incentive programs ever invented that were even able to incentivize trips that wouldn't otherwise have happened at all! (Hard to get much more successful than that). And they're suddenly just throwing it all away, making flying for miles all but pointless because mileage rewards for most people have been cut down so low?

What this does is it lets LCCs and ULCCs into the game like never before. They can tell the masses that their programs are now much MORE rewarding than the legacies and their fares are lower (as many times legacies aren't matching). You can take the free bags and go WN or get some really low fare and the charge-for-everything bit like NK.

It's also ridiculous of DL to try to suggest that people earning on deeply discounted fares and redeeming only on saver awards are somehow getting too good a deal. They're yield managed both ways, so chances are the paid ticket and the award ticket both might have converted to empty seats.

Contrast that with Spirit, which is a mediocre program for regular flyers but can be rewarding for cardholders who can do award travel in spring and fall and hit the 5K and 10K awards.

Here's my breakdown for 2014:

Legacy paid: 6
Legacy award: 3
Credit card award (on legacy): 1
Spirit paid: 6
Spirit award: 8

Legacies included 2 Asia and 2 South America trips, while the longest on NK were LIM and SJD.

Notably, DL and UA will keep minting miles like crazy via the credit cards, so if you're good at the manufactured-spend game or the churn game or that whole side of it you've still got that.

I dunno if MRs had enough business to move the needle in the first 2 weeks of December, but with DL we may find out. OTOH, it's easy to cover mistakes if your planes are still full, even if the main reason for that is your own cutbacks.

RustyC

Maybe the model indeed is like a dominant national/international carrier in a European country, like AF for France or KL for the Netherlands. OTOH, DL has gone so far in cutting the mileage-earning potential of most tickets that it ceases to become a factor in purchase decisions. Competition is down but fortunately not yet out. With Asia trips KE and Eva might get a look, or even the Gulf carriers. Domestically the LCCs and ULCCs might be viable for those travelin for leisure on their own funds. Hub-captive business travelers have the least choice, but companies will push back with controls.

And as we saw with 9/11 and SARS, externalities can cause the bottom to drop out. When that happens again, DL and UA will find a lot of burned bridges between them and many of their former loyal flyers.

milehound

Good thing I have 1MM status with AA. Thanks to a new job, and age related medical conditions, the days of hunting the last-minute cheap fare and/or EQM multiplier promotions are over (I know, I know, the legacy carriers have made it near-impossible anyway). I used to score 50k miles per year and use the miles toward free or cheap stays in 5 star hotels. Now it looks like I'll have to earn and churn with mileage-earning credit cards for biz class tickets, and - horrors! - actually pay to stay at the same hotels (charged to a credit card with a multiplier for travel based spending).