Meanwhile, over on DL (Spend thresholds being added to elite qualification)
Has anyone here been paying attention to what's going on over at DL today? Starting 2014 they will be adding dollar thresholds to the elite levels in addition to MQM's (Silver - 25K miles and $2500, etc.). Let's hope Doug doesn't get any ideas.
This is hardly news. By 2014-15, all of the legacies will have spend systems in place. UA started by prioritizing -UP fares for elites over freebies and the others will follow suit.
Fewer UG's out there, so who gets them? Them what spend more.
Yup I think this is the way that the industry is headed, at least here in the States. Hopefully the F product and the overall elite programs will improve enough to make the extra challenges assorted with maintains status worth it. That's across the board, not just US.
I think UA will go next to a model closer to DL, and that US and AA will go last, regardless of what happens with the potential merger. Merger happens = bad timing for such a fundamental change as folks are already ticked off simply because there's always big changes with mergers. No merger = time to lure in as many of the other guy's elites as possible rather than thinning the ranks with more difficult requirements. Poach the customers for a year, then change things up.
Fwiw I'm thinking 2013 may be a good year for US promos. If the merger happens, placate the elites and/or get extra money from them; if not, keep them from jumping ship, and poach them from AA (and now DL possibly).
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Some folks STILL haven't gotten their prizes from the Top Flyer contest, and that makes me really sad. What's the holdup, IB?
Looks like DL is giving flyers an out - spend 25k on the DL branded AMEX and spending limits go away. 25k really isn't that hard for higher level elites - I wouldn't mind if US/AA did this actually, might thin out the ranks a little.
Looking at this a little closer - I suspect *A would boot US if they did this because partner spending doesn't count. DL is the kingpin of ST so it works for them. US/AA would be the primary carrier of OW so it would work there also.
Programs: DL No More, Hilton Gold, National Executive
Posts: 1,297
And from reading the response Delta is going to take a beating. It is pretty logical, really.
People who spend high amounts on tickets are rarely buying tickets based on return for frequent flyer miles. They are spending high because they are more worried about schedule and direct flights. The airline doesn't attract these fliers with flyer points anyways.
Discount shoppers are going to go for the discount. If they can get a decent upgrade out of it by sticking with an airline, they will. But if it is put too far out of their reach, they go else where. Thus, you loose them to JetBlue and Southwest.
It's the discretionary spenders that are the prize. They fly enough that their loyalty means money - you may not make a ton from their fares, but they make some, you don't have to spend much to get them to buy from you, and they fill your plane. Unfortunately this the group they are going to loose.
It will look good for a little while until they realize they lost the loyalty of those fliers. They are going to have to start spending more upfront in advertising and promotions just to earn those same fare amounts. And when they start pulling that they will loose their high end customers.
This is really US's chance to shine. They need to make an investment - yeah that means pulling a Delta and adding more first class seats. But they have a lower cost structure, and they can win a whole slew of regular customers. This will mean some more competition for upgrades, but if they play the numbers right (and realize that the extra cost to the airline of a US First seat versus a coach is not huge) they can grab a whole lot of market share, and start being able to afford larger and newer planes.
Let's hope they remember what happened a few years ago when the airlines tried limiting what fares you could earn miles on (which this essentially is). Didn't work then, wont work now.
I don't think the dollar levels Delta has put in place should really be an issue for anyone except a true mileage runner. I said this over on the UA board, but I am pretty thrifty when buying tickets for personal travel, and my company requires all work tickets to be within $100 of the lowest option, yet I still spent over $13,000 on US last year (all domestic flying) and didn't even re-qualify for Platinum. So $2500 for Silver or $5000 for Gold seems pretty attainable in my mind.
I'm more worried long-term about the possibility of mileage redemption going to a revenue model than I am about spending requirements to obtain status.
After reading the new rules over at DL I added up my airline costs last year... $1800 total for just over 25k PQMs. $350 of that was on a US club membership and $300 was on a UA ticket. So I would be one of the unlucky saps to get short changed on preferred status. Due to a lack of vac time and funds I'll likely lose my status for 2014 anyways but if US follows DL I'll be looking for best prices rather than maintaining my US loyalty.
Programs: DL No More, Hilton Gold, National Executive
Posts: 1,297
If you fly for a big company with an expense account it probably doesn't matter, but then I bet that you dont have as much say over who you fly anyways. I fly on my own dime for leisure. I HAVE to be careful what I spend - I cant afford 7500 for Platinum - that is more than I spend on leisure stuff my entire year! My flying is all domestic - I dont have big international spend. That is going to really tip the balance I think for a lot of flyers.
Programs: US (Silver, *A Silver), AA, Starbucks (Gold)
Posts: 2,218
Quote:
Originally Posted by dcpatti
Yup I think this is the way that the industry is headed, at least here in the States. Hopefully the F product and the overall elite programs will improve enough to make the extra challenges assorted with maintains status worth it. That's across the board, not just US.
That might be the day I look into A3... if they're still in *A at that point.
Programs: DL Plat/million, AA 1 mil, HH Diamond, SPG Gold
Posts: 16,384
Quote:
Originally Posted by Cloudship
If you fly for a big company with an expense account it probably doesn't matter, but then I bet that you dont have as much say over who you fly anyways. I fly on my own dime for leisure. I HAVE to be careful what I spend - I cant afford 7500 for Platinum - that is more than I spend on leisure stuff my entire year! My flying is all domestic - I dont have big international spend. That is going to really tip the balance I think for a lot of flyers.
If a flyer like you is getting all elite-qualifying miles from (cheap) flying and are Platinum, that's a minimum of 75,000 butt-in-seat miles. If hypothetical flyer likewise won't hit the $7500 revenue threshold, that's less than $0.10/mile (before taxes). That is far below the average revenue/passenger seat mile for Delta. Even if said flyer isn't using benefits that cost Delta real money to provide (multiple free 70-pound checked bags, for example), this is a marginal (profit) flyer - and Delta's program acknowledges it. Buh bye.
The move is all about yield and profitability as stated above. While mildly annoying to have another threshold to hit to maintain status, I can't blame Delta for going this way.
Programs: US (Silver, *A Silver), AA, Starbucks (Gold)
Posts: 2,218
Delta is obviously trying to set a standard as to the amount of revenue each Medallion tier is generating. To that end, why not dump the BIS requirement and only use revenue as the yardstick? If DL wants $12,500 in revenue for a flyer to become Diamond, why should it matter if that money comes from two round trip TPAC BusinessElite tickets vs. 125,000 miles of hub captive shorthops? That's what I'm confused about...
Or why not make make it an either/or with qualifying miles vs. qualifying dollars. Reward high value flyers as well as the high mileage flyers:
Silver: 25,000 PQM's or 30 PQS'es or $5,000 PQD's
Gold: 50,000 PQM's or 60 PQS'es or $10,000 PQD's
Platinum: 75,000 PQM's or 90 PQS'es or $15,000 PQD's
Chairman's: 100,000 PQM's or 120 PQS'es or $20,000 PQD's
...To that end, why not dump the BIS requirement and only use revenue as the yardstick? ...
Perhaps because DL doesn't want to imitate US (which sells Preferred outright?)
Old US (pre-merger with America West) tried to limit DM miles earned only for higher fares purchased, and failed miserably. These are different times, of course, but hopefully a lesson learned ..
Programs: US (Silver, *A Silver), AA, Starbucks (Gold)
Posts: 2,218
Quote:
Originally Posted by kudzu
Perhaps because DL doesn't want to imitate US (which sells Preferred outright?)
Old US (pre-merger with America West) tried to limit DM miles earned only for higher fares purchased, and failed miserably. These are different times, of course, but hopefully a lesson learned ..
You think there might be enough backlash that Delta retracts?
You think there might be enough backlash that Delta retracts?
I don't know. I know DL is performing very well these days (hitting their numbers, etc) .... I'm sure they've studied the issue and think they know what's good for them as a business.
