$pend based FF program
 

I was asking the Bens about AC moving to a $pend based program as it would likely be better for some of the members that purchase business or latitude fares but don't necessarily hit the 100k mark. If I remember right they said that there was nothing planned at the moment.

In 2015 UA has announced they are moving to a solely spend based program - I thought it was an interesting development.

It's definitely an interesting industry development!

Ben ,Where were you 10 years ago when I started advocating doing just that, a revenue based FF program?:)^
I will hit the Trifecta,Q miles,segments and revenue. :cool:

It's overdue.

The current measurement was originally designed when fare structure was very different from today. Any discount fare required a Saturday night layover. AC was neither flying to Asia (except Singapore for a short while) nor South America. It flew to Europe and the farthest point was probably Moscow. Partner airline flights do not count towards status - "Q" miles were AC flights only.

AC has consistently ignored moderate flyers like me who generally buy discount business class fare. I verily believe that my annual total spent has been more than some SE's especially when I read boasting posts here on how to achieve SE for spending $5,000 or less! One TPAC in business costs more than that!

AC already does this for economy fares by restricting mileage earnings on Tango fares vs. Flex and above.

UA offers its own FFs 100% redeemable mileage earning based on distance no matter what the economy fare class. A nonsensical practice (from a business perspective anyway).

AC could of course follow what UA/DL have done, but already does in a rougher sense by restricting Tango earning. Which is more akin to the European and Asian carrier method.

Keep in mind that this change for UA is ONLY for redeemable miles. So some important key points to keep in mind.

1) Their FF program (equivalent for Altitude) is unchanged. Miles are awarded on distance and NOT spend. With COS bonus for cabins.

2) Miles that can be redeemed are changing (equivalent only to Aeroplan).

Drawing a comparison to the Altitude program and this change is nonsensical for the reasons listed above. Comparisons can only be drawn to the Aeroplan program.

Also, as pointed out above. AC already does this and has for a long long time with the Tango / Flex / Latitude milage accrual differences.

I looked but couldnt find the response. And that is irritating because my recollection is the opposite of yours. I recall something like "it is under consideration and we hope to announce something in the not too distant future." Or I could be dead wrong. But I do remember thinking "be careful what you ask for because you just might get it" after reading Ben's response. Meaning that while I see the sense of this from AC's perspective, I think that except for a vocal few, almost no current elite (inc. SE) would like this in practice. UA's changes seem to have garnered universal condemnation. Even though spend doesnt alter status level, it only impacts their equivalent of AQM (as a multiplier). If I understand what they did correctly.

The way I read it you still qualify exactly the same way for status (miles or segments) but the non-status award miles shift to this revenue based scheme. Or am I mistaken?

I find it hard to imagine how shifting the status level qualification could work without applying it alliance-wide.

Why would you say that? Within *A, qualification for *G varies quite widely.

Until the 2013 benefit year, *G was actually comparatively easy to get on AC (believe it or not) - 35k miles vs 50k on UA for example.

I think LH requires 100k (!!!!) status miles for *G.

Of course different earnings rates for different fare classes between *A programs makes this a difficult direct comparison - but certainly status qualification criteria across the alliance is not uniform.

Ben the spend in just for REDEMABLE miles. AC program giving 25% and 50% miles on low fares is far worse cut than the UA changes.
Qualifying miles from UA have not changed, so don't get to excited this wont allow you to make any more cuts to the Aeroplan program.

As other stated, the changes have nothing to do with their altitude equivalent, which is still mileage based and not downgraded from the current levels.

And the new redeemable miles equivalent, whilst a downgrade, is still more generous than aeroplan.

There is an argument for having some spend associated programme, maybe in conjunction with mileage. But switching solely to a spend based policy as your suggesting would take a huge overhaul, and more importantly likely annoy far more people than it pleases.

And has been said many times before... if you are spending in the region of 25-30k a year and not hitting SE, then you should hire an PA to arrange your travel for you... you're not getting value for money but that isn't the fault of the lower spending SE!

If you are spending that sort of money and not hitting target that tells me 2 things. 1, you don't fly internationally. In which case you don't really need the extra benefits of being SE. And 2, you buy a lot of lattitude fares, which means you can upgrade all segments domestically at anytime for 1 credit meaning you always fly J and never run out of credits. Both things suggest you aren't exactly being screwed by the system.

I think the point was that even for this change, it only applies to 016 ticket stock, because it's hard to track spend when you buy the ticket elsewhere.

And if the program ever changes such that a domestic US flight doesn't get me anything, I'll be very annoyed.

Well at least UA tells you in advance and not retroactive like AC.
Next its always been VERY simple to know how many miles you get on other Star carriers? Just click on this link and you will know how many miles you get to Mileage Plus, NOTHING has changed for Qualifying miles. also for STAR airlines you get the redeemable miles the same way you always did.
https://www.united.com/CMS/en-US/mar...ePartners.aspx

So the only change that will complicate you on Mileage Plus is you need to multiply the $ less tax by 11 if your 1k. Hope this makes it easy. Also your Aeroplan what do you care?

Rather introduce spend-based, just award miles based on the shortest distance between 2 destinations.

They are losing revenue on those adding multiple hops (for the same price) to add extra miles/segments.

100% correct.
Effective 1 March 2015:
Lowest published fare will continue to receive full 100% status miles of distance flown. Only RDM miles will be based on the cost of the ticket with the highest tier getting x11.

For example the lowest publish fare on United from YYZ-SYD-YYZ August 4 2014 (Average for United for last 2 years) for example is C$ 1758.00 AL Inclusive booked in T class.
Say in April 2014 The Lowest Published in T YYZ-SYD-YYZ is C$1758.00.
The Routing is: YYZ-EWR-LAX-SYD-LAX-EWR-YYZ. From March 2015 UA elite will received :
20882 Status miles (including minimum 500 YYZ-Ewr-YYZ)
No change here. Which to me & many 1K I have been in contact with are please there is no change in Status earing miles.

For US based UA MP members loss in RDM can easily be made up by manufactured spending on Chase Credit Card.

Change in status earning would have been major devaluation .

For Canadian Based UA Elite effective 1 March 2015, can continue to receive 100% status miles on lowest publish fare for distance travel..

AC Elites on the other hand will receive between 25%-50% of distance travel.

Normally I would be very opposed.
But since I do not credit any flights to AC anymore, go ahead :D
(on the other hand, don't do it as I really do not want AA to match.)

As noted, the UA changes don't affect how elite status is earned. EQMs are still mileage based. And COS bonuses accelerate that earning for those who buy full Y and J tickets so this is already revenue-based. As for RDMs, after a certain distance, the revenue based system delivers fewer miles than the mileage approach and UA caps the earnings...not to mention ends elite tier and COS bonuses.

So OP's inability to understand what UA -- and DL before it -- has done negates the whole premise of this thread: That those whose companies pay their travel tab in high fares should get the all the personal benefits.

The real benefit to UA of this new scheme is that it will save millions (perhaps just book transfers, but the accountants can use it in the overall quarterlies to show cost savings) by not having to purchase hundreds of millions of miles from MP. It's just another of Smisek's desperate attempts to shave $2 billion off annual expenses and trying to turn a profit.

AC has already gone through such a process in a different fashion, by reducing the miles earned (both EQMs and RDMs) when lower fares are purchased. The US carriers have resisted this approach and adopted the one being discussed. And AC itself realized it had to reintroduce EQM (well, now AQMs) to Tango fares.

I have a better solution. Sell status for money. I am perfectly happy to purchase SE for cash and stay home!!! Short of 50K miles to SE, spend the cash and get it.

US Air did this. You could buy *G back in the day before they were merged

I don't care... I was responding to another post, to show that it would not be easy to switch a program to a full revenue model.

Whats wrong with rewarding loyalty based on how much $ you spend with them? I must be missing this

Because how much you spend is not directly related to loyalty?

Who is a more loyal customer?

1 ticket a year at $5k (and then goes off and flies others)
or 25 tickets a year at $200 each (on one single airline)

The one who spends the most, lets say annually, from a total standpoint. Is that not irrational?

Of course it is. I fully agree with you that the one that spends more should be rewarded more.

But that is not rewarding "loyalty"
A spend based program no longer rewards frequency of one's purchases with an airline - it rewards a one-off more than it does 'loyalty'

Loyalty = who spends the most. No?

Yes. In this model, it certainly would be.

You dont think that frequency of purchases and not buying elsewhere are also part of loyalty?

Removing this double post

Seriously, there is no compelling reason to change the current two-track methods for attaining status. For those who do most of their flying domestic, segments bring status. For international travelers, mileage is the route to status. Those who fly paid J are rewarded with 150% AQM, latitude and PE with 125%. That means that for paying more, they qualify for status from 25% to 50% faster than their Flex purchasing peers. The differential AQM along with the delta between Flex and Tango add power to the already strong correlation between spend and status.

My understanding of the UA spend program is that it is conditional on mileage achievement. I stand to be corrected on this: you still have to earn 100K miles or 100 segmants to qualify in addition to a spend of $10K. Spend without miles will not qualify for status. There is no chance that an Airline willl give you top-tier status for spending 25K on one return J fare to SYD. If that happens, I will spend $100K/a year for 4 different top tier programs. Where is my loyalty?

As I have stated before, there is a good way to do both (BIS miles and spend)- with the benefit of removing the scourge that is AC corporate rewards. Keep the current system for status; bring in something like Delta SkyBonus to recognize/reward small company spend. Police it with minimum spend. Dump the corporate rewards program as currently structured.

"Loyalty = who spends the most. No? "

NO!

I think you confuse the purpose of loyalty programs with loyalty.

A person who buys J class all the time, gets many of the benefits (concierge, bigger seat, lounge access, priority board etc.) and doesn't need status to get them. Loyalty there must be encouraged through better product not status. They can take their business elsewhere and don't worry about status too much (I know there are always exceptions). Status doesn't matter-product does.

A person who buys Flex all the time and won't get those benefits unless they can achieve status. These persons are motivated to spend marginally more than they would normally spend or at least spend with one airline/alliance more than they would otherwise since they receive real or perceived benefits for doing so. This person can also take their business elsewhere but may be reluctant to do so if the value proposition is there. Status matters and both the pax and the airline benefit.

A large purpose of loyalty programs is to get those people in the second or similar scenarios continuing to buy into their system and hence more revenue for the airline. The individual annual spend may be the same or less than the person who buys J all the time but their motivations are quite different.

I am not opposed to spend as a criteria or as a way of determining status but to say $$$ = loyalty is not correct. It is much more complicated and the above scenarios are just a couple of ways of looking at it. Each of us has a unique reason why we want status (or don't care)--the airlines have to figure out a way to get more of us in their doors without breaking their bank. True bottomfeeders are likely rare and don't make a big difference positive or negative to the airlines. High spenders are also likely rare and could make a difference but may not be at all motivated by loyalty programs. The big question is how much of the status-seeking middle spenders can an airline capture with its status/loyalty program. Will be interesting to see how these spend/hybrid spend/BIS miles approaches play out for loyalty. I don't really think any of us know the answer but obviously some airlines feel they are giving away too much with just BIS mile-based programs.

Try to get the Concierge Agent to help you in YYZ if you are not SE?

You must be kidding. They will tell you to get lost and not to bother them, from a personal experience when flying on an International Business Class ticket and they would even go to the "extreme" of giving you the telephone no. and e-mail address of the Concierge at the next station for you to contact them yourself for assistance.

My experience from time to time as *G as well ('status only gets you enhanced experiences at checkin, lounge access, and onboard. For those enhanced services talk to the issuer of your *G status.')

Non-US resident accounts are exempt from the minimum spend requirement as these are also tied to the UA cc (except for 1K) and which is not available to members outside the USA.

And once more, let's not be coy about it, for 99% of those who fly, it is their employer (who can deduct higher cost tickets) who pays for the ticket not them. It is the company that has the loyalty based solely on the deal they cut with the airline. Around FT, a large number of elites are actually paying for their tickets out of after tax dollars with no hope of deducting from their taxes.

Don't disagree with you about the company paying for it, but most companies give flyers the option to fly more than 1 airline. Then if the flyer chooses to fly consistently with 1 airline, does that not count towards loyalty?

I see your point. Duly noted! :)

A bit harsh...no?

Okay I misread the UA announcement a bit - but still - interesting development for a *A carrier. I guess the question is: is this the start of a trend.........I guess time will tell. There's probably good arguments on both sides for a spend based program and not.........

That sounds like you're flying YYZ-YVR-HKG or something and expecting concierge access in YYZ.

From the description on the website, it is not clear if you should be entitled to the benefit in that case.

This is precisely the point ... my company requires that I select the lowest logical fare, but I have the choice of date & time (window) - and so whenever I can, I direct my business to AC. AC gets the benefit of the vast majority of my travel dollars (low fare class but high volume), and I get the benefit of FF perks & recognition.

"Loyalty" seems like a loosely defined (even controversial) term around here ... but all I know is that it's a mutually beneficial relationship, and (I think) exactly what the frequent flyer programs were designed to encourage.

Even when you are definitely entitled to concierge service as a rev J passenger - you will often not get it from certain of the YYZ concierges. They make it very clear they are not interested in helping non-SEs.

Rev J passengers are definitely not rewarded by Altitude - pay 500+% of a Flex fare but only get 150% miles!!!!

really AC should not give any miles or at least reduce loyalty for those who fly in Canada, also flyers who fly from trapped airport that only have AC service.
Really those flyers have very little choice, so why reward them?;)

How long till AC starts this cutback? :confused: