Where did the 500 mile minimum benefit come from?
 

If I'm not mistaken, it's an elite benefit on all the big US airlines. So that got me curious, how did this come about? As in, what was the rationale for providing this benefit (either fact based if anybody knows, or would love some speculation as well).

Was it to encourage non-hub based customers to stay loyal to an airline from all the extra "free" miles they'd get from rounding to 500 mile minimums?

There's two parts to the answer. First part is easy to answer, the other is more speculative in nature.

1. 500 mile minimums were in place for ALL fliers regardless of status until around 2006/7 when the next race to the bottom targeted this. UA, for example, slashed the benefit even for elites. I was one who complained very loudly and they backtracked fairly quickly, labeling this once-standard practice as an 'elite benefit.' Were it not for the vocal elites this would have vanished.

2. As to when the concept of 500mi minimum started, that I am too young to know. Why? My guess is that they wanted the intra-state and short flight length flier to accumulate miles a little faster, feel more invested in the loyalty program... 'you're paying a high fare for SFO-LAX and only getting 337 miles? Hey we'll bump it up to 500, thanks for flying with us for such a short distance!'

50 seems to be the magic number for frequent flyer programmes. At 50 segments you would earn status etc... 500x50= 25000. Enough for an award ticket for a very frequent traveller that takes short routes.

Not sure what you mean by that. At 30 you make gold on segments. Which is where I draw my confusion.

It seems the 500 mi/min is meant to catch people who need to take short flights, but not *only* short flights. I.e - not somebody who does LAX-SFO weekly, but somebody who has to do SAN-LAX-XXX frequently. So then does it only exist as an elite benefit because the others have it? (the theoretical pax in my example could just as easily be loyal to UA. however, if AA or UA were to get rid of the benefit, She/He would stand to lose 782 miles each RT, and would thus might be incentivized to switch to the carrier which still had the 500 mile min elite benefit)

Was it always 500 miles? Was it higher, maybe 750, in the early years?

Ooo great question. Never thought if it used to actually be HIGHER.

TWA used to have 750 mile minimums.

When I first signed up for Aadvantage, it was 500 miles min. BUT, they were giving out triple miles that year (1988), so that meant a 1500 mile min.

In order to stay over a Saturday night and avoid the higher cost of "business" fares, I used to travel on business then fly DFW-ICT-DFW to spend the weekend with my parents before flying back to Calif. So, I got a discounted "leisure Sat night stay" ticket, plus flights to and from ICT and 3000 extra miles. Hotel cost: Free. Meals: Free. Car: Free.

"Hotel Mom & Dad" were always running great specials.

I can only speculate.

In the old days it made sense to fly even shortish distances, like 150 miles. As someone said, it was probably a floor to make the program work, i.e. for 150 miles I couldn't be bothered preferring AA over UA, but at 500 maybe I cared.

Nowadays I presume that almost all of such shortish flights are for connection as part of a longer trip, so the minimum no longer makes as much marketing sense.

But, presumably thanks to all of us who complained, AA retained the minimum for elites. ^

I'm speculating, but the rationale for the minimum per flight had to be that some frequent flyers were doomed to a life of 200-300 mile mainline flights while their colleagues might have been "lucky" enough to get an assignment that required that they fly halfway across the country on a frequent basis.

As airfare is not priced per mile flown, the short-haul frequent flyer might have paid fares as high or higher than their colleague. Especially if the long-haul colleage was not based in a hub and thus paid lower connecting fares and if their destinations tended to be competitive, cheap routes. At the end of the year, the short-haul passenger might have displayed tremendous loyalty and, more importantly, might have provided higher revenues and consequently, more profits than their lucky colleague who racked up lotsa miles on cheaper fares.

Since airlines didn't want to make employers angry (by directly rewarding dollars spent), without a floor on the miles earned per flight, the airline risked angering the short-haul flyer who might start asking why they didn't earn enough miles for either status or that coveted free trip when their lucky colleague long-haul flyer earned both.

Solution: goose the earnings of the valuable short-haul flyer to reduce that disparity in miles/status earned. By telling the short-haul flyer that they'll always get at least 500 miles per segment (I think it was higher in the beginning), they can see that status and that free ticket to HNL are within reach. And that short-haul flyer is less likely to go complaining to the boss about the fabulous rewards lavished on their long-haul colleague. Peace and harmony abound. And those extra miles didn't really cost very much compared to the extravegant short-haul fares they caused the short-haul flyer to purchase.

Fast forward to 2008: US eliminates the 500 mile minimum to "to help offset record fuel costs." Losers.

http://www.bizjournals.com/triad/sto...1/daily25.html

Later, after much complaining, US has to backpedal some and reinstates the minimum for elites:

http://aviationblog.dallasnews.com/2...te-bonus.html/

http://phx.corporate-ir.net/phoenix....657&highlight=

it was 750 at first.....later reduced to 500...

Should be closer to 1000-mile minimum, imo. With the 500-mile minimum, a $50ow SFO-LAX ticket which is almost the best you can find these days, that's still a whopping 10 cpm.

Thanks. It's good to know that I'm not crazy, yet.

It's odd what I remember: Getting bonus miles on DFW-STL (550) and the minimum being about the same as DFW-ORD (802).

Mid-80s, when I started joining programs, most were 750, and there were 3x mile promos.