The industry is desperate for cash. From my perspective, DL and AA have an advantage with their programs right now. What if they maintain status quo while UA continues with this new MileagePlus program?

In other, similar programs, they try to obfuscate as much as possible. I presume your card issuer doesn't have a giant scoreboard that says how much money you've given them this year. (How much money they've given you, sure). Especially when you're running a commodity business -- and air travel is a commodity -- you want people focused on perceived value, not the aggregate cost.

There are two reasons to run a loyalty program with membership tiers. The first is that your competition does it. The second is that you're trying to encourage your members to make irrational value judgments -- you want them to value the points / status / etc. enough to pay you more for the same product than they'd pay somebody else.

Your "cash back rebate" program idea fails spectacularly at this. If anything, it allows people to make increasingly rational decisions. If it's all about money for the business, it's all about money for me too.

AA, DL, UA, and WN all give you miles based upon spending. UA's program is only different in terms of status qualification -- and, even then, it's not that different. While you focus on the cash value of upgrade certificates, remember that the vast majority of Premier flyers, on every airline, earn a total of zero such certificates.

LMAO J! Even in the early hours of the day, you've managed to get me to laugh with a sentence like that.

Awesome post. Your explanation makes perfect sense to me.

If so, then wouldn't you want your mileage program to incent cash spending...

Of course, but there are plenty of other airlines as well. UA doesn't have a monopoly. So I guess unless you're hub-captive, there are alternatives to consider.

I see. So the goal is to create a mileage program encouraging irrational customer behavior. Interesting business strategy...

I think jsloan was explaining that this is the premise in all loyalty programs.

The more we talk in circles, restating the same things, with valid points from all sides, the more it reinforces to me that the debate is really this:

Should UA (or any business) pursue the lifetime value of a customer OR the transactional value of a customer? It may be possible to convince people you do both for a while. Eventually this become difficult, especially when the spectrum of customers themselves value different things.

Yes, it honestly is. The concept of "customer loyalty" is irrational, especially in a commodity business -- a rational consumer will shop by price and/or schedule. The purpose of the MileagePlus program, like its competition, is to get people to spend money with UA when the rational choice would be to fly with a competitor (or stay at home). Otherwise, why bother? If the company isn't getting incremental revenue out of the program, what's the point?

There's nothing to suggest this new cap impacts more than a small percentage of non-016 tickets. Can we finally get past calling this as a "huge devaluation"?

NEVER...ok

I'm not sure that I would call it a small percentage of non-016 tickets, but I will say that it may impact a small percentage of UA customers. Personally, it doesn't matter much to me based on my flying patterns (well, historical patterns - we'll see what the future holds) and my 1MM status. I fly 1-2 trips to Europe in Y each year and this is likely a loss of about 300 PQPs (based on my typical flight cost).

I don't disagree - I think the overall number of 1K members planning to requalify with other airline spend was significantly small - as in the hundreds of people, barely a dent in the overall 1K population - so if this is true, then the UA move is made to appear even more petty, and on par with the Baldanza Playbook - zero in on customers you want to alienate, and do something specific to alienate, annoy, harass and drive them away while deriving joy from the process.

This is a �meh� change to this Europe based flyer. I�ve only had to purchase LH tickets for a few short haul flights around Europe where UA won�t sell a ticket. While I prefer flying on LH metal TATL, I can do it on a 016 ticket.

I created a updated version of the PQP calculator to handle the upcoming per segment PQP earning limits. It also calculates RDM:
https://pqp.economiles.com/