Garten

There's no way you get GS on $21k spend.

I think there are a lot of 1K flyers who would be GS if they just flew 2 or 3 times as much.

Those certainly seem to be the people whom UA *wants* in their highest tier.

UA-NYC

You didn't really read my post - I didn't say it WAS a GS - but rather, with 60% of miles flown in paid biz, much CLOSER to being the profile of a GS than being a 1K. Could also easily be a corporate contract GS as well.

Do a test - ask how many 1Ks on this board do 60% of their miles in paid J (or, conversely, make 1K with only 77K BIS, absent any credit card PQM or the like). I'm guessing, not too many.

Additionally - everyone knows GS is not about volume, but rather about margin. Have been plenty of 2K non-GS on FT over the years. A 1K flying 50% or 100% more isn't going to make them magically GS.

cerealmarketer

The problem is this board is not representative of the 1K population.

It will over index to those who spend the time to stretch and earn it as cheaply as possible.

You for example note you are an entirely domestic economy 1K - with the occasional upfare.

I can understand Delta, United, or eventually American not being motivated to reward that behavior as generously as in the past with the industry as concentrated as it is. That's a battle that was lost long ago.

Whether that is the majority of 1Ks or not is ludicrous to say without their data.

Though I'd say international paid premium is present in more 1K profiles than your personal experience.

Whether the new program motivates those flyers with international premium more is a whole other question that is unclear.

I posit that a meaningful segment of 1Ks just doesn't pay attention. They get more miles than they have time to use, fly who's reliable and treats them well, and don't consternate about milking every opportunity the way we do.

In other words, mileage accumulation rates could be far down the list vs being reliable and comfortable if you polled them.

UA-NYC

We'll agree to disagree then - IMO FT is a pretty good representation, especially now that MRs are in effect dead (yes, people may do them to retain status, but they're no longer lucrative).

I actually had 3 TATL paid J segments on UA last year, plus another 8 domestic where I paid for a P fare, plus an EWR-HKG, plus a bunch of PS, some cheaper LGA plus some monopolistic EWR - a nice mix all around. I'd say I'm pretty average (18CPM). Last years stats, this year's rules - I'm down 20K RDM. And will be down even more this year.

YMMV

bocastephen

There are a great many GS who are at that tier with 0 spend. They are CEOs, travel dept directors or other influencers. If I was able to steer the majority of my customers to paid premium travel on UA, I could probably make a case with my sales rep to get me GS.

Based on a variety of comments I hear from other customers on board, in line, in clubs, etc - I would say FT represents a very accurate cross section of customers, at least from the perspective of articulating opinions, risk, value perception, etc. Perhaps not identical spending profiles, but similar perspectives.

Garten

I was curious, so I added it up: I earned 213058 RDM on UA metal in 2014. I had $29660 PQD, so that would be 326260 RDM in the new system.

I'm getting more, obviously some others are getting less. That's how averages tend to work. I'm probably more profitable for UA than the average 1K, too.

I had 94594 BIS on UA metal. Almost all domestic.

UA-NYC

You're 32 CPM (assuming you were 100% UA metal)...that's likely closer to being GS-light as opposed to a more "typical" 1K. At least IMHO.

spin88

A few details are being missed here. First, what matters is the yield, which is what the average passenger pays. in 1Q 2015 it was 14.60 c/mile. [Its not PRASM as that is over all seats, including empty ones]

So we know that the average paid by someone flying UA is 14.60 c/mi.


Under the old approach 1Ks got 100% bonus miles. so someone flying in Y for 100K BIS miles would get 200K redeemable miles.

But, and its a big BUT, there also used to be class of service bonuses. Those have now gone away. For example, given my travel patterns, I used to fly about 25% of my trips in paid domestic F (which as I recall was a 50% bonus in P, 75% in A/F) . So for me, I would get 75K x2 + 25K x 2.5 = 212.5K miles. [I can't recall now if they doubled the Class of Service bonus or not, this is them not doing it]. For someone who flew nearly all F, they would have gotten from 250K to 275K in miles.


Today to earn the same miles, I would need to pay United between $18,181 (18.1 c/mi, all in Y) and $25,000 (25 c/mi, all in domestic F/A). With my old travel patterns my break even point would be about 19.3 c/mi.

I clearly come out ahead (my average yield on UA was from 34 c/mi at the low end to 44 c/mi at the high end, I used to track as it was of interest to me for GS qualifications; and my yield on DL so far this year is 31 c/mi, and on VX its 45.1 c/mi) but most do not.

And given that (1) miles are capped at 75K, and (2) the "average" fare is 14.6 c/mi, United is giving out a whole lot less miles. Who gets shafted?

(1) long haul Y
(2) long haul discounted J (Z, etc)
(3) transcons in discount F and all Y
(4) anyone connecting on mid-cons in discount F, or any Y.

Basically the only folks who are likely ahead on this are those (a) flying lots of high cost short hops (the $278 one way minimum I pay to Seattle, or 41 c/mi), (b) those in hubs with very high fares, (c) those who always travel last minute, and pay for F or Y/B fares, and (d) those paying full J fares (the full F fares get cut off with the 75K cap).

p.s. I went back and fixed looked at my c/mi again, with the most recent trips added in, and fixed a small math error. What I found is quite interesting. My VX travel so far this year has been three RT trips in F, and the rest in Y. probably 50% of my VX miles are in F. My c/mi on VX is 45.1 c/mi driven not by my First Class Travel, but by all of the short haul Y trips to SEA and LAX. 100% of my travel so far this year on DL has been in First Class, mostly A/P with a few F legs thrown in. Its either Transcon/mid-con, with much of it being connecting traffic, yet me c/mi for my all First Class travel is only 31 c/mi, and that is mostly driven by one expensive ticket. When I take it out, my DL spending (again all in First Class) has been only 27 c/mi.

What is interesting to me is that the "short hops" which get very high c/mi, and therefore high miles under the new scheme, are not actually as profitable as the longer transcons, or longer stages. Likewise connecting traffic (by filing out the network, and able to be moved to match demand) is very profitable. Yet the flights that make the most money for the airlines get the fewest miles under this scheme. United certainly does not want to de-incentize people to fly United on these flights, yet this is just what this system does.

p.s. my UA spending this year has been at 13 c/mi.

Garten

That sounds like most of the 1K's would fall into one or another of these categories. Or at least most of the ones who are most valuable to UA.

The people who fly frequent but predictable domestic trips, or who fly several international trips each year in Y, booking well in advance on fares aimed at leisure travelers, who used to get 1K status easily and share the benefits that UA intended for the high-value passengers above, it is not too surprising that UA wants to reduce their benefits.

spin88

then your "bonus" was on average 1.25, which says you were e.g. flying 1/2 in Y, and 1/2 in P fares. If so, your break even point would be around 20 c/mi.

This makes my point that its not exactly the same for everyone, those who use to get some "class of service" bonuses need to have a higher spending not to fall behind.

Interestingly, I find on DL on some P (and even A) fares in competitive markets, I am behind under the new system. I catch up as I also have some expensive tickets, but even "premium" fares are not always better under the new system.

This said, even with my higher earning under the new scheme on UA, it is more than balanced out by the increase in price for what I want - *A J/F, which now is more than twice what it was before the merger. Even at my spending level (1.5 to 2 x the "break even" point) I am not net ahead with all of the "changes you will like"

Bottom line, I am the type of high cpm flyer this was supposed to attract, but Mileage Plus stopped having any impact on my buying decision, and I now fly Delta and VX (much better service, etc).

Garten

Not many P fares. I see a mix of M fares (+0%), B fares (+25%), and A fares (+75%), with a smattering of lower fare classes. International was D one way and V+GPU return.

Stopped having any influence meaning if they used the old or the new RDM formula it's not going to have any significant impact on your UA flying? I think that's true for most. The strongest argument against the new formula might be that it allocates the most RDM for those who are likely to care about them the least.

spin88

Meaning that even the "extra" RDM I would have gotten under the new scheme does not compensate for what I lost in redemption value/availability post merger. The "free travel" that used to motivate me became a must less important motivator, and certainly no longer counteracts the poor service and product, hence the switch to "skypeso" and VX's program, which is (other than premium partner awards, which I am about to use ^) more of a rebate program.

I 100% agree with what you put in Bold. I just don't think that "premium" travelers are on average very interested in the current scheme where there is little availability, unless you pay for a "standard" award and then only on UA, not partners. The heavy hitters on OPM will feel ripped off by the difficulties of redemption and high prices, people of a certain net worth who are paying out of pocket, or using OPM, simply don't care about the miles. Throwing more (devalued) miles at this does not fix the issue. Meanwhile those who were motivated by the miles get upset, and may (and as some here have said do) look around.

This said, these changes clearly made some sense for Delta, as it cut down on mileage awarding at a time when DL was promising (and some evidence is) to make rewards more available. As an earlier poster noted, DAL's yield is much closer to the 18 c/mi break even point in the rewarding systems, so the winners/losers were more balanced. But Delta is not primarily focused on Skymiles to drive sales, it relies upon a higher class of service and product, and great OT performance. As I showed, Delta had $9388M in operating income in 1Q 2015 and it had $7747M in 1Q 2011. So DAL's operating income grew by 21.15%. That growth was certainly not driven by SkyMiles!

United however (at least on the non-hub-captive sUA side) was/is much more dependent on Mileage Plus to drive revenue. Having hacked away at MP since 2012 (and service/product levels) United has $8608M in operating revenue last quarter, in the same quarter in 2011 (before jeff put his plan into place) United had $8202M in operating revenue. that is only 4.95% growth in operating revenue.

Delta went from having much smaller to having much larger operating income. Had UAL had Delta's growth in revenue it would have had another $1.331B in income this quarter.

Given what has happened to United's revenue, I just don't think a scheme that hurts the middle of your customer base (remember that UAL's mainline yield is 14.6 c/mi and its consolidated yield is only 15.98 c/mi) and in particular those taking the longer (and for UAL cheaper to operate on a CASM basis, and therefore more profitable) mainline flights makes any kind of business since. I think that UA's management did not think carefully about what they were doing, and just copied Delta, without any appreciation of the very different competitive situations they faced.

Garten

I see lots of availability to use my miles. I often find XN, particularly at the last minute. If you value miles at $0.01, then that's $125 for a transcontinental flight, Hawaii, etc. JN is virtually always available, that's just $500 for a first-class transcontinental flight, even when the cash fare would be $2000. Anyone who isn't getting well over $0.01 per mile is doing something strange. If your miles are worth $0.02 then that's a 20% discount on every ticket you buy as a 1K.

spin88

(1) most premium travelers are not interested in using their miles for domestic coach travel on UAL.

(2) most premium travelers are only slightly more interested in using them for domestic first travel on UAL.

Neither are really motivational or aspirational awards.

and the "last minute" is simply not workable for 90% of travelers, particularly not the established ones that the airlines want to attract.

Given UALs current scheme of not opening up any good seats, and them dumpng seat 2-3 days before, is good for is someone who wants to use the miles for work travel. But that is not a draw for probably 99% of Mileage plus elites. Even someone like me (who spends my own $$$) is reluctant to do it as my expenses do eventually get paid, and "mileage in place of $$$" on a cost bill will raise some red flags.

Garten

Dollars are dollars. I would assume that most "premium travelers" can just buy any trip they want, so if they get awarded 200k miles that save them $4000 then they don't really care which particular flights they save $4000 on, it's just like getting a check for $4000. I would also think a lot of "premium travelers" do a lot of last-minute vacation/family/leisure travel; the flexibility to not commit to your plans far in advance is one of the things that money buys you.