spin88

But that is the whole point. There are a lot of folks who travel enough to want some kind of status. And in may not be high level, it may be that they fly 35K, 50K miles a year, end up at Silver/Gold Level. Delta in it's roll-over-miles system cater to these folks. You get them, and they are a steady stream of business.

And there is not a lot of "better" business out there that one can suddenly get. United's 2018 PRASM (what it gets per seat, per mile) was 11.75 cents. So if that average flyer flew 50K BIS miles, they would be paying $5875 to United. Gold status required $6K in spending. So you have to have spending that is at or above the AVERAGE spending/per seat that UA pulls in.

And lets be serious, United does not give a lot back at that level. Few fee waivers. A few upgrades. E+. But the costs of this is not substantial. And certainly not for someone who is by definition (with only a few exceptions) paying more than what UA is getting on average for it's seats. And what is that revenue? Well, if the seat would have gone out empty, it is "free money" to UA. And if not, it because of how fare brackets work, did not displace someone who would pay more for that flight.

So it is perfectly nice for you to say "well, if I apply a set of third order assumptions, I can figure out how the new UA system does not make qualification much harder", but for 99.99% of UA's elites, they are not going to get beyond "oh, this hurts me, It may cause me to lose status, or be at a lower level." They then face a choice of do they stick with United, or go to another carrier.

The entire purpose of having a loyalty program is to keep your customers from ever considering another airline. Reminds me of Oscar (or perhaps Kirby, I can't recall today)'s comments about flying small RJs when the competition (Delta) was flying a main line jet. He commented on how this caused them to book away from UA, soon they had another airlines card in their wallet, and soon they were flying that other airline on other routes, and soon they were not UA's customers any longer.

It appears to me that with changes like these, United has gone back to management by spreadsheet. Impose some change, assume static behavior by UA's elites, record it all as some type of profit. My guess is no one modeled the impacts, let alone the impacts if the economy slows.

But this system while it looks good on a spreadsheet (gee, I modelled us getting all of the last minute traffic) serves none of the purposes of an elite program. Since Status does not matter that much to these folks (or those on premium tickets) some rule making it easier to qualify for them is not going to atttact them to UA. LIkewise, those who do care about status, are going to be more inclined to leave, i.e. the stickiness of status will no longer work to hold them to UA -which is not exactly a leading airline in service, hard product, of soft product.

halls120

I agree with your assessment - any set of rules can be gamed. That said, what UA has done in this recent rules change is that they have incentivized me to book flights on *A partners. Which I have done, and what I've found is that the flight experience is better most of the time on the competition. Guess where I book now, especially since I don't have to worry about making sure the *A partner flight has a UA codeshare flight number? And since I have never spent $24K on flying in a single year, I no longer worry about flying non *A airlines.

I think UA is betting that most existing elites will simply suck it up and continue paying top dollar for a substandard soft product. Perhaps they are right, but I won't be one of those customers.....

jsloan

It is business that UA has decided that it doesn't want.

No, you don't. For one thing, the PQD waivers meant that plenty of people achieved Gold with far less spending than tat. For another, there were plenty of PQD-limited people who flew much further than that but only had the PQD for Gold. I got 7.5 PQ¢ per PQM in 2018 and 10.1 PQ¢ per PQM in 2019 (with the caveat that there were a couple of errors in my favor). I made 1K both years. I am not a profitable customer, and UA wants rid of me, so they've changed the rules of the game. I've adapted, and I expect to make 1K this year with less out-of-pocket spending than I did last year.

You can't have it both ways. If you're right that these customers are paying more than the average passenger for their flight, then they'll have a decent chance to make the new thresholds anyway. UA is targeting 20 cents per mile, just like they did with the change to redeemable miles.

I suspect that 99.99% of UA's premier members aren't paying attention to any of this.

UA thinks it sells a different product than you think they do. They're making billions of dollars a year. They're making less of your money than they did in the past, but it doesn't seem to have hurt them much. Perhaps they actually do have some idea what they're doing. Is Delta making more? Sure, so they're trying something different. It might work; it might not. We'll know in October or so, when DL either matches UA's program or doesn't.

If you start with the assumption that "Status does not matter than much to these folks," what's the point of having Global Services (which is definitely targeted at that kind of flyer) or even 1K? Surely it's not to try to scoop up as many passengers as possible paying 7.5 cpm. UA thinks "hey, give us all of your business, and you'll get lots of miles and upgrade certificates to take your family on neat vacations" is a selling point, since they understand that most people aren't making GS (or even 1K) on their own dime.

That's my entire point.

The 24K is a massive red herring for people who have the ability to book on *A partners. You can get 1K for much less than that, so if you still value its benefits, you can have them. Sure, if non-*A flights make the most sense for a given trip, that's fine, but if there's a sensible *A alternative, you're going to feel silly if you end the year at 52 PQF and 16K PQP, or just 22K PQP, if you actually value 1K status. (Personally, I do, because I am able to use my PlusPoints). And, yes, it's so much easier to take advantage of partner fares when I"m not trying to plate them on 016 ticket stock.

I mean, I actually like the benign neglect of flying UA, as opposed to the excessive attention of, say, SQ, where I had to pretend to sleep just to be left alone. But I understand that's not for everyone.

halls120

I think we've found UA's new target audience!

Kacee

If true, that's insane. We're talking about $18-20k per year customers who generate PRASM 50% higher than UA's average. And you're defending the decision to show them the door?

This "logic" made some measure of sense when flyers were able to 1K qualify for $2500. Not when they're generating revenue in the 20 cpm range.

ryman554

I agree with what you say.

But also, note, I am not generating revenue at 20cpm, yet I will qualify for 1K (probably, just) at the $24k spend level because I fly between 150-200k miles / year. That puts me at 12-16cpm, more in line with the average bear. I think we'll find that the 1K this year are higher volume / less cpm fliers ... ie, not the ones at 100k PQM, but 200k PQM.

Which seems to me (based on the ludicrous amount of PZ and/or short upgrade lists I see now), they *did* cull the 1K appreciably compared to last year. It's a shame they didn't wait to see the effects of the $15k spend before doing this one. I know UA has "data", but one might think they would try to understand changes before changing more.

hirohito888

Not necessarily "out the door", just to a lower status with less benefits than 1K. But of course, for many here and those who have been 1K for many years, that's a direct slap in the face. I would say most of the general population who don't make their purchasing decisions based on obtaining status would either not notice or even care and just accept being Platinum or lower.

narvik

That one is indeed puzzling.
😦

jsloan

I did say It wasn't for everyone.

UA's target is $0.20 / mile. One way to look at the $24K figure is that they raised the number of miles necessary to reach 1K -- at the target figure they're looking for -- to match DL Diamond. If you fly 125K miles per year, and you pay $0.20/mile, you'd hit $25K. (And, yes, they're giving a discount to 90K miles for someone with 54 flights, presumably because they think that non-hub-captive passengers would be more likely to defect).

Please don't misunderstand. I don't like this change; I've hated PQDs from the start. If you're going to have PQDs, I appreciate being able to earn them on partner tickets, because (a) I can take advantage of partner sale fares without having it negatively affect my ability to reach 1K and (b) they're obviously game-able. I also like being able to combine them with the new PlusPoints system, allowing me to upgrade sub-W fares and thus cut my total spending.

All I'm really doing is interpreting the decisions UA has made: they have clearly decided that they want to focus benefits on customers who spend $0.20/mile or more. They're working with coarse tools -- total sending doesn't really accomplish what they appear to want, which is more like average spending -- but this is what they seem to be trying to do. I'm not defending it; I'm just trying to explain it.

"ludicrous amount of PZ?" Do tell.

It's not possible for passengers to determine the effect of 1K culling, if any, from the $15K level yet, especially via the short upgrade lists -- people who qualified in 2018, under the $12K level, still have status. The PZ thing, maybe, but I'm calling foul -- I haven't seen any ludicrous amounts of PZ space, unless by ludicrous you mean "yes, I did find one TPAC route and one TATL route on basically the days I wanted."

FlyingBeanCounter

Interesting discussion. The idea that UA did not really consider what they are doing is not exactly far fetched. They seem to do this all the time.

Personally, I booked away from UA for the short term. I went back to DL and begged my diamond status back. Thanks to gaming the system and flying ST partners I should actually have Diamond locked up by the end of Q1. I will probably switch back to UA at that point and fly their partners to lock up 1k.

So, UA not only lost revenue on me, but I will now have top tier status on two airlines. If they expected that then I suppose they are geniuses. I cannot fathom why they would want anyone to fly anyone else but I appreciate it. AA offered me some sort of status match too - so I might dump UA and go to AA. At least on AA I will see upgrades on my normal domestic DEN-ORD flight. on UA that is a nightmare.

Kacee

PRASM is calculated on a BIS basis, not PQM basis. Calculated BIS, I was right around 20 cpm last year, and suspect you were, too.
This goes back to "don't give your customers a reason to check out the competition." That's exactly what UA has done, and I don't think I'm the only one leaving rather than accepting a demotion to Plat.
IME, the "ignorant 1K" is less prevalent than often suggested around here. The 1Ks I know are pretty aware of the program basics, what they need to do to qualify, and the impact of changes to the qualification requirements.

Aussienarelle

Great discussion and do hope UA Insider is reading it and it is in alignment with their thinking at the time they implemented the changes.

With that said I do think they have used a static forecasting method rather than a dynamic forecasting method.

Static forecasting methods are the beign of the US federal government forecasts (may apply at the state level as well but I am only aware of the federal impacts). It is one of the problems that many bureaucrats have - they understand how to forecast with fixed assumptions but forecasting in behaviour completely stumps them.

Hopefully United did use dynamic forecasting methods and What If analysis. My belief is they did not as the incentive to stay with United is very limited but then I am also from the business school that it is easier to keep an existing customer than find a new customer.

My only puzzlement in all this is if UA is seeking 20 cents per mile, the BE model drastically reduces this margin. So they plan to fill the seats they cannot sell at 20cents or more with BE? I personally pay more than BE but not 20 cents.

I know United does not want my business as I am in the middle of the two data points. However, an airline (or three) is going to value my 125,000 - 150,000 BIS miles in 2021 it just is not United (my recent message from United reminded me I have been in the MP program since the mid 1990s and have been 1K for more than 10 years).

WineCountryUA

As to the comments UA "does not want the business" or "does not want an individual as a customer" is frankly nonsense.
What UA is doing is changing who / how it rewards travelers for their business. Some will get more rewards, some will get less. Net-Net, there may be less overall rewards, no one here has anywhere enough information to make that assessment -- we can guess, we can suspect, ... but can not state as a fact.

It is the customer who decides to leave, UA is not refusing to have you as a customer, just perhaps on different terms which you may not like.

Similiar overstatements about forcing customers to take partner flights. UA is clearly changing metrics and personally having have tried this in other complex environments, it is hard to impossible to do without there being corner case conditions that are not consistent with the overall intent. It does appear the certain sweet spots for certain partners presently exist, to me, this is not surprising (think arbitrage). Suspect some of the sweet spots will disappear, others, especially with JVs, UA may not worry as much about. But as others have suggested, the vast majority will not go down that road. It has just created a new form of "mileage running" which few ever participated in (and in this case, it still will take serious cash to be successful, so that will self limit the number of participants). And it will drive threads in FT

bryanwallace

thanks-how do i go about finding these on star carriers?

VegasGambler

1. Read the premium fare deals forum.
2. Sign up for accounts on all the *A partners -- they will email you when they have fare sales (although their definition of "sale" is often questionable)
3. You can search on Google flights. Restrict to *A, select premium economy, and use the map view to see the cheapest price to various destinations. This can also help give you a good idea of what is actually a "good deal" if you do it frequently.