Tuesday, January 3, 2012

Whither MileagePlus®: Is Our Million-Mile Ride Ending? Will Cash Be King in Airline Loyalty Programs?

 A line from a recent USA Today article caught our attention. In 2011 the most financially successful U.S. airline, Southwest, drastically revised its loyalty program to recognize how much money customers spent on flights rather than simply how many miles they flew. The airline is quoted in this article as claiming it's "adding new members at a rate that is 50 percent higher than in the past since the program debuted."

We've enjoyed a great ride, mainly on United Airlines for the past decade, flying our way to Million Mile status on UA through 9/11 and Chapter 11 with bankruptcy and beyond in those "Friendly Skies." That ride, at least as we've come to enjoy it, may be coming to an end.

One of the outcomes of the merger of United and Continental is that certain features of each airline's former program have been incorporated into the new program. The revised MileagePlus® (now spelled as one word) program represents a significant devaluation for us. An example? Let's look at the revised Million-Miler program.

We've been aiming for that for at least the past couple of years because UA advertised its program as including the following benefits:
  • lifetime Star Gold status (the next-to-top tier);
  • 100% bonus miles awarded for all flights;
  • a one-time award of international upgrades;
  • a set of domestic upgrades awarded annually.
The new program mercifully maintains us (at least for now) as Star Alliance Gold. The new United has appropriated and inserted a Platinum tier from Continental between Gold and the top-tier 1K. UA has taken Continental's honorary benefit for nominated spouses and "significant others" and announced it as a replacement for the assorted upgrades. The nominees will hold the same status when they fly by themselves. This, of course, is of no benefit to Kathy and Brian because we hold the same status already by always flying as a couple; in fact, it will add an unknown number of competitors for exit rows and upgrades. Ironically, we flew "extra" to make sure we qualified before the merger.

The former Continental program did not limit lifetime mileage-earning to Continental metal (planes) and their Million-Milers only earned lifetime Silver status. As part of merging the programs, United "bumped-up" all members December 31, 2011, by adding to their lifetime miles flights on partner airlines, mileage promotions, and class of service bonuses. We, for example, went from just over 1 million lifetime miles to 1.3 million miles. When our lifetime Continental miles are added later this year, we will have over 1.4 million lifetime miles. Consequently, a lot of excited new Million Milers have been added to the "club," including the former Continental Million-Milers who now find themselves Gold rather than Silver.

What some folks are overlooking in their excitement is that all this is the equivalent of grade inflation in academia. As the old saying goes, "when everybody is special, nobody is special." As Groucho Marx famously quipped, "I don't care to belong to a club that accepts people like me as members." Our new Million-Miler benefits look like this:

  • lifetime Star Gold status (the second-from-the-top tier);
  • 50% bonus miles awarded for all flights; 
  • the ability to nominate a "significant other" to share status.

Are we about to whine about it all? No (well, maybe a little). It only affirms our decision to fly so much over the past decade and take advantage of all those upgrades to Domestic First and International Business. Besides, we have between us more than two million United Miles in the "bank" and 70,000 international flight miles already confirmed this year, most legs of which are already upgraded, and we'll continue to enjoy the ride.

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