The evolution of elite level qualification in airline frequent flyer programs

Qualifying for elite status with an airline requires meeting a certain threshold the carrier has published, whether it be point, mile or segment based. Those thresholds have been periodically raised, lowered and adjusted even to the point of birthing new tiers. Delta’s fairly recent addition of the Diamond level at 125,000 Medallion Qualifying Miles is one example, and the all but likely creation of a uniquely named 75,000-mile level at the new United is another. The ability with which to achieve status beyond simply flying “butt in seat” (BIS) miles has also gone through its own metamorphosis over the years. Bonuses for flying in full-fare economy, business and first class is common today, as are bonus elite qualifying miles for charging a pre-determined amount on co-branded credit card.

This, of course, is nothing new to many of us who have been participating in the programs for years, possibly since their inception in the early 1980s. I have benefited greatly from the current policy at all major U.S. carriers by achieving elite status through flying the requisite mileage-based level of BIS miles on deeply discounted tickets. Failed attempts were made by U.S.-based carriers in the last decade to limit elite qualifying activity when flying in “low bucket” classes of service. Continental Airlines had at one time instituted a policy where only deeply discounted tickets purchased on their own website would earn full elite status miles, and Delta Air Lines had for a time outright restricted their lower fares from earning full qualification miles.

It’s a tricky landscape and the airlines know it can touch a nerve with the ranks of loyal passengers accustomed to the status quo. Here in the United States, the collective voice of the frequent flyer community seems to be able to apply enough pressure against policy changes to force airlines to effectively back down, as was the case with the Delta and Continental example above. Overseas it seems airlines are less reactive to similar pressures with Air Canada, Air New Zealand, ANA, British Airways, Qantas and Singapore Airlines holding steady with their policies. This all finally brings me to the point of my post.

On one hand I think our time is short in just how much longer U.S.-based carriers will continue to offer 100% elite credit for the cheapest tickets. American’s elite qualifying point system is well-established giving preference to the higher valued revenue tickets, although you can still achieve elite status through straight BIS flying on any fare. American spearheaded an effort to challenge the distribution model of how tickets are sold, and although it appears they’ve lost for the time being, the debate is alive and I think we’ll see continued efforts by all airlines to overhaul that system. Who’s to say American won’t make the first move in overhauling elite qualification by eliminating the ability to achieve status via BIS flying and instead require the necessary points tied to fare classes?

On the other hand, it would be a very bold move for any one airline to attempt such a policy shift unless they’re willing to turn away a population of travelers, myself included. For such a policy to stick given the history of attempts here in the U.S., it would basically require carriers to collectively do it all at the same time. We all know that is highly unlikely given the illegal nature airline collusion. So then, is this the right time for a carrier to stick their foot out and test the water again? Is the economy recovering enough and will the price of oil remain at a level capable to support a potential loss of passenger revenue? These are rhetorical questions mostly, but I think the time is approaching and we’ll see attempts again.

The reason I think this is because I believe some of the recent changes at airlines, including those to frequent flyer programs and fare structures, reveal a bit of posturing at the different carriers. This is of course pure speculation on my part, but I’m going to put it out there.

I’ve already mentioned the point-based system at American rewarding higher fare levels, and they of course have the separate Concierge Key program for the uber high-end spenders. United’s similar program is called Global Services (GS) and I’ve read the “hidden” revenue contribution required for that level to be around $50,000 annually. Those programs have been established for some time, but I believe a newer system is looming.

The creation of four tiers of elite ranks not including Global Services at United leaves the door open to further segment travelers based on revenue contribution. Should United make an attempt to limit elite qualifying miles on the cheapest fare classes, such as ‘G,’ ‘L,’ and ‘K,’ I could see United’s existing 1K level becoming a lower published version of the GS program as there is likely a huge population of business travelers who don’t quite reach the GS level of spend, but are far more lucrative to United than flyers like me. While I’m sure some business travelers do end up falling into the lower buckets from time to time, the ones United is looking to incentivize typically purchase closer to departure. How much longer will United (and all airlines for that matter) be willing to bestow the best benefits to non-significant revenue contributors? I believe the lack of systemwide double elite qualifying mile bonuses is another indicator the game may change soon.

I also believe Southwest’s recent overhaul of the Rapid Rewards program, which places an exponentially higher significance on top-dollar revenue tickets has made the legacy carriers take a keen interest in wanting to look at their programs again. Yes, the Southwest scheme affects primarily accrual and redemption abilities, not elite qualification, but it had to bring the conversation back up among legacy program executives.

Another change that peaked my interest was United’s recent move to bring the ‘G’ bucket into published tariffs that now allow mileage accrual. Some will say this was to aid in mapping fare classes with Continental coming into the mix, but I’m not sold on that idea. I believe in time we’ll see that ‘G’ bucket as one of the deeply discounted fare classes with restrictive elite qualification conditions.

I’ve really blathered on for this post, but it’s something that’s been in the back of my mind for some time. It’s no secret airlines want to cater to the higher yield business traffic and I think the time is approaching we’ll see more attempts for a shakeup of elite qualification, if not even going so far as to restrict accrual of miles. That’s a topic for another post, so for now I’ll close and hope for my own sake I’m completely wrong and will continue to reap the benefits of top-tier elite status.

 

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  1. I buy the cheapest tickets on Continental. Meaning, I buy tickets on Continental.com for economy restricted. If my purchase of tickets on Continental did not result in EQM qualification, then I would not be beholden to Continental at all. I would be a slave to the absolute lowest ticket price anywhere. So eliminating EQM would add some downpressure on fares, and i’m not sure what Continental would gain in turn (empty seats for upgrades are empty seats, unless you think fare model reduces prices for business class etc — highly unlikely given how profitable those seats are). They also make a lot of money on change fees, baggage fees over the years… I think that is where airlines are truly focused in squeezing passengers. I would think there would also be more resistance to $150 change fees in the world you pictured, although not sure what that resistance would amount to.

    • Like you, I’m a bottom of the barrel price guy since nearly all of my travel is self-funded. As far as a reduced EQM structure creating a downpressure on airfares: I’m not so sure. I think you’d find fares to remain as they are today, but with the front cabin filled with the higher yield passengers who might be riding in coach today since they bought at the last minute and other elites were upgraded at their “window” in advance.

  2. I don’t see this happening any time soon with DELTA. The recent FAST and crazy dust up over the “E” class that could have been no MQM quickly was stamped YES to MQM when on web site but not when a “free” ticket.

    http://cwsi.net/delta.htm

    &

    http://www.delta.com/skymiles/about_skymiles/benefits_at_glance/mqm_calculations/index.jsp

    Bottom line is DELTA is not ready to drive flyers to other airlines and I think if other do start DELTA will say: “Hey come fly us our miles never expire and we always pay MQM’s”

    I also think this is a smart move. I do hate that IT has taken away miles when you get rebooked after a bump. In the old days when you had a free ticket – and took a bump – you got FULL Y class miles etc. No more. This, I hate to say it, is only right. But I still hate it.

    • It certainly was/is a nice perk when getting rebooked in Y and earning the bonus, but nice to hear you’re realistic about it being “correct” to adjust your earning back to what was paid for. Yeah, Delta is certainly bucking the trend on expiring miles, so maybe they won’t be the first to attempt a reduced EQM/MQM structure.

  3. BTW everyone at Flyer Talk is enjoying the new acronym for the fare class at DELTA: “sLUTE” now that we have an E class.

  4. As a 1K with United, done largely on low S fares, I also worry that there could be a limit on earning with low fares. However, United has this year quietly removed some of the benefits. Domestic upgrades (at least on hub to hub routes) are now difficult in low fare buckets and international upgrades have become significantly more difficult. This is because the premium required to purchase an upgradeable fare has increased sharply, and the chances of the upgrade clearing have decreased.

    If I bought more expensive fares, these restrictions would not be apparent, so you could argue that United have achieved the end, without tinkering too much with the front end of the system. I’ve flown over 50,000 miles this year already and had one upgrade. So my benefits are primarily in terms of service, redeemable mileage earning and fee waivers. I’m disappointed but sanguine about it – I never really thought that United could sustain flying me around the world in business class on a deeply discounted economy ticket. However, I do believe my loyalty deserves some recognition, and that is what United continues to provide.

    • Nice analysis, NB. The hub-to-hubs are indeed difficult for upgrades during peak travel times, which it sounds like you’re frequently a victim of. My success rate this year is still >95%, luckily. And you’re right… our loyalty should still be recognized. I just think UA will try to protect the upper tiers from bottom feeders like us on the cheaper tickets. I hope I’m wrong, but I’m realistic about it should it happen. It would make business sense for the airline.

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