US frequent flyer programs focusing more and more on revenue than miles & segments

As being widely reported in the news and blogs this week, Southwest Airlines is launching their revised frequent flyer program on March 1, 2011. Instead of the current segment-based earning system, it will now be based on the price of your ticket, with 6 points per dollar earned for the lowest fares, and 12 points per dollar earned for the highest. Those who fly Southwest on their highest “Business Select” fares will certainly reap the greatest rewards, while those buying the lowest “Wanna Get Away” tickets will struggle to earn a meaningful amount of points. It makes sense to reward your highest paying customers, but I’m seeing more frequent examples of revenue-based programs and promotions.

This week United Airlines sent out a targeted bonus mile promotion, which could yield 15,000 redeemable miles if you fly three qualifying roundtrips by March 31, 2011. Nothing new for United, they are restricting it to the higher coach class “buckets” of fares, the lowest being Q-class. A quick example of the difference I looked at just now on a Los Angeles to Chicago route shows the lowest base fare excluding taxes for a L-fare as $221, whereas the base fare for Q is $587. That’s a significant difference for the low-fare-buyers like myself. You can bet I will not be partaking in this promotion.

American and United already have an exclusive revenue-based level in their programs (Concierge Key and Global Services respectively), which makes sense for domestic carriers with a large international network and frequent corporate travelers who drop enormous sums on full-fare tickets. My concern is for the mileage and segment-based side of the program and if they were to restrict accrual of either redeemable or elite qualifying miles to the higher fare classes. Here is the current chart of United’s buckets:

You can see there are currently 11 Discount Economy booking classes or buckets out there right now, and it has long been a concern for those who just love to fly and earn status that the carriers will restrict our earning ability at those S, T, L, K levels. While people don’t even like to bring this up on the Flyertalk boards out of fear of giving the airlines new ideas, it’s nothing new. As it stands currently, many foreign carriers already restrict accrual on the lowest fares including Air Canada, Air New Zealand, ANA and Singapore Airlines.

So with the news that even Southwest’s Rapid Rewards loyalty program is becoming exclusively focused on revenue, I am almost certain we’ll see changes in the coming years to the major carriers’ policy on discounted tickets.

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  1. Continental used to only give 50% EQM credit on the cheapest fares unless purchased at continental.com. Delta did something similar but backed down more quickly than Continental did. Neither targeted the award miles but both have many lower fares on partner carriers that don’t earn at 100%. The industry is heading that direction; we should start getting ready for it.

    Interestingly enough, Southwest is actually making it easier to earn status than in the old program while making it harder to earn an award for most customers. It is actually backwards from how the other carriers had approached the situation.

    • @Wandering Aramean: Thanks for stopping by! Wow, I don’t remember CO or DL did that, but I’m sure I was too focused on United at the time. Agreed that we all should be prepared for these types of changes when they come… I’m not looking forward to it, though.

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