Airlines ramped up elite status qualifications over the last few years because they had too many elite travelers. But now, they need them more than ever, are they remorseful?
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Airlines Ramped Up Elite Requirements
Over the last ten years, following massive airline consolidation, US carriers have completely changed their requirements for elite travelers. Top Tier levels were 75,000-100,000 miles flown per year or 100 segments allowed flyers into the upper echelon at Delta, United, and American Airlines.
Since then, the carriers added a revenue requirement to accompany the mileage/segment qualifiers starting at $10,000 annually, then $12,000 then $15,000 and this year, United pushed the bar even higher to a staggering $18,000 spent just on airfare excluding taxes and fees.
Coronavirus is Crushing the Carriers
American, United and Delta have all slashed their schedules to China, Hong Kong, Italy, with South Korea and Japan facing reduced schedules and in some cases complete route suspensions. Domestically, the carriers are also reducing schedules as demand has dried up. United has stated they will cut schedules by as much as 20%, other carriers are thought to do the same if not more.
Many companies are reducing their employee travel, some even shutting down offices (HSBC in London, Facebook and Amazon in Seattle) or reducing staff required in the office, let alone traveling.
The carriers are getting hammered on the stock market and I have no doubt that earnings reports will reflect this sharp decline in demand.
Will Carriers Adjust Their Requirements to Keep Customers
I don’t speak for all frequent flyers, but through thousands of comments, as the airlines have changed their requirements over the years, many have voiced that they feel discarded by the carriers. The same flyers that filled seats, put up with the delays, the mechanical issues, the reductions in service and reduced award seats with increased prices – the ones that carried the airlines through the bad years – were relegated to fewer and fewer benefits.
The airlines didn’t need them/us. The economy was excellent, it was (technically still is) the longest bull run in the modern era and carriers could throw more and more capacity while they continued to grow and profit (except you, American Airlines.)
But now they need elite travelers more than ever.
If the carriers don’t adjust requirements for elites, both for segment/mileage and spend, many travelers will lose their status. Status is the glue that keeps many elites at their preferred carrier because flyers don’t want to lose their benefits by starting over with a new airline. However, if elites were to lose their status or a good portion of it, flyers may decide to try out another airline.
The carriers can ill-afford to lose their most frequent flyers and status-related benefits cost them very little to extend. Gary Leff makes a great point that carriers would be foolish to extend status or curtail requirements early in the year because there’s then little incentive to spend with the carrier as opportunities arise during the year. As long as all the competition does the same.
However, Alaska is already bucking that trend by offering 50% elite-qualifying miles for travelers flying for the next month. It’s only a matter of time before others match or make adjustments. United released an email just yesterday that stated they would not make adjustments as of yet, are monitoring the situation but will extend flyers on a challenge currently. The others will crack soon.
Conclusion
I don’t find joy in the peril the airlines find themselves in now because of Coronavirus restrictions. Tens of thousands, if not hundreds of thousands, of employees are already facing reduced hours, hiring freezes and unpaid leave.
But the airlines were careless with those who were the most loyal to them. They didn’t care about losing faithful elites and took them for granted, will they appreciate them now that they are facing a challenging financial future?
What do you think? Will the carriers reduce requirements for 2020 qualifications? How should elites respond?
To what extent did airlines not care about elites versus there being too many elites? Had the coronavirus never happened, the stricter 2021 qualifying criteria are probably gauged about right. There’s no denying there were too many top tier elites. You can’t have it both ways.
This is the time airlines and hotels will have to beg for customers to come back. After you don’t fly or stay for a long time (in this case due to the virus concern) customers will have time to rethink their loyalty. I guess if you look at the market you will see who is in deeper trouble. YTD stock prices, United is down 41%, AA is down 40% while Delta is down 21%. I have Diamond status with Delta but there is no way I will earn enough MQMs to qualify for Diamond next year. Hopefully Delta will keep my status for 2021.
BTW, Delta is already being proactive in trying to keep my loyalty. Just yesterday I had to cancel flights that I booked prior to March 1st (when they allow to waive change fees) since my meetings were cancelled due to the virus concern. I called Delta to cancel and the nice and polite agent waived all change fees of my tickets without me even asking for that.
I just had to change a flight due to a canceled business meeting. Because it was booked prior to March 1 on UA I had to pay the change fee and I get a small refund as an electronic travel certificate. Not happy with UA. They will have to work much harder to retain my business long term.
Does Parker still assert that American will never lose money?
I have no sympathy for those arrogant corporate shills that run the travel industry these days.
This feels very familiar to 2008. Fully expecting United to launch a 100% elite promo and to start handing out $200 ecerts like stroopwafels for non working lights or seat recline
Elite status has become just another perk of having a corporate job that includes a lot of flying…banishing those of us who pay our own way with personal travel. I can still travel but all those corporate flyers are grounded and complaining about the possibility of losing status next year.
I hadn’t really thought of it before this but maybe my gold for Life million Miler status will actually be worth something next year if there aren’t 10 platinums ahead of me for an upgrade.
Um no no they aren’t. Didnt you just see the article where United just made it harder on its customers to change flights? From a 2 hour delay now requires 25 hours. United can literally change the days you’re traveling and but care.
I have been EP with AA for the past 10 years. Not for 2020. I’m tired of being screwed around by them. Delays, bumping, missed connections, delays, cancelled flights, no upgrades, no way to use SWU’s, more cancelled flights, more delays,…. They will need to beg to get me back. I am fed up. Hello Delta!
On the one hand, it is still early to tell exactly how long the COVID impact will last and what the impact on the airlines will be, so I can understand an airline not making program changes now. But at the same time, the way airlines were reducing loyalty benefits, I suspect they are about to find out that in an era of empty planes, they’ve got no well of loyal customers to draw on.
I dont think loyalty or the lack of it will make much of a difference when this Covid 19 hysteria dies down. The airlines in the USA are an oligopoly. What with all the fortress hubs and focus cities divvied up between the big three, travellers are ultimately stuck to flying the big three in a lot of cases, making loyalty an anachronism