American Airlines announced this week that they would allow frequent flyers to spend their way to frequent flyer status. I welcome this news and it’s different than what United offered.
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Anything You Can Do, I Can Do
There is safety in numbers. American, Delta and United have matched new and increases in elite status requirements over the years from $10,000 spent annually up to $15,000. The levels nearly match each other with only slight variances among them.
The strategy when making unpopular changes with frequent flyer programs is to avoid disparaging the competition as much as possible and then increase the requirements to match. If all the choices are the same, customers can’t run from one carrier to another and benefit. Thus, the airlines all benefit mutually from the increases.
The courts have seen several cases pursuing the loyalty programs for honoring their own word and have all failed. While this appears to be its own form of collusion, the courts have turned a blind eye.
We have all been stuck in the same program regardless of the logo on the tail.
United Changed the Game
United Airlines announced a couple of weeks ago that elite status requirements would change. Elite spending requirements per tier would increase but the distance flown was no longer important and segment requirements have been reduced.
Additionally, two game changers were introduced. The first was the ability to qualify solely by spending (and completing at least four flights on United) but the spending levels are well above what the elite levels require. The second is the ability to add elite qualifying spend and segments from partner flights based on distance and earning.
While it is perceived that only frequent flyers travelling on expensive tickets purchased by their company would benefit, that’s not necessarily the case. Frequent flyers from American and Delta already know that partner tickets can add outsized value to those seeking requalification.
I welcome being able to qualify based on spend. If a traveller flies loyally every week on expensive but short routes, why should they be penalized for the distance of the flights?
American Adds Similar Changes But Without Added Spending
American added similar distance waivers this week for top spenders but without adding additional revenue requirements for their current tiers nor reducing flying requirements for those who achieve elite status via traditional methods.
This is a “best of both worlds” solution. Adding distance waivers allows those who want to continue to qualify at lower levels to do so, but it also adds the ability for travellers who may be able to exceed them to have a fair status for their spending.
In my opinion, if qualification was the sole factor, high distance waivers put American Airlines Advantage program above Delta (who has them only for spending $250k on their co-branded American Express card) and United who requires more miles.
Luckily for those two carriers, they run a better airline than American so they don’t have anything to worry about.
Differentiation is Key
When everyone has the same frequent flyer elite program structure it hurts airlines. What stops a frequent flyer that can earn status with their carrier from switching when the requirements and benefits are roughly the same? Nothing.
Why fly American if Delta has the same requirements and benefits? Differentiation must be clear, detailed and added value for both parties. Alaska still has the most generous program, still awards miles based on distance and has an amazing collection of partners, but their network beyond the west coast makes them a non-starter for most of the country.
Conclusion
I loved the distance waiver when United introduced it and love it even more now that American has something similar but without the additional spending requirements for normal qualifications. But what seems to be the most progress of all is that the three largest US programs finally have some differentiation and are moving away from matching each other. That’s better for flyers as they aim to compete for our business.
What do you think? Do you like the American distance waivers? Are you a flyer that’s affected by this?
It’s always fascinating to see these posts completely forget that Southwest Airlines exists, if you’re talking about “differentiation is key”. They arguably have the most differentiated program out there.
Came here to say exactly this. SWA is wonderful.
Southwest is probably great if you live in a larg er city and travel domestically. If you are flying out of regional airports and want to see the world though, then it has its obvious shortcomings. I think for articles like these you have to forget about swa because it’s comparing apples to oranges, especially considering they aren’t in an alliance.
I think I’m on the opposite end of the spectrum from you. i fly fewer flights but long haul flights so the individual ones are more expensive and have more miles. I smash through miles barriers long before I ever reach the segments. I would reach platinum pro miles before I reach gold segments. Your perspective is that American airlines has a mileage waiver. My prospective is that United has added a pure spend requirement increase. But we seem to come to the same result, American is the clear winner of the two for both of us because of these changes.
I hit EXP with just 3 trips to Asia and do this before Summer. When AA sent me notice that they want me to spend over 22k to reach EXP in lieu of the current requirement I said no thanks. Why wait for 5 Asia trips to hit EXP when I can do it with 3 at the current structure?
I’m just glad I got my million-mile status before all this. I’m retired now and wouldn’t qualify for anyting. But when I was flying I would fly at least 25 trips a year but all on cheap tickets because that’s what my company required and all on Thousand Mile domestic flights which would only qualify me for silver.
But now with all the changes in the economy plus and seating Maps I hope they don’t make it so gold as worthless!
I hate people who throw money at everything to be perceived as a “winner.”
It’s (or was) a loyalty program. Not a ***ring out program.
These changes at UA and AA are a slap in the face to fliers who take their business more often but with smaller chunks.
I guess you’re part of the camp that thinks money=loyalty.
Time to switch blog loyalty.
@Flyoften – It’s not the only metric but if you have followed the blog for a while you’ll recall a story I shared about my boss who was faithful to American Airlines, spent $24,000 (requirement at the time was $12k for EXP) but because he flew direct flights domestically, he barely qualified for Gold. It seemed unfair to me (and bad business for the airline) to upgrade, or treat better a customer who flies long distance cheap tickets because that’s where their travel takes them, than the guy who spends that kind of money with the brand just because their flights are shorter in distance.
Fly short flights and you get the minimum 500 miles, so you rack up EQMs plenty fast, double and even tripled EQMs in First Class. Your boss could spend $24,000 and only get to Gold is if he spent $1412 PER LEG on 17 short single-legged full-fare First Class flights in a year. If he flew Coach, he’d be flying 50 short legs to get 25,000 miles at an average cost of $480 per leg. Safe to say your boss is an extreme outlier.
The degradation of the English language here bothers me the most. Qualifying “miles” has virtually nothing to do with distance traveled anymore – you know – “miles.” Credit card holders earn “frequent flyer miles.” Um, WHAT? A “companion traveler” doesn’t include my WIFE if her PNR doesn’t match mine, even if we’re flying an identical itinerary. She’s a “companion traveler” by literally any definition possible, unless I’m on a company trip and she decides to join me, and we buy her ticket five seconds after my ticket is booked.
For clarity, the misaligned status and spending thing happens more often than you think. I have another colleague based in Houston who often flies expensive coach tickets to mid-range destinations. Because she’s not elite there’s no minimum mileage. He has something like 26 segments, 16,000 miles and 7,000 PQDs. Next year he has at least silver on United. This year he’s just under appreciated.
You don’t need status to get the EQM. You just need to be signed up for the AAdvantage program. I fly weekly for work. Those who are failing at the status game are usually not paying attention
This change is built for the hub city East Coast American flyer. Expensive, monopolistic short-haul routes. I flew out of Charlotte for 15 years and would get trounced in the status game despite incurring 2x the annual ticket cost of non-hub flyers. Will be digging into this change more deeply.
It appears that we are ultimately headed for a land where, instead of cramping yourself into their seats for hours upon hours and miles upon miles, you can just pay the airlines a bunch more money than a cheap seat costs and you are treated as “special” by the airline with a few perks to distinguish you among other passengers. Nothing new about this: you could do it from the earliest days of airline travel. Back then they were called “First Class Ticket Holders” and were always treated better than the riff-raff in the economy cabin. Worked so well, they still do it today, regardless of membership in the airline’s loyalty program. The airlines have realized that to woo the narcissists among us to go first class, they had to change the way they market their first class seats: now, they call them “free upgrades” only available to those who spend enough money to “qualify” for their “loyal customer” cards. The older, simpler way is much more direct: if you have enough money to buy a more expensive ticket, you are given a preferred seat and preferred service. Perhaps there is something, after all, to PT Barnum’s observation about a very profitable event that occurs in the delivery room every minute, . .
I am about to lose my Gold status on American because I don’t fly far….I fly often, though! Was thinking of making the move to Delta as my favorite regional airport has just as many flights on that airline. With this new announcement from AA, should I stay or should I go? I fly around once or twice a month, but mainly east of Rockies….even though I think that will be changing soon.
Depending on what you spend, United is probably the better bet since it requires fewer segments in exchange for slightly higher revenue than the others.
Will this mean that CK will require more spend to get?