Minimum Spend Requirements for Elite Status Coming to United in 2014

United Airlines has announced minimum spend requirements in order to achieve elite status starting in the 2014 program year. Similar to Delta, there will be a waiver from this requirement for those who place at least $25,000 on a MileagePlus co-branded credit card issued by Chase, but 1Ks will not be exempted from the minimum spend requirement.

Here’s the scoop straight from the source—

Starting in January 2014, Premier qualification for members living in the United States will include a minimum annual spending level. We will track this new requirement with Premier qualifying dollars (PQD) – dollars spent on most United tickets, including partner flights, and Economy Plus purchases. The changes will not affect Premier qualifying miles (PQM) or Premier qualifying segments (PQS). The new criteria will look like this:

• Premier Silver: [25,000 PQM or 30 PQS] and $2,500 PQD
• Premier Gold: [50,000 PQM or 60 PQS] and $5,000 PQD
• Premier Platinum: [75,000 PQM or 90 PQS] and $7,500 PQD
• Premier 1K: [100,000 PQM or 120 PQS] and $10,000 PQD

A minimum of at least four paid flights operated by United, United Express, or Copa Airlines will be needed to qualify for any Premier status. 

For 2014, the PQD requirement is waived for Premier Silver, Premier Gold, and Premier Platinum qualification for members whose address with MileagePlus is within the 50 United States or the District of Columbia and who spend at least $25,000 in Net Purchases in 2014 on a MileagePlus co-branded credit card issued by Chase Bank USA, N.A. There is no PQD waiver for Premier 1K qualification.

The following spending will count toward meeting your PQD requirement:

• Flights operated by United, United Express, or Copa Airlines
• Flights operated by a Star Alliance^® or a MileagePlus partner airline and issued on a United ticket (ticket number starting with 016)
• Economy Plus purchases

Below is some fine print. Note in particular that only Star Alliance partner flights booked on United 016 stock will count toward meeting minimum spend requirements. Issuing all Star Alliance tickets via United is frankly unfeasible, so this is a big hit to the spirit of alliance partnerships. Second, while base fares and fuel surcharges will count toward your minimum spend requirement, government taxes will not count, which will add another 1-2CPM (or between $1-2K for 1Ks) to the minimum spending requirement. Addresses outside the USA will be exempt from the minimum spend requirement.

1. The Premier qualifying dollar (PQD) requirement only applies to members whose primary MileagePlus account address is in the 50 United States or the District of Columbia. Those who use military or diplomatic addresses (APO, DPO or FPO) are exempt from the PQD requirement.
    
2. Members must fly at least four paid flights operated by United, United Express, or Copa Airlines during a calendar year to qualify for any Premier status. For 2014, members who hold a United MileagePlus Presidential Plus or Club Credit Card are exempt from the four segment minimum as long as they are the primary Cardmember and their Credit Card account is open and not in default at the time of qualification.
    
3. For 2014, the Premier qualifying dollars (PQD) requirement is waived for existing Presidential Plus Cardmembers for Premier Silver, Premier Gold, and Premier Platinum qualification. There is no PQD waiver for Premier 1K qualification. The Presidential Plus Card is no longer available to new applicants.
    
4. 2014 Premier qualification dollar (PQD) waiver: For 2014, the PQD requirement is waived for Premier Silver, Premier Gold, and Premier Platinum qualification for members (i) whose address with MileagePlus is within the 50 United States or the District of Columbia and (ii) who in 2014 have spent at least $25,000 in Net Purchases, on a MileagePlus co-branded credit card issued by Chase Bank USA, N.A. at the time in 2014 they qualify for Premier status. There is no PQD waiver for Premier 1K qualification. Only the primary Cardmember is eligible for the PQD waiver. (“Net Purchases” are purchases of goods and services made by you or any authorized user on your account minus any returns or refunds, and do not include balance transfers, cash advances, cash-like charges such as travelers checks, foreign currency, and money orders, any checks that are used to access your account, overdraft advances, interest, unauthorized or fraudulent charges, or fees of any kind, including an annual fee, if applicable). Purchases made by authorized users will qualify toward the primary Cardmember’s Net Purchases total but authorized users are not eligible for the PQD waiver. If the primary Cardmember has multiple MileagePlus Chase Credit Cards, Net Purchases on those cards will be combined to calculate the $25,000 spend for the PQD waiver. For MileagePlus Chase Credit Cardmembers that open an account in 2014, “Calendar Year” means the period beginning with the day the Cardmember’s Credit Card account is approved through December 31, 2014. Therefore, the Cardmember may have less than twelve months in 2014 to qualify for the PQD waiver.

This move is not totally unexpected–after all, a revenue requirement was part of the leaked plan two years ago–but still surprising that it came this soon. I had predicted it would happen in 2015.

Later today, I’ll address why this move may not affect many, but does not make sense from a incremental revenue perspective and an alliance perspective.

Fozz is “ecstatic about these changes as it means the long needed thinning of elite ranks may finally come to fruition, which in turn means better upgrades and more benefits for the elite ranks” but I take a different view.

I average about 6cpm on United so this policy change means that I’d have to pay 40% more for my fares or fly 40% more in order to achieve top-tier status. I doubt either will happen. I did spend about $10K last year (flying 150K miles), but a chunk of that was booked with Alliance partners, meaning it would not count under UA’s new rubric for status qualification. So where does that leave discretionary flyers like me? In a quandary to be sure, but likely traveling less. In 40 segments, I have not had one bump opportunity this year and cannot a recall a single flight that has not been able to accommodate several standby customers. The majority of my flights have gone out with several open seats.

Why does that matter? It means United loses customers at the margin like me, who go out of their way to fly United but now might temper that behavior (assuming the programs changes take place as described above). Flying is a cost/benefit analysis for me and based on my planned travel next year (with no more frequent trips between Philadelphia and Los Angeles), it simply may not make sense considering I will have MMer Premier Gold status for life. My $6K in revenue may not be much and I by no means consider myself “valuable” to United from a revenue perspective, but I just cannot understand why United (and Delta) seems anxious to sever ties with leisure and budget-conscious flyers who still pour in a decent revenue stream to the carrier each year.

I am not about to jump ship over this change–Delta’s frequent flyer program is a joke and it is only a matter of time before the new American Airlines does the same thing–but I likely will cut back on travel, resulting in the same outcome for United.

Many have expressed support of this change on Flyertalk and MilePoint, but these are the people whose business pays for their travel, i.e. the people who will fly anyway. Why reward them when doing so will presumably not result in any increased travel?

Anyway, more on the Star Alliance aspect of this later today.

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