Over the last five years, airlines have changed the requirements for reaching elite status from a certain number of miles flown to that component plus revenue from tickets. The airlines have all made clear that they want to reward high spenders and have convinced themselves (though perhaps not the general public) that this will benefit many travelers. However, if revenue is the goal, why are they still subjecting high spenders to miles or segments flown?
If Revenue Is All That Matters, Why Are Miles/Segments/Nights Important?
If airlines and hotels are chasing high-value clients and courting them over high-frequency travelers then why is there a mileage component at all? I have a colleague whose role at work recently changed. He went from locally managing a regional business unit to covering business units spanning from New York to Utah. His airfare isn’t necessarily long distance, he isn’t running to China every week, but expensive last-minute coach tickets into smaller markets add up. He qualified for Gold Status on American from a spend perspective before January was over ($3000). Over the course of the year, he will exceed Executive Platinum’s $12,000 and maybe (if he concentrates) the same for United’s 1K status. His flights are relatively short, through January he had amassed just 4,000 miles on American. At his current rate, he will have spent enough on domestic travel to qualify for Executive Platinum status with only 60% of the miles he needs for Gold.
Why does American Airlines care how many miles he flies? The thought that another colleague who happens to fly more miles on cheaper tickets will get complimentary upgrades for half the spend while he sits in the back of the plane is so counterintuitive to their goals it makes my head hurt.
I can understand that perhaps the carriers want to avoid giving away all of their benefits to a flyer who isn’t really frequent but spent the required money one time on a last minute business trip. I can understand the desire to balance an infrequent flyer who happened to buy an expensive ticket one time, with carefully rewarding the truly loyal who fly your airline every week on cheaper fares. Gary Leff always says that he is not his fare, and I agree with that most of the time. However, in this case, why would American want to reward a 25,000 mile/30 segment flyer that scraped by at $3000 over my colleague spending 12x that amount and flying 90% less? He’s an easy customer to please, upgrade him and he will continue to pour money into your bottom line.
The same applies to hotels in a different capacity. Lucky pointed out that lifetime Platinum status at SPG hotels comes after 1,000 nights and ten years of qualifying for Platinum status. If you have spent three years of your life in SPG properties, whether that happened in three straight years or over more than 10, why would it matter to SPG? Are you less valuable to the brand if the 1,000 nights came in consecutive years rather than over a decade?
Last year with IHG I amassed 120 nights and 280,000 points. Top-tier Spire status requires 75 nights or 75,000 points and they are willing to rollover dozens of nights (though it may take months to post) regardless of how much was spent, why not roll over the points (which are derived from spend)? If I had earned 300,000 points but stayed just 75 nights in their property why am I rewarded less than someone who stayed more nights at cheaper rates? Wouldn’t I have earned more credit than another guest who stayed 100 nights but just barely scraped together 75,000 points? In the case of IHG it doesn’t really matter anyway because they don’t treat elites very well as it is.
It’s Not Always Bad To Switch to Revenue
Switching to revenue requirements for airlines was likely a net positive event for business travelers. Short lead times on trips (as opposed to leisure travelers that book well in advance) typically drives up the cost of flights and hotel stays. For them, the revenue component is easier to achieve and now they are rewarded for their travel spend not their travel distance. Additionally, with fewer leisure flyers qualifying for status due to the revenue requirements, business travelers would stand a better chance at scoring an upgrade (if the airlines had maintained the same first class seat quantity). In theory, those travelers now earn more miles than they did before and have a better chance to secure a seat in the front due to less qualified elite flyers.
In the case of Starbucks – yes, the coffee company – their system awarded stars solely based on completed transactions. If you grabbed four coffees for your co-workers on one receipt, you earned one star. A $20 order earned the same amount of stars as someone who purchased $1 worth of mints at the register. That seems inequitable to me and apparently, it did to the Starbucks team as well. In 2016 the brand switched to a revenue-based point system and while some guests clearly didn’t like the change (revenue dropped below 5% for the first time in 25 straight quarters – attributed to the change) I personally thought it made more sense for my buying patterns.
Revenue Is Either Important or It’s Not
I can understand why airlines switched from miles and segments as sole qualifiers to requiring revenue in exchange for the benefits received. While I was certainly one of those flyers who achieved 100,000+ miles on cheap tickets to Asia and earned Executive Platinum status for less than $4000 – twice – I can appreciate that the airlines wanted to make a change.
Now we are seeing the flip side of the coin because travelers pay closer attention to their fares. My colleague has a tough time understanding how his $20,000/year in airline travel spend will have nearly doubled Executive Platinum and 1K status requirements, and yet he can’t clear an upgrade because he doesn’t fly far enough. If revenue really is the key qualifier, it shouldn’t matter if he spent that on one flight or 100. We also know that revenue is the key component as with all three of the major US carriers, it’s the only element of the three that qualify a traveler for status, that’s non-negotiable. At United and Delta there are no waivers to avoid spending that amount on those airlines and holding the status.
As Gary Leff has often pointed out: you are not your fare. For example: You live in New York and travel to Florida frequently where your chosen airline happens to offer competitive fares. If you book the same airline every time, you shouldn’t be penalized simply because the airline doesn’t charge more for the route. A passenger that flies 100,000 miles with any carrier should earn status whether they spent $12,000/year or not in the same way that someone who spent the required dollar amount shouldn’t have to mileage run to get the perks.
My Proposed Solution
Airlines should offer waivers to allow passengers who meet alternative requirements. If a passenger spends $15,000 they should receive the top benefits regardless of the miles flown. If a passenger likewise flies 125,000 miles it shouldn’t matter how much they spent. Both travelers are demonstrating extreme loyalty to the carriers, it’s time the carriers did the same.
What do you think? Should high-spending travelers have to complete the mileage/segment portions of the requirements? What about highly frequent flyers traveling on low-priced routes?