I came across an article from this past week talking about how United Airlines is implementing new levels and requirements on its loyalty rewards program, MileagePlus. In short, airlines have historically rewarded their customers based on miles flown. United is now adding a twist to it where the number of miles flown is not the only requirement to achieve elite status. Aside from adding a minimum number of flights flown, they have now created “premier qualifying dollar” (PQD), which is simply the money you spend on flights. Below is a brief outline of the tiers of their program as well as what the requirements are to reach a specific level:
- Premier Silver: 25,000 miles or 30 segments flown annually, and $2,500 PQDs
- Premier Gold: 50,000 miles or 60 segments flown annually, and $5,000 PQDs
- Premier Platinum: 75,000 miles or 90 segments flown annually, and $7,500 PQDs
- Premier 1K: 100,000 miles or 120 segments flown annually, and $10,000 PQDs
I am a loyal southwest customer and in turn am part of their “rapid rewards” club. Their idea is very simple as you simply collect points based on the price of your flight, with the price of your flight directly related to the distance between the two cities you are flying to/from. Not to mention if you are close to meeting the point total for a free flight but are not quite there, you have the option to purchases additional points without having to purchases a flight. This is a very simple, easy to understand, flexible and relatively non-exclusive program which is the way I envision a rewards program being. As a traveler, I am very comfortable with the program and I feel free flights are attainable. I travel enough where I am concerned about earning rewards of some kind and a program such as United’s is completely unrealistic for me. Unless I have to travel frequently for my job, I would not have this same level of comfort ability with rewards programs such as United’s outline above. I definitely connect better with Southwest’s rapid reward program and I feel that my business is valued and taken seriously by the airline, something I cannot say for United
In a sluggish economy, why is United (and other major airlines such as Delta) pursuing programs that are raising the bar and basically shrinking the pool of travelers who can qualify for these elite rewards? Why is prestige becoming such a major factor in the programs decision making process? I understand you do not want to give away your product easily but I feel programs like these do more harm than good by emitting a highly arrogant vibe. The airline is trying to gain a competitive advantage but I feel it is sacrificing business while trying to gain that advantage. The decision to pursue a program such as this was bad one almost from conception as I do believe the project managers were too focused on the specific issue of creating a prestigious rewards program and as a result ignored the bigger picture. Focusing on differentiating yourself from a competitor is good but not at the expense of long-term sustainability. Especially given the fragility of the airline industry (and the economy as a whole) in recent times I would think decisions would be better thought out, more universal and simply more accessible to the average traveler as a means to entice new business and grow existing business.
What do you think of this new plan? Do you think it will be successful?