United shocked the loyalty game with the changes they announced on Friday
On Friday, United announced a massive shift in its loyalty program – MileagePlus – with the first true acknowledgement of what loyalty really means to airlines: money. The short of it is that United is doing away with the formulaic approach that the Big 3 US airlines have taken the last few years, where some combination of a dollar amount threshold PLUS actually flying = status. By removing the loyalty facade, we’re left with a system boils down to just money. Flying a lot with United is no longer synonymous with elite status, making it not so….elite. United has spent 2019 upending their entire MileagePlus program, from dynamic award pricing, to the new PlusPoints upgrade system, to now the entire system itself.
What changed
United has replaced dollars with PQP’s or Premier Qualifying Points ($1=1PQP), and the flying requirements with PQF or Premier Qualifying Flights. On the surface, the changes make things more straightforward. Take a flight, get a flight credit. Spend dollars, get credit for it. The spending credits now include upgrades, economy plus seats, and subscriptions. Award flights – just like how award stays at hotels count towards their loyalty program – also count towards your flight total. The other big news is that finally Star Alliance flights will finally count, even when they’re not sold by United. All of this is good news in the sense that customers will finally get credit for almost all of the money they actually spend with the United or within the Star Alliance.
However, like American and Delta, there will now be far more opportunities to earn status cheaper due to cheap business or premium economy fares. Much like the way my cheap British Airways fare got me to Platinum status.
Credit Cards Won’t Help with Status
In the past, United had offered a spend waiver if you had their co-branded credit cards. The waiver was not valid for 1K status, but would at least gave a sizable discount to required spend for Platinum and below. It’s now clear that United must not be happy with Chase, the card issuer, because the value of the current lineup of cards decreased further with the announcement. 500 PQPs can be earned every $12,000 in spend, up to 1000 PQP, which amounts to a rebate not worth much. I wouldn’t put much spend on the cards.
My take
Make no mistake, this is a huge change in the way that any airline has taken when it comes to loyalty. Airline loyalty programs exists to extract more of customers’ money, but the difference is that most want you to engage with them as a brand, to go out of your way to stick with them, even when it’s not convenient. United’s changes eliminate much of the need to do that. Even as qualifying dollars went into effect over the last 5 years across the big 3 US airlines, there was still a flying component. That meant there was no way someone that flies once a quarter, regardless of class or destination, could earn top tier status.
Personally, as a 1K with United who’s also trying to earn the PQMs (premier qualifying miles) I need to finish requalifying for 1K for 2020 (meaning I will have the required $15k in spend, but the 100,000 miles is the issue), this is even more frustrating. I’m currently going out of my way to earn more qualifying miles, yet in ~80 days, those miles won’t matter a bit. I’m also not someone that flies paid international business class with any regularity, so at this point, I expect to lose my top tier status with United heading into 2021, and honestly, that’s fine. United just made it harder for the people like me who need/want the perks, and easier for those that don’t (i.e., the ones already in paid business class for most of their flights).
The other interesting aspect will be to see who follows suit. United went their own way for a change and didn’t follow Delta, and that in and of itself is refreshing. I do think there’s an opportunity for American – even as the talk of dynamic award pricing continues – to play a middle ground between United’s new approach and Delta’s SkyMiles, which I view as the least rewarding program of the three.
Is United alone in this move, or will others follow?
