I Don’t Feel Guilty Earning 1K on the Cheap

There was an interesting thread on FlyerTalk started a few days ago by TomA after chatting with an economics professor. There is always some strife in the forums between those who earn top-tier status with an airline the “fair” way (paying $10,000 or more each year on mid- to full-fare tickets for business travel) and those who earn it the cheap way (those like me who almost always book the cheapest G fare tickets months in advance).

I haven’t kept as good track this year as in the past, but I would estimate I am paying only $4,000 for my elite status. (I am excluding the domestic MegaDO charter for various reasons.) In return, I have earned miles worth at least that much, plus the additional benefits of elite status that put my total return somewhere far higher.

Do I feel guilty? Not at all.

I Pay the Fare United Asks

Airlines segregate fares into a dozen or more individual fare buckets. I’ve talked about these in the past. Inventory management has some idea of how many seats it will be able to sell at a particular price, and it sets those prices and the number of seats available at each price in advance.

When the cheap seats are gone, you have to buy one that is more expensive. Most people buy tickets this way, although a few will pay more for pricier fares that have more flexible rules like penalty-free cancellations. The end result is that the total revenue earned for that flight will exceed the operations cost and turn a profit. It doesn’t particularly matter who buys which seat at what price, only that they all get sold.

So when I buy a cheap G fare to fly from Seattle to Miami for $170, I’m pretty sure I am the least profitable passenger on that flight. But I also removed a G fare from inventory. The next person buying a ticket may have to pay for L or K. And that removes a seat from one of those buckets, meaning the passenger after has to pay for W or V. And so on.

If inventory management does its job well, and assuming the proper aircraft is matched to the demand for that route (e.g., you wouldn’t fly a 747 on IAH-MCI), then the total revenue brought in at the end of the day remains the same regardless of whether it was a frequent or infrequent traveler who bought the cheapest seat.

Frequent flyers are not rewarded for buying expensive tickets. They are rewarded for flying often, which fills seats and means that someone, anyone, is buying the expensive tickets. Not every market can have a custom-tailored aircraft with exactly 97 seats in economy, 5 in business, and 1 in first (but only on Fridays). For those days when there are bound to be some empty seats, letting me buy a cheap ticket is kind of like adjusting the size of the plane so more expensive tickets are sold.

Am I Detracting from the “Real” Frequent Flyers?

As a frequent flyer, I get perks like complimentary domestic upgrades, free checked baggage, priority access through various airport queues, and systemwide upgrades with some fare limitations. Most of the time, I don’t believe any of my Premier 1K benefits come at significant expense to those who travel on more expensive fares.

Domestic upgrades are ranked by status as well as fare class. I don’t get upgraded very often when I fly on G fares. Those of you who earn Premier 1K on W fares and higher are probably getting a much better success rate. Where it hurts are the times you might have lower status but a more expensive ticket. But guess what? People like me are a small minority. Removing me from the list is not going to make your odds that much better.

Checked baggage and priority access are subsidized by the non-elites. The lines are rarely long enough to make a difference depending on how many elite flyers there are. If you want to blame someone, look to those who have a co-branded credit card and may only take one or two flights a year. I rarely check a bag anyway because I fly so often that I realize significant time savings from sticking to a carry-on.

Finally, systemwide upgrades matter less to me than they do to full-fare 1Ks. I don’t have an employer buying me W or B fares to Europe. If I want to use a systemwide upgrade, I have to pay $500 more over the K and L fares that are also available. If I pay that extra fare, I think I’m justified in using my systemwide upgrade. If I don’t, then I’m no longer your competition.

Revenue-Based Status

I think my logic applies in some version to the frequent flyer programs at most legacy carriers, but on United, there is an answer for those who buy more expensive tickets. It’s called Global Services. I don’t begrudge these people at all. Global Services is extended only to those who buy a significant number of full-fare international tickets, spending upwards of $40,000 each year. If someone is laying down that kind of cash, I agree that they should receive some extra benefits.

But again, consider how much these customers fly. They may travel infrequently or frequently, but always on expensive tickets that earn additional elite bonuses for elite qualifying miles. Many would probably qualify for Premier 1K status anyway. Global Services is a means to provide some extra recognition for the revenue they provide in addition to their role filling up the plane.

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  • DCA2977

    I’m a newbie subscriber to your blog- please explain what “1K” status means…..


    • Del

      Its the name for United’s top tier elite status. You have to fly 100K miles a year to earn it. Silver->Gold->Platinum->1K

    • Scottrick

      Del is correct. You have to fly 100,000 miles in a year to earn 1K status. It has lots of benefits, but if there are too many elites, the value of those benefits can be diluted. For that reason, some people complain that those who pay more to fly those 100,000 miles deserve their status more than people like me who pay less.

  • http://twitter.com/kziel Kris Ziel

    Are there people who feel guilty hitting status on G fares/MRs? I sure as hell don’t, only a few flights I’ve booked have been oversold, so I’m giving them nearly free money.

    There is apparently a bug where you can buy a ticket, do award/premier accelerator, cancel the ticket, and apparently you get all the money back and keep the miles (sans the change/cancel fee if it’s a non refundable fare). I haven’t tried, nor will I ever try, but that is something that people ought to feel guilty doing, because it is fraud, and perhaps illegal.

    • Scottrick

      I’ve done it once for about 500 miles. But I could have done it for any of my other flights. IMO if United wants to sell them, they can sell them. They have the ability to prevent them from posting until the flight is flown, so I don’t really think this is a glitch.

      • http://twitter.com/kziel Kris Ziel

        I highly doubt they are allowing people to do it out of the goodness of their heart. I’d imagine there isn’t enough fraud to justify fixing the issue, so they let it happen.

    • disqust101

      How is it fraud or remotely illegal? The airlines are the ones who administer the programs and set the rules. If you comply with their rules, per se you are entitled to whatever benefits you get. It’s no different than people who take advantage of “mistake” fares. I haven’t bothered to use that “scheme”, but I might if I am in a jam and need a few miles.

  • http://twitter.com/jamucsb Jamison

    i got EXP status thanks to DBEQM for less than $2,000!

    • Scottrick

      It’s a great deal, but probably one best saved for the beginning of the year. That’s why I decided not to requalify this year after getting a status match. I should just wait until early 2013.