Yesterday United Airlines announced a coming change to its MileagePlus program, which will apply for travel during 2014 in order to qualify for status in 2015. Nothing has changed for those who have status now or are earning status toward next year, but it is worth considering now how this change will affect your strategy in the future. Some might want to consider a status match to a competitor, but I have a strong feeling that American Airlines will soon follow suit.
I expect the majority of my travel to continue to be with United Airlines. I have found many reasons in the past to be loyal to United Airlines — including its excellent route network and the utility of its frequent flyer miles — and many of those reasons are not changing. But I do have to decide how to adjust my strategy in the future. The introduction of a revenue component means that carrying on as before is no longer possible, but neither is it reason to panic.
United’s addition of a revenue requirement was not entirely unexpected since they have made an effort to increase revenue and profitability. The first news I heard of it was a DM from Amol that said, “Did you see this change from United coming?” I immediately knew he was talking about a revenue requirement even though I had no idea about the timing or requirements. I would have expected this to be announced next year, after allowing time for defections from Delta. That’s what many people expect American to do, but perhaps they’ll also jump on the bandwagon sooner than we thought.
In short, United will begin tracking dollars spent in 2014, known as Premier Qualifying Dollars (PQDs, similar to Delta’s MQDs). These PQDs will be independent of who actually purchased the ticket. If your boss buys you a $5,000 fare to Abu Dhabi, then you — not the company — earn 5,000 PQDs. The minimum spend requirement will be in addition to the traditional Premier Qualifying Miles or Premier Qualifying Segments, which remain unchanged. The requirement that you fly at least four segments operated by United Airlines also remains unchanged.
The following charges will count toward your PQD balance:
- Base fare and carrier-imposed charges (includes fuel surcharges, but not taxes).
- Flights operated by United Airlines, United Express, or Copa Airlines.
- Flights operated by a Star Alliance or Mileage Plus partner and issued by United Airlines (with a 016… ticket number).
- Economy Plus purchases.
What most worries me is that this means if you want to fly on Lufthansa, ANA, or another partner and have it contribute toward your PQD requirement, you MUST book it through United Airlines. (Matthew at UPGRD expands on this point more fully.) In the past, you could book through the partner carrier directly and still credit your elite and redeemable miles to MileagePlus without worrying about things like PQDs. But honestly, I already book many of my flights through United.
The PQD requirements for each tier are in the table below. Effectively, you must pay 10 cents per mile flown on average. The exclusion of taxes also means that the revenue requirement is technically a little higher than United lists for each elite tier, so lets raise that to 11 cents per mile — $11,000 per year in order to maintain my Premier 1K status. Normally I spend only $6,0000.
It would seem I have lost my ability to “Hack My Trip.” Or have I? There are two ways to receive an exemption from this rule. First, I can spend $25,000 in a calendar year on my United co-branded credit card. The nice thing about this is that if I do it with the MileagePlus Explorer card I get 10,000 bonus miles. Or I can use my legacy MileagePlus Select card that earns triple points on United purchases. If you have a legacy Presidential Platinum card, those members receive an automatic exemption. But this exemption applies only to members who want to obtain Premier Silver, Gold, or Platinum status.
The second option is to register a foreign address with your MileagePlus account since only those in the 50 states and DC are subject to the spend requirement. I wonder if United will make any effort to find passengers who attempt get around the rules this way. If my new address is in London, and I fly every other week out of Seattle with a Seattle billing address, will they care or even notice? I’m not sure I want to invest the time and money to find out at the end of the year when they conduct a review.
So to keep my Premier 1K status, I have to spend $10,000 (plus taxes). Surprise: I kind of like this rule. It reflects United’s continued push to increase the exclusivity of its top tier. If anyone can get Premier 1K status for a couple grand and a few weekends of mileage running, then its value is diminished for those high value travelers who really do “deserve” their status. (I don’t mind admitting that I am not United’s target customer.) This is the same logic that led United to remove the ability to use Flex PQMs from the Presidential Plus card for Premier 1K status.
But… United can only get away with this if it continues to improve its recognition of top-tier elites. I think it is trying. There are reports that it is now offering special gate-checked baggage tags, a small but worthy change for Premier 1K passengers. It has reorganized its boarding queues. It has improved the responsiveness of the Premier 1K Line for reservations and customer assistance. It has introduced new benefits like Global Entry for Premier Platinum and 1K members. It still has a long way to go.
What Do I Do Now?
I have two options: downgrade to Premier Platinum or spend more to maintain Premier 1K. My initial thoughts were that I would be happy with Premier Platinum, but I also wanted to determine if there is sufficient value in Premier 1K to make it worth the investment.
Resign Myself to Premier Platinum
This is the most likely choice for now. It is fairly easy to manufacture spend without much out-of-pocket cost; I can imagine worse targets than $25,000. Premier Platinum members still receive many of the same benefits as Premier 1K members, including a generous baggage allowance, priority security, Economy Plus, free award changes and cancellations, and Star Gold status. Many of these benefits are important as United continues to dilute the benefits provided to lower tiers. Amol posted late last night about a new change, effective immediately, that eliminates the ability to change awards for free more than 21 days out.
By shifting to Premier Platinum, I will rank just behind Premier 1K members for priority check-in, priority boarding, upgrades, and customer support and reservations assistance, but I think I will probably be okay with that. Besides, there will probably be fewer Premier 1K members to compete with. I will not be moving that far back in line.
I will also be giving up some of my mileage earning bonus, which drops from 100% to 75%. Because I will also be flying less (75,000 miles instead of 100,000) I will be out 18,750 miles on the part I still fly — a value of $375 at 2 cents per mile. I will also lose four Global Premier Upgrades and two Regional Premier Upgrades; using them all for domestic flights, they have a value of $600. But I’m not sure it’s worth reaching the high minimum spend for Premier 1K in order to keep these things. I think the cost/benefit ratio is roughly even under the current circumstances. Spending more without getting more isn’t very motivating.
I am not likely to shift any new business to a competitor. I am already adding Alaska’s MVP Gold status this year. It is hard enough fitting all that travel into my schedule. If anything, flying 25,000 fewer miles on United will make my life easier.
Live Large and Keep Premier 1K
This is not such a bad idea. I don’t like the idea of spending $10,000 a year on flights ($11-12K with taxes), but I could do it. First, my cost of travel has gone up in recent years. I estimate I now spend about $6,000 a year to earn my status compared to $4,000 a couple years ago. This is largely because of fare increases, fewer quality mileage runs, and fewer mistakes. It’s very rare to see a 3 CPM mileage run these days, for example. I have to go to conferences where I don’t pick the date or location. Some destinations, like visiting family in Amarillo two or three times a year, have seen fares soar from $300 to well over $500.
The greater expense has been manageable because (1) I have been booking Megan on award flights more often, and (2) this blog can subsidize my travel much as any business traveler is justified in deducting the cost of reasonable business expenses. I realize the latter excuse is cheating. Spending more because you have more money is not what travel hacking is about.
I first thought, “What if I just travel even more?” United has not forbidden mileage runs. It just ruled them out for earning elite status. Mileage runs for the sake of earning miles are still perfectly viable. So if you do lots and lots of mileage runs you can still earn Premier 1K status because you’ll eventually pay enough money. Hopefully the miles you earn will balance out that cost. The problem is that I have a very large gap to fill, about $5,000. Right now I justify mileage runs because I make up the cost with the redeemable miles I earn. I come out ahead with the elite benefits. I would have to fly well over 100,000 additional miles — and find them at mileage run prices — in order to reach the PQD requirement for Premier 1K. I would still come out even as far as the miles are valued. I would not be much further ahead in terms of elite benefits.
The only real solution here is to buy more expensive tickets. I could do that easily buy purchasing W fares (about $1,500 to $2,000 round trip) to redeem my six Global Premier Upgrades. I wonder how this will affect the complaints about United’s GPUs, which require a relatively expensive fare in contrast to American’s eVIPs that work on any fare. I guess if you need to spend the money anyway it is no longer an issue.
I could also purchase more expensive fares for domestic travel. Why not buy Y, B, and M fares that offer more generous change rules and prioritized upgrades to first class? The first two even have a 25% bonus for earning redeemable miles. If I book myself into first class from the start, I could receive up to a 75% bonus. This isn’t really mileage running, but you see how I can take the PQD requirement and turn it to my benefit. I don’t have time to fly 300,000 miles a year. But if I have to spend $12,000, I can make the 100,000 miles that I do fly much more rewarding.
After spending a day thinking about this, I think Premier Platinum is the best option to keep most of my current benefits. It will make my life a little easier to spend more time at home with a lower target in sight. But if I decided to spend the $11,000 to $12,000 required for Premier 1K, I do think that more expensive fares offer a means to make the travel experience even better than it is today. Having committed myself to the expense, I would free myself to book more expensive routings, higher fares, and potentially earn more bonus miles and better upgrade chances. All of which are things United wants for good reason. I don’t think it would be the best choice for my wallet, but neither are we witnessing the end of days.