Last year, Delta and United each announced a radical transformation of their frequent flier programs, switching from awarding miles based on the distance flown to fare based, rewarding business travelers paying top dollar for first class and last minute flights at the expense of other fliers.
Delta’s change went into in effect during January, while United’s identical change will go into effect on March 1.
MileCards.com believes these changes are not in the interest in most fliers and to see how consumers felt MileCards.com recently surveyed a representative national sample of over 1,000 active frequent flier program members via Survata. Highlights of the study include:
Among active frequent flier program members…
Among those who were already aware of the changes United and Delta are making…
Among those who were unaware of the changes…
Among Delta and United fliers…
Among high spending fliers ($10,000 or more in airfare per year)…
About the survey: The survey was conducted by Survata from January 29 – February 3, 2015, and included responses from 1,002 U.S. residents age 25-64 who answered yes to whether they earned miles in an airline mile program by taking a flight at least once in 2014. Respondents were taken from Survata’s representative sample of the U.S. population.
About the respondents
What was your primary airline in 2014?
How many trips did you take by plane in 2014?
Do you have a credit card that earns miles for flights?
MileCards.com tips for fliers impacted
If you fly a lot, but aren’t a big spender.
Consider moving your business to American Airlines / US Airways. They will still reward miles based on how far you fly, and won’t penalize you for flying on the cheaper fares. And if you have elite status with another airline, they will match it and allow you to earn status with American quickly via a special challenge. For 2015 at least you have a chance to send a message to the airlines with your business.
Southwest is also a popular option, and to the surprise of many it switched to awarding miles based on how much you spend in 2011, yet remains a well liked program, thanks in part to no fees.
If you don’t fly often, but want reward travel.
Just shop on price, and consider a mileage earning credit card as the way you earn miles with credit cards is not changing. While only about half of fliers surveyed have an airline credit card, 59% of those hold one say they earn more miles with the card than they do by flying.
With many cards now allowing you to transfer points to multiple airline programs, it’s easy to double up on your rewards quickly, and earn an award flight faster. Fewer miles being earned by heavy fliers might mean it’s a bit easier for you to find an award seat.
How will the changes influence American AAdvantage?
At least for this year, a market experiment is in place, with American offering traditional mileage based earning, and United and Delta offering revenue based earning.
The first test will be American’s 1st quarter financial results, and whether there is any meaningful difference in yield or traffic trends. The balance of the year will provide more data than any survey can provide on whether holding out on earning miles the traditional way is a meaningful differentiator for loyalty.
If the advantage is difficult to quantify, expect American to more closely consider an earning scheme that uses attributes of United and Delta’s new model.
How do the numbers work for fliers?
While United and Delta advertise they will reward their most important customers more with these changes, make no mistake these are moves to issue fewer miles overall.
According to United Airlines’ financial filings, in 2014 the average United passenger flew 1,489 miles, or about 3,000 miles roundtrip.
The average fare for that trip was $492 (a 16.4 cent ‘yield’ per mile flown).
Under its old scheme, the flier would earn 3,000 miles for the trip.
Under its new scheme, that $492 fare would earn just 2,460 miles, a nearly 20% reduction. These averages include United’s base of high fare fliers, so in aggregate it’s likely fewer miles will be given out overall with the new program.
The vast majority of fliers will see a modest drop in the number of miles they earn each year, a small but heavy flying minority will see a substantial drop of 50,000+ miles, while another small minority of heavy spending fliers will see sizable increases in the number of miles earned.
The examples below illustrate:
Infrequent flier: 3 trips a year (earns fewer miles)
Total miles earned (old system): 18,000 miles
Total miles earned (new system) 10,000 miles
Difference: -8,000 miles
Low price business flier: 20 trips a year (earns fewer miles)
Total miles earned (old system): 96,000 + 96,000 elite bonus = 192,000 miles
Total miles earned (new system): 96,300 miles
Difference: -95,700 miles
Premium business flier: 20 trips a year (earns more miles)
Total miles earned (old system): 96,000 + 30,000 premium fare bonus + 96,000 elite bonus = 222,000 miles
Total miles earned (new system): 243,000 miles
Difference: +21,000 miles
An active minority of frequent but lower dollar business fliers will lose out on earning hundreds, sometimes thousands of dollars worth of mileage rewards each year, and has reason to be very upset by the changes.
However the majority of once or twice a year fliers will see a much smaller impact. No longer earning 5-10,000 miles per year hurts, but with so many members also earning miles on the ground, making up those miles requires a few months of extra spending on an airline’s credit card or taking advantage of partner opportunities.
The fact that 70% of fliers in our survey don’t believe the changes are material is consistent with the math that illustrates the reduced earning is not significant relative to the cost of an award for many fliers.