June 11--Following rival Delta Air Lines' lead, United Airlines said Tuesday that starting March 1, the biggest carrier at Newark Liberty International Airport will begin awarding frequent-flier miles based on how much customers paid for tickets, instead of how far they flew.
The move will make United's MileagePlus program more rewarding for travelers who buy high-priced tickets and less rewarding for frequent fliers who shop for the cheapest fares.
"They are taking miles from lower-fare passengers and giving them to higher-fare passengers," said aviation consultant Jay Sorensen of the Wisconsin-based IdeaWorks Co.
Higher-fare passengers most often are business travelers. They are more likely to book seats in business class or first-class cabins. They also are more likely to buy tickets that have no cancellation or flight-change fees, and those tickets cost more. And these travelers tend to book flights just days |before departure, when fares are more likely to be higher.
Airlines should want to encourage those kinds of purchases, said Kevin Crissey, an industry analyst at Skyline Research LLC in Mahwah. "Why reward on distance? It's always made more sense to reward on spend[ing]," he said.
In February, Atlanta-based Delta announced a similar change to its frequent-flier program, to take effect Jan. 1. Southwest Airlines, based in Texas, began basing its loyalty reward miles on dollars spent several years ago.
Sorensen expects American Airlines will follow in Delta's and United's footsteps.
"They have to follow suit," he said. "I hope they show a bit of creativity. United seems to have just matched what Delta announced."
According to Sorensen, airlines traditionally have based their rewards miles on the number of miles flown.
When these programs were started some decades ago, most tickets were sold by travel agents, and it was harder for the airlines to track the prices paid for each ticket in order to accrue reward points, he said.
United said MileagePlus members in the new plan will earn five miles for every dollar spent, and those with MileagePlus Premier status will earn from seven to 11 miles per dollar spent, depending on whether they have Silver, Gold, Platinum or 1K status.
The way it works now, a MileagePlus member flying round trip from Newark to Fort Lauderdale gets 2,130 reward miles, one mile for each mile flown, regardless of the price paid for the ticket. Under the new system, someone paying a coach fare on that route of, say, $300 would get 1,500 reward miles. But someone who paid $600 for a premium seat would receive 3,000 reward miles.
"There's a huge benefit for people who pay high-yield fares," Sorensen said. "If you spend seven grand on a round trip in business class, which is not that hard to do, you get 77,000 miles, or actually 75,000, because there is a 75,000-mile cap," he added. "That's enough for three domestic-award trips."
Frequent United flier Marian Goldberg of Rutherford, who provides marketing and public relations services for the travel and hospitality industry, was not thrilled to hear about United's new plan.
"I was afraid they were going to do this," she said.
Goldberg travels a lot on business, but she always shops for the lowest coach fare and likes to rack up reward miles and share them with her family and friends. She tries to fly enough each year to maintain her MileagePlus Gold status that allows her to upgrade to Economy Plus seats, which have more legroom, at no extra cost.
Goldberg also gets expedited service at the security check because of her Gold status. "I can get to the airport a half an hour before departure instead of like two hours," she said.
Those perks will not go away next year, and there will be no change in the criteria for achieving elite frequent-flier status, said Karen May, a United spokeswoman. "We are not making any changes to how you earn Premier status in 2015," she said.
But beyond that?
"I can't speak to the future," she said.
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