2014 Brings Change to Frequent Flyer Programs

By Paul Riegler on 20 February 2014
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And then there were three.

At some point in early 2015, the number of frequent flyer programs run by legacy airlines will drop to three.  US Airways Dividend Miles will disappear along with the US Airways brand, merged into American’s AAdvantage program, the granddaddy of them all.

The three that will remain, AAdvantage, Delta SkyMiles, and United MileagePlus, stand in stark contrast to the landscape in 2005, when the field also included WorldPerks (Northwest) and OnePass (Continental), as well as Dividend Miles, making this a 50% reduction in frequent-flyer programs in a single decade.

The survivors will become vastly different programs, and changes are already starting to manifest themselves.  Starting with calendar year 2014, Delta and United have added a new wrinkle: minimum spending requirements for members who wish to qualify for elite status for the 2015 program year.  In addition, airlines are becoming stingier about the complimentary first-class upgrades distributed to elites and changing the cost of award redemptions with increases of 20% in some cases.

In a nutshell, Delta and United are requiring their lowest elite members to spend $2,500 directly with the airline, in addition to meeting the other requirement for attaining status, such as flying 25,000 miles for Silver Medallion and Premier silver.  Mid-tier members need to spend $5,000 to maintain Gold Medallion and Premier gold along with their flying, and higher tier members need to spend $7,500 for Platinum Medallion and Premier platinum.  For the top tier, Delta requires a $12,500 expenditure, along with 125,000 miles for Diamond Medallion, while United requires $10,000 and 100,000 miles for Premier 1K status.

Given that airlines are very fond of bestowing descriptive names and acronyms on aspects of their programs, Delta is calling the spending requirement Medallion Qualifying Dollars, or MQDs, and United calls them Premier Qualifying Dollars or PQDs, terms that are in line with the Medallion Qualifying Miles or MQMs and Premier Qualifying Miles or PQMs that have been the measure of a flyer’s elite status for many years.

It’s unlikely that American will completely ignore this trend when it launches its merged AAdvantage program in 2015, although the airline has not given any indication as to whether it will add a revenue qualification at the current time.

Frequent flyers are grumbling, in some cases loudly and publicly, about the changes, but the larger airlines appear to be following what has been a successful strategy employed by low-cost airlines including JetBlue, Southwest Airlines, and Virgin America, whose loyalty programs track the amounts customers spend.

Numerous threads on FlyerTalk, an online discussion forum devoted to miles and points, have sprung up both discussing and complaining about the new requirements.  Members there are not happy: they have spent years honing the tricks and techniques that allow them to obtain status for the least possible amount of money, and the new spending requirements virtually guarantee many of them a much lower rung on the status ladder, or even no status at all.

Click here to continue to Page 2The Future, More Expensive Awards, and Beating the System

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