United Airlines is making some big changes to its MileagePlus loyalty program. The airline will begin requiring a minimum annual spending amount in addition to a minimum number of miles flown for customers to qualify for different levels of MileagePlus.
United Airlines, which is owned by United Continental Holdings Inc. (NYSE:UAL), will now require customers to spend $2,500 in addition to flying 25,000 miles in 2014 to qualify for the lowest level of the program by 2015. In order to achieve the highest Platinum status customers will need to spend $7,500 and fly 75,000 miles. If a customer spends $7,500 but doesn’t fly 75,000 miles they will qualify for the Gold, not Platinum, status. The loyalty programs give frequent fliers numerous perks, including free baggage, better seats, upgrades to first class, faster mile accrual, and other benefits.
Earlier in the year Delta (NYSE:DAL) made similar changes to its SkyMiles loyalty program. Both airlines have said that the new procedure allows them to better identify and serve their highest-spending customers instead of rewarding people who rack up miles on inexpensive flights. A spokeswoman from Delta said that the program change has gotten mixed feedback thus far, but added that “many of our Medallion members were pleased by this because they see it as narrowing the pool and focusing more on the high-value customers. As a result, you’ll have fewer people fighting for the perks, like complimentary upgrades to first class.”
But some are viewing the move with skepticism, and not just because it’s more difficult to achieve a high loyalty program status. An opinion article published by Forbes claimed that the new spending requirement is not actually helping the airlines make more money or identify their customers that deserve to be rewarded.
The article points out that the new program actually punishes people who fly cheap flights frequently without rewarding those who spend more money. Because the airlines have maintained mileage requirements instead of switching to completely cost-based loyalty programs, a customer who spends a lot of money on infrequent flights would not qualify for higher levels.
Those customers taking infrequent but expensive flights are the ones that make airlines the most money, and so the change in United and Delta’s loyalty programs still ignores the company’s most profitable customers, according to the Forbes article.
While there have certainly been mixed reviews on the change, it’s one that’s likely to become an industry standard, as several foreign airlines have already implemented similar changes in their loyalty programs as well.
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