In an Era of Airline Consolidation, Elite Status Matters More Than Ever

It’s a rare publication that will listen to me opine endless, and then quote my rants extensively. So I have to give credit where credit is due.

Financial site Minyanville.com ran a piece on consolidation in the airline industry and what it means for elite perks and miles.

They quoted me extensively, and began by suggesting that fewer planes in the air, and planes that are more full, makes upgrades more difficult — it shifts those upgrades upwards to only the top elites. (Unlimited complimentary domestic upgrades does this, too.)

Indeed, it’s a simple matter of supply and demand with regards to seat upgrades. With airline consolidations, there are now fewer planes and thus fewer seats on many routes, making upgrades scarce commodities. As such, both Raja and Gary Leff, co-founder of the frequent flyer community,MilePoint.com, agree that only the very top-tier of elite flyers continue to enjoy upgrade perks. For lower-tiered elite flyers, upgrades are becoming an endangered species.

The dialogue I had with the reporter began with the suggestion that status no longer mattered, and I made the case that it mattered more than ever now, and that being an elite made the best of a bad situation up in the air (and on the grond).

As for regular passengers with no status, the situation is worse. “Just getting through on the phone to United these days is tough if you aren’t an elite member. [The privilege of] boarding early matters just to get overhead space and not have to gate check your bags. And when you do check bags, not paying is a privilege,” elaborates Leff.

I argued that despite the doomsaying, that mergers have had some real pluses, with all of the disastrous problems from a flyer’s perspective with the combination of United-Continental reservation systems, it’s easy to forget the real benefits that have come as a result of the merger (err, Continental acquisition of United) — don’t forget, we haven’t seen Starnet blocking in a long, long time.

Airline mergers do not always spell doom for customers however, argued Leff, who believes they have been a mixed blessing for frequent flyer programs.

“There has been a general trend at United over the past three or four years to clear upgrades later and later rather than at the 24, 48, 72, or 100 hour windows. But it’s not obvious that’s getting worse. In fact, I’ve seen the opposite – Continental has tended to clear more upgrade seats earlier than United was, and it looks like the Continental approach is prevailing,” he asserts.

“[Also,] frequent flyer redemption has gotten better for Continental members when the airline joined Star Alliance in 2009, and it’s gotten better for United members since the merger was announced.”

Jill Schiaparelli, a senior executive at AxoGen, agreed with Leff’s more nuanced take of airline consolidation.

That said, I’m not sure I buy this

When asked to respond, United spokesperson Rahsaan Johnson said that the United merger with Continental was actually good for frequent flyers because they now give “members more options and improved ability to earn and use their miles.”

“For example, with the merger and the transition to a single reservations system and website, members have consistent access to international upgrades using Regional Upgrades, Systemwide Upgrades, or accessing mileage upgrade awards, regardless of whether they’re on a pre-merger United or pre-merger Continental flight. That’s an important benefit to our most-frequent flyers,” Johnson said in an email interview.

I also argued that pseudo-elite benefits that come with co-branded credit cards don’t really dilute benefits for those earning their status butt-in-seat.

Leff disagreed that these moves made loyalty programs less meaningful, saying that elite travelers still get priority to all benefits.

“Purchased upgrades at check-in are generally offered only after they’ve been made available free on domestic flights to elite members. Credit card holders may get boarding priority, but this generally comes after elites have boarded. And getting a free checked bag for getting a credit card takes nothing away from elite members,” he said.

“If anything, there may be a substitution effect between getting a credit card and reaching the bottom tier of elite status. But this takes away nothing from the very frequent flyer, and underscores the cash value of the benefits they receive.”

In the end, contrary to what I think the reporter expected to find, loyalty is more important than ever before.

“Loyalty matters more than ever. If the travel experience has been degraded, it’s been degraded most for the non-elite, non-loyal traveler. And where it’s been degraded for the frequent flyer, it’s been degraded for the less frequent (ie. 25,000 miles vs. 100,000 miles) traveler,” Leff opined. “Sure, folks who can’t stick to one airline and fly even more miles might give up and throw in the towel. But the benefits of loyalty, and the need for those benefits, have never been greater.”

They reported on my own current flying choices as well:

For his part, Leff’s choice of legacy carriers in 2012 is American.

“Overall, American and United have the best programs. Which one works better for an individual traveler depends on where that traveler is flying from , where they’re going, and what they value most. If I had to give an edge to one over the other, I’d give the edge to American right now, even though my upgrade for [last] Thursday afternoon probably won’t clear. I have an exit row and they not only comp my drinks, but even my buy-on-board snack.”

And carried my comparison of US domestic carriers on several fronts:

 

How does Gary Leff, co-founder of frequent flyer community, MilePoint.com, break down each of the legacy carrier’s frequent flyer programs?

Mileage Award Redemption If you’re like me and you prefer international first class awards (as opposed to even business class!) then American AAdvantage is far and away the best program right now.  If you want business class to South America, it’s American.  If you want domestic seats, again American.  But business class to Asia or to Europe, it’s a slight edge to United by virtue of all of the partners they have.
International Upgrades for Top-Tier Elites American lets their 100,000 mile flyers upgrade internationally on any fare 8 times a year.  United requires buying up to a somewhat more expensive fare to be eligible to upgrade, but United serves more international destinations than American does.  Delta is tough – you have to buy nearly a full fare coach ticket in order to be eligible to upgrade.  So American or United is best, depending on where you’re going.
Domestic Upgrades Here everyone is pretty good.  I think that top-tier elites on American probably are in the best shape.  Delta prioritizes price of the ticket over status (silver elites on a full fare trump their higher tier members).  The new United is going this way, too.  That may be a reasonable policy, but American is more rewarding of loyalty in its method.  A sleeper here is US Airways, their front cabin isn’t great but their elites have a very good upgrade percentage – even their lower tier elites.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community Milepoint.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Good post Gary, but I will be interested in hearing Steve Belkin’s take on this at the FTU. It is anecdotal, but I have found UA upgrades tougher as a 1K, starting in January. Before that, no problem.

    As for the pre-boarding, was much more organized pre-merger, has been a total mess since they got rid of the red carpet. Not sure of the benefit of that anymore.

  2. I am an AA EXP living in DFW, and agree with your comments. AA obviously has an edge over the others from DFW because of the sheer volume. I’m interested in your views on:

    1. AMR dropping Eagle and connecting with a different regional carrier?
    2. A possible merger between USAIr and AA – what it means for domestic and South ASian travel (most of our readers are South Asian Americans).

    Thanks
    RB

  3. Based on my own experiences and those on the FT community, the following does not seem to be true at United.

    “Purchased upgrades at check-in are generally offered only after they’ve been made available free on domestic flights to elite members.”

  4. @Goosh I believe what I told the reporter is that is what United has said is their position/intention, I am well aware of non-elite buyup upgrades at checkin for tens of dollars…

  5. Yup, on UA anyone less than 1K can forget about upgrades, even a 1K needs to be buying a more expensive fares to be in the mix. Being Platinum is going to suck, I don’t think they will be upgraded more than 25%. Of course if you can get silver and you can purchase Y-up fares that works.

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