Which Flyer Deserves More Miles? You Be the Judge!

Sometime in the early 1980s I came across an old paperback book in the basement of the house where I grew up. It was worn, and I have no idea how many decades old it was at the time. It was called You Be the Judge and contained interesting ethical dilemma stories that called on you to sort through right and wrong.

I Googled for it but only found a series by the same name from the last decade.

I thought we’d try something like that here. I’m going to describe two customers, and ask which one should United award more miles? You be the judge.

Fast forward to the end of 2015, and let’s review the travel for the year of Mary and John.

Customer 1: John

John is an investment banker out of San Francisco. His bank is based in Minnesota and has a corporate agreement with them. Most of his travel is paid premium cabin to Minneapolis and New York, but he likes to fly Virgin America when he can.

He’s putting together an important deal in China and has to fly to Chengdu. His admin puts him in business class on United, since they have new non-stop service 3 days a week there. It was a 3-day advance purchase Z fare and cost about $7500.

The 787 was great, the flight over was half empty, and he was reasonably rested when he got to China. He made great progress towards closing the deal, too! There’s going to be a huge round of financing, and he’ll make a ton — for himself and his bank.

He also took one United flight to London in business. The company’s deal should put him on Virgin, but he needed to make a morning meeting and United’s earlier flight let him do it (it’s earlier than the first of the two BA flights also). That flight cost ~ $6300, with no discount. He took the Virgin flight back, though.

That’s it for his United flying for the year.

Since his admin added his MileagePlus number to the reservations he earned 69,000 miles. The admin is a bit of a mileage junkie, unbeknownst to him, and will keep on top of the account and make sure his miles don’t expire… though feels it would be much easier to track the United account with Award Wallet, but that’s the story for another post…

Customer 2: Mary

Mary works in the Midwest as a mid-level manager for a large Agribusiness company. She’s doing well, and on the road more than she’d like. Fortunately her husband doesn’t travel for business and can make it to all of the after school activities for their three kids.

She puts all of her travel on United, at least as much as she can without drawing too much ire from her accounting department. She squeaks by with just over 50,000 miles a year all domestic, almost all flying through Chicago with the occasional trip through Houston. It’s a lot of planes, too, with 70 flights for the year.

When United costs a bit more than American or Delta, she’ll go with United because she likes her status and she likes economy plus and the occasional upgrade. She tells her bosses that they’re benefiting too because she gets free checked bags (even though she never checks a bag — too good a traveler for that) and because she won’t waste as much time during bad weather disruptions as her status gets her to the top of the waitlist.

Mary tries to get the best fares she can, she’s careful, but with an average fare of 12 cents a mile she easily makes the minimum revenue to keep her Gold status. But just in case she puts all of her family’s expenses on her United Explorer card; about $2250 per month.

When the kids were off of school for the Christmas holidays, she and her husband took the kids to Disneyland. She even found three award seats with her miles, helping make the trip affordable for her family! Naturally the kids flew on awards, she saved a paid ticket for herself so she could earn miles, and her husband’s ticket was paid too.

As a United loyalist Mary buys all her tickets on the United.com website, but her company makes her use a corporate card to do it. She buys flowers for her mother when FTD has a good MileagePlus bonus offer, and since she’s busy she buys as much for her family as she can online — always going first to the MileagePlus shopping mall.

Mary’s 50,000 miles of flying cost $6000 and earned her 48,000 miles thanks to her Gold status. She flew about the same miles in 2014, and earned 75,000 miles for it.

Is that the right distribution of miles between the two of them?

Let’s stipulate that:

  • A frequent flyer program can’t be designed just around two customers.
  • These flyers may – or may not – be typical.

End of the year John earned 69,000 United miles from flying, and Mary earned about 48,000. Sound about right?

You be the judge in the comments. Let’s hear who you think a frequent flyer program ought to award with more miles, and why.


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 InsideFlyer.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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Comments

  1. Gary, thanks for a solid post (see, not all of my comments are negative :)). This is a perfect real world example and I don’t think the airlines have thoroughly thought this through.

    Aramean, really? Normally I agree with you but I couldn’t disagree more. Gary isn’t giving false hope, simply pointing out a valid argument. I think the airlines will eventually regret this move. Is anyone at DL, UA and AA not thinking about their major international threat- Qatar, Emirates and Etihad? If they remove all incentive to fly US airlines with subpar planes and service, most people will say screw it and go with a foreign carrier to have a better flight experience.

    Being Exec Plat on AA is the only reason why I continue to fly them- their international economy is just horrendous and their old business class product is mediocre at best. If AA follows suit I’ll simply drop all US carriers and fly foreign carriers where I know even in economy I’ll have a solid experience.

  2. This was a fun exercise. Thanks. So I don’t want this to sound like I’m joining Aramean and ganging up on you, but Aramean has a valid point.

    I’ve read several of your postings on your theories of who adds value to the airline, and I’ve spent enough years buried in economics that I disagree with your basic assumptions. I don’t think you’re wrong, not at all. You have some simple scenarios that are great to teach an intro economics class.

    My complaint is you are creating rare scenarios and passing them off as common. Here you have put out two extremes and offered them as mainstream. Yes, fliers like them exist, but they are not even close to being common. No one is going to design a ff program around them.

    BTW, to follow up on your comment about WN’s secretaries program, when I traveled for business, I NEVER (o.k., maybe once) booked my own flights or even picked my own airlines. We had a receptionist in house who did the bookings for everyone.

    Even when I did do something on my own, it all went directly on the company’s American Express account. My manager came from Coopers and Lybrand, my CFO from the IRS. If I had once tried to pull what your fictitious Mary pulls, I would’ve been out on my butt. In real life, your Mary is not as common as your readers think.

  3. @ Dan: The comment wasn’t specifically directed at Mary but rather at the general public of which she’s a member. Airfares are at an all-time low, but people still expect the kind of premium service they got 20 years ago. Mary is paying the flying equivalent of bus fare but wants free bags, upgrades, miles, lounge access, etc. It’s just not realistic.

    Think of these Mileage Plus revisions the next step in fare unbundling. There’s a charge for earning extra miles now. Air Canada did it several years ago. If I want to earn 100% miles on a domestic ticket I usually have to spend $65 more each way to move from a Tango to a Flex fare (both discount Y). When work pays I buy Flex and when I pay I buy Tango. Welcome to unbundling.

    @ LarryInNYC: There are people of all types in this game of ours, but I suspect the numbers drop off fairly quickly as you get towards the socioeconomic extremes. When you charge $325 an hour (as my accountant does, for example) the cost/benefit ratio of mileage runs, card churning, manufactured spend, etc. no longer makes sense. It’s easier just to buy a seat in F and get an annual club pass than to fly to SIN in Y for the weekend so you can reach 50K. At some point one’s time becomes more valuable than status.

    The 8-to-5 folks may have less disposable income and vacation time, but at least their work life tends to be confined to those hours. How many doctors, lawyers, executives, etc. do you know who only work 40 hours per week? I suspect the 8-to-5 crowd has more time to play around with this stuff during the day as well. It’s easier for a secretary to read a blog at work than it is for a surgeon.

    Most people in this game of ours probably fall somewhere in the middle. They need enough free time and money to be able to travel, but not so much that it’s easier just to pay for a premium ticket and room at the Grand Hyatt out of pocket. We’re the middle class of the traveling public. I suspect the few well-heeled players are in it for the game itself, not the prize.

  4. 1 thing I’ve missed in the comments besides one. Disincentivizing Mary takes her out of the United halo. If she isn’t engaged in the program or moves to WN she gets rid of her united card and portal. She’s going to start earning Chase points or similar. Those are the profit centers of the FF program. Less people less profit.

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