Are Revenue-Based Frequent Flyer Programs, and Bonusing Premium Fares, Really the Same Thing?

It’s tempting to say that ‘going revenue-based’ and ‘rewarding premium cabin tickets more’ are two sides of the same coin. That’s actually wrong, for one simple reason.

Both United and Delta next year will be rewarding miles for flights based on the cost of a ticket, rather than the distance flown. To paraphrase comedian Steven Wright, one mile no longer equals one mile.

While Delta in particular talks about ‘rewarding hte right customers’ my contention is that this is really about planes are full, they don’t need (or in United’s case, don’t think they need) to spend much more to put butts into empty seats.

They’re printing fewer miles. The break-even point in both United’s and Delta’s program, where you earn as many miles in 2015 that you earned in 2014, is spending 20 cents in airfare per mile flown. But the average fare is much less than that.

Alaska Airlines’ approach to actually rewarding premium customers with more miles is to reward premium customers with more miles: bigger elite bonuses, and bigger class of service bonuses.

Let’s take a simplified example, though. An airline might:

  • Award miles based on fare so that cheaper fares are earning fewer miles
  • Keep award redemption prices the same.

Or it might:

  • Award more miles for premium fares, while keeping earning the same for cheaper tickets.
  • Since more miles are being awarded, the carrier increases the cost of awards.

In one version let’s say cheap tickets are worth 0.5, expensive tickets worth 1, and award tickets cost 1. In the other version cheap tickets are worth 1, expensive tickets worth 2, and award tickets cost 2.

Both of these accomplish the same thing, but they’re framed differently. One takes miles away, the other gives customers more miles. Is that what’s going on here?

Absolutely not, for several reasons.

Taken together, it looks more like the programs going revenue-based are devaluing the most, on both the earning and the burning side of the equation.


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. Delta has been the airline for the uninformed and the hub-captive for at least five years now. Only a fool would fly them if similar options were available on American…even considering that sexy new vinyl seat coverings Delta is going to install. I’m very thankful my usual routings are served with AA/US, otherwise I’d devote my spend to the cheapest carrier out there. United is hard to describe, they never won a customer by being a good airline, but their miles were great–now there’s absolutely no good reason to fly them unless you’re trapped in some corporate/government contract.

  2. I wasn’t a big fan of revenue based fares but recently moved to Europe and had to buy a flight to the US relative late and would have gotten twice the amount of miles with the new revenue based scheme on United.
    I tend to fly Swiss though but have no problems buying it on 016 ticket stock.
    My wife also flies more and can now also fly business class and therefore will end up with more miles as well.
    International business class fliers will come out ahead but my economy flights inside Europe get barely any miles because of being low priced tickets (even not on 016 stock but because UA does not give credits for all LH flights).
    In total I expect we get out ahead but with the award chart being much worse it is probably a wash.

  3. “American has committed not to make big changes to award charts while they’re combining programs with US Airways.”

    Seriously???

    American has massively devalued the past couple of years. BigFoot sightings are more credible than the official 62.5K o/w FC TATL Saver Award. Just searched for a pair of FC awards JFK, ORD, or DFW to LHR. Not a single day in the entire 331 day booking period. In fact there is not even a single FC seat award at the Saver level n/s from JFK to LHR for the entire year.

    True, the printed award charts haven’t been changed, but there is virtually no AA metal International FC Saver award availability, from any US city to any European city, on any day of the entire year. It’s a Stealth Devaluation, done to maintain ‘Plausible Deniability’, but it’s a massive devaluation in fact.

  4. @Robert Hanson Yes, seriously, because nothing in your comment disputes the claim I made. Award chart pricing hasn’t substantially changed. Availability on AA flights has. (And it’s changed on many other airlines as well, because of the improving economy, but AA transatlantic is indeed an extreme case)

    Of course I don’t especially want to use miles for American’s own flights across the pond. For those who do, inventory management has not been their friend to say the least.

  5. We too have tried to book aadvantage flights from Florida to Europe next year. It appears that American has decided to only provide full anytime advantage seats on their flights…and discounted aadvantage mile fares can only be found on BA or others with (significant) surcharges. I agree with others…the chart hasn’t changed much…but American seat availability in any class at anything but full anytime rates has disappeared. Essentially, our perception is that the new American has devalued the Aadvantage program by essentially withdrawing American flights from any of the discounted aadvantage milage options.

  6. I don’t care about award miles earned, as miles are easy to earn from credit card spend. What I want are EQM/MQM earned by cost of tickets.

  7. Gary,

    Learn to spell, proofread or at the very least use a spellcheck program before submitting your posts. It’s rare when your posts DON’T have a mistake in them.

    And yes, quit whining or quit traveling. Bashing the airlines for rewarding their business customers is getting old.

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