Though the airlines would have you believe that ‘on average’ they’re awarding the same amount of miles under the new program as the old, and just redistributing those miles — more miles to big spenders, and fewer miles for less expensive tickets — that’s not really true.
Instead, these airlines are spending less on marketing, awarding fewer miles, even as they make the miles they award less valuable.
Both United and Delta require spending at least 12.5 cents per mile flown to earn elite status as part of their revenue-based elite rules. But they both require an average of 20 cents per mile flown just to break even with the miles that had been earned under the old distance-based system.
(Both airlines even limit the miles that can be earned by top spenders.)
How many fewer miles are Delta and United awarding than they did before? They don’t release those numbers, but we can get a sense based on the revenue details they share.
I took the second quarter Passenger Revenue per Available Seat Mile (PRASM) and load factors for each of the 3 largest airlines in the US to come up with each carrier’s revenue per mile flown during the quarter.
And then I compared that to the ‘break even’ earning for both Delta and United under their revenue-based mileage earning systems to see how that compares.
Both United and Delta have lower average fares than would be necessary for passengers to earn the same amount of miles as they did prior to the new revenue-based earning systems went into effect.
I’m prepared to believe that the reductions aren’t as significant as these numbers would suggest — it’s conceivable that the average fare purchased by a loyalty program member is higher than by a non-member. It’s not obviously so and the airlines don’t release that information.
Eventually, though, inflation alone will cause mileage-earning based on revenue to exceed that based on distance.
Under a revenue-based redemption system you expect the earn and burn side of the equation to balance out, since ticket prices are higher increasing earn but higher ticket prices increase redemption costs as well. But neither American nor United are quite there yet. (And revenue-based redemptions don’t preclude devaluations, as Southwest has shown on multiple occasions, because they can — just as banana republics find it too tempting to devalue, so do airlines).