United Airlines Raises Revenue Requirements Again

The legacy carriers in the US have long practiced a “me too” strategy, piling on what they perceive is a good idea from one of their competitors.  That’s why it was little shock to me any many others when United copied Delta’s recent increase in the revenue requirements for elite status.  Before I share my opinion, here’s the new chart:

It’s a flat 20% increase on the amount of money needing to be spent to achieve elite status, or an average of 12 cents per mile flown.

I’ll need just a minute to get out my soapbox here…..

Okay, so here’s some text from the e-mail United sent me announcing this change:

Last year, we introduced Premier® qualifying dollars (PQD) so customers who spend more with us can enjoy more access to benefits like Premier upgrades, Economy Plus® seating and Premier Access®. On January 1, 2015, we will adjust our PQD requirement for 2016 Premier status.

But, that’s not entirely true.  In my example, I’ll have about 75,000 miles flown but have spent well over the amount of money needed to achieve that level.  In fact, I’ll spend about double, or $5,000 more than needed for the higher level 1K status I hold now.  I don’t think I’m a true edge case here, but I do believe I’m solidly in the minority.

That being said, spending more money with United this year did not earn me any extra benefits.  I can live with that, mostly because United’s service continues to go downhill.  But, this is still a blunt instrument to solve a more nuanced issue.  In some ways, it’s better than just awarding status based on miles flown, as the airline is guaranteed more revenue when someone does qualify for status.

For me, when coupled with poor service, it has created a disincentive.  By not flying another 25,000 miles to achieve 1K I am missing out on a few benefits, like another 25% bonus on miles flown and access to Global Premier Upgrades.  Given the trouble I’ve had using my GPUs on international fares that’s not enough of an incentive to funnel business to United.

I had largely decided that I would forego 1K status this year with UA.  Based on these most recent announcements, the Black Friday devaluation,  and my belief that United will either (or both) continue to erode service levels or increase spending requirements in the not-too-distant future, I suspect I will move the majority of my 2015 spend elsewhere.

Contrary to a program truly based on revenue, United continues to employ a policy limiting the total amount of miles you can earn on a ticket.  That threshold, set at 75,000 miles, may seem like a lot.  But, there’s a healthy group of hardcore business travelers who will hit it on international tickets.  Telling folks you want them to spend more money on each ticket but limit the number of miles they earn doesn’t really match the message of wanting to reward the customers who fly the most with more benefits.

United’s core product is nowhere near as good as Delta’s, IMO.  I’ve said in the past that replicating things a successful airline is doing when your product needs a lot of work is a flawed strategy, one that will likely yield a sizable drop in profitable customers from their elite ranks.  United, with this move to increase revenue requirements, is saying I’m wrong.  We’ll have to wait and see.