Wednesday, January 9, 2013

I'll take your MileagePlus status and raise you a credit card.

Yesterday, as The news for Jeff Smisek's dream plane got worse and worse, United unloaded an announcement on travel message boards regarding more changes they think you're going to like, this time regarding their boarding process.  The changes are pretty simple, they're moving from 7 boarding groups to five and the new pecking order is going to be as follows:

  • Pre-Boarding: Customers with disabilities, then Global Services and uniformed military personnel
  • Group 1: Global Services, Premier 1K, Premier Platinum, premium cabins
  • Group 2: Premier Gold, Star Gold, Premier Silver, Star Silver, MileagePlus Presidential Plus and Club cardholders, MileagePlus Explorer and Awards cardholders
  • Groups 3-5: General boarding

While I believe the future of the 787 is going to be OK, once they work out the bugs, I continue to believe that the future of United's MileagePlus program is in dire straits.  Certainly this change is not the end of the program in and of itself, but I do believe it's a significant erosion of mid-to-low level elite status, with Gold Premiers taking the biggest deduction.

Let me explain.  When flying United as a Silver Premier you basically have three perks.  One is the chance for an upgrade, two is a waiver on some bag fees, and three is a better than average chance of getting to your seat and finding ample carry-on bin space due to pre-boarding.  For Gold Premier customers you're perks are basically Silver perks with a more generous booking window (economy plus at booking rather than check-in for example) a slightly higher place on the upgrade pecking order, club access on international itineraries, and an even better chance that you'll have bin space due to a higher boarding number.  Yes, there are mileage bonuses and what-not factored in but those are the main, hard product, items that make being a MileagePlus member worth you while.

With this new boarding policy United is basically taking away pre-boarding privileges for all but Platinum, 1K and Global Services members, placing Gold and Silver Premiers on the same level with those who just happened to purchase their ticket with a United branded co-branded credit card. Given that complimentary upgrades are becoming more and more rare what with flight capacity decreases, and credit card holders get free bags and, in some cases, have greater access to United lounges than even Gold Premiers, I think United is getting to the point where Gold and Silver are just going to go away and there will be some type of credit card issued which allows for mileage bonuses, a certain number of space-available complimentary upgrades per year and even economy plus at booking.

This resolves two problems for the airlines, it cuts down on the overall member count in their frequent flier programs, and it increases the likelihood (in their eyes) that those members dropping out of the program will purchase a co-branded credit card and continue flying as normal.  Given the hub & spoke structure of airline routing, this might be a good gamble for them to make.  Airline elites are a curious bunch, they make a lot of noise about their loyalty not being properly valued but only a handful of them make an actual change when the airlines do thumb their noses at them.  Certainly, were I a Platinum Premier, I'd be happy about this because I would feel like this is a great value-add to me.  However, being a passenger who has lived in the Gold to Silver level you bet I'm unhappy.

Unhappy enough to leave the program?


And that's where the airlines win.  Flying out of Houston I have very little flexibility on most airlines other than United for my travel so it behooves me to stick with them and take whatever it is they provide to me as a "perk" and continue to watch the program erode over time. Premier status, for me (Your mileage may vary) is a side-effect of my travel and not the sole reason for it.  I travel to see interesting places and do interesting things.  The wife and I enjoy it and, for now, interesting destinations can still be had for value. Additionally, there's still a (shrinking) value-add for staying loyal to United and the Star Alliance.  That additional value is getting less and less with every "enhancement" they make to the program however and eventually it's going to disappear altogether.  At that point I, and I'm guessing many like me, will stop worrying about where we are status wise and will either drastically change our travel patterns or we'll become hyper-price conscious. Contrary to what most travel experts think, this is exactly what the airlines want.

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