AIRLINEAVIATIONFINANCENEWSTRAVEL

United Airlines Published New Qualification Requirements – Deja Vu Again?

United Airlines

United Airlines (IATA Airline Code – UA) published the new elite qualification requirements for 2015. Why is this topic trending with UA’s MileagePlus (TM) members and passengers alike?

Details

The Premier Qualifying Mile (PQM) and Premier Qualifying Segment requirement for all MileagePlus (TM) members remained the same for 2015. The one thing that changed was the Premier Qualifying Dollar for US residents as noted below:

Image taken from http://www.united.com/web/en-US/content/mileageplus/premier/qualify.aspx no November 13, 2014 (All Rights Reserved)
Image taken from http://www.united.com/web/en-US/content/mileageplus/premier/qualify.aspx no November 13, 2014 (All Rights Reserved)

Analysis

Focusing on the PQD requirement, there is a straight 20% increase across all levels for 2015.

2015 Premier Qualifying Dollar (PQD) requirements at different levels
2015 Premier Qualifying Dollar (PQD) requirements at different levels to qualify for status in 2016. Information taken from United Airline’s website on November 13, 2014.

This is the same as the increase published by Delta Airlines (DL) for its Medallion (TM) members.

This is not the first time UA has published the same system as DL. Earlier in 2014, when DL published revamped its earning chart based on dollar spent, UA quickly followed with the same chart with very little deviation.

Why is United Airlines following suit?

It is easy to say that United Airlines did not have any newer ideas and chose to use another airline’s methodology for earning miles and status qualifying.

The following are some of the possible reasons why UA would be benefit from following DL’s directions:

  1. Deviating from what was released from DL could have a negative effect on its stock price (especially if these deviations benefit passengers more).
  2. UA’s MileagePlus members would be significantly angrier if these deviations were negatively impacting them which could reduce their flying on the airline.
  3. The airline industry is evolving into a spending system where the quality of service or benefits received will be correlated to the amount of money spent. UA is being consistent with the industry standard set by DL.

Looking at UA’s stock performance today, it is up $2.16 (US) to close at $56.76. That is up 3.96% from yesterday.  Focusing on the boarder airline industry, the market reacted positively to the news and UA’s stock price outpaced other competitors.

US Airline stock performance for November 13, 2014. Information taken from Google Finance on the same day (All Rights Reserved)
US Airline stock performance for November 13, 2014. Information taken from Google Finance on the same day (All Rights Reserved)

What about the US based MileagePlus members?

US based MileagePlus members may decide to stay with the program because the changes are the same as DL which may provide less  incentives for them to start a new program and change their flying habits.

Members may decide to move programs because there are choices available in the US. Of the other remaining legacy airlines in the US with an international presence, American Airlines (AA) announced that it will not implement significant changes to the 2015 elite qualification program.

Members may also decide to switch to programs operated by Alaska Airlines (AS), Southwest Airlines (WN), JetBlue Airways (B6) or Virgin America (VX). However, these airlines have a pre-dominant presence in the USA and are not tied directly to an international airline alliance (Star Alliance, SkyTeam and One World)

Of the 5 listed, AS based out of Seattle (SEA) may be an interesting option for some flyers as they are partners with  many airlines in One World and SkyTeam along with Emirates Airlines. Elite qualification is simply than the others and award redemption rates are reasonable.

Final Call

Changes are inevitable. How passengers and airlines manage these changes would be the focus in 2015. We expect both UA and DL to closely monitor travelling habits and spending (especially for members from hub operations) to better analyze whether program changes affect revenue. American Airlines will watch the development to decide whether they would want to introduce a similar program in 2016.  Experience The Skies will analyze quarterly earnings to report whether changes have any direct impact to airlines’ bottom line.

 

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