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United Follows Delta By Connecting Its Loyalty Program to Passenger Spending

Jun 10, 2014 9:34 am

Skift Take

All the legacy carriers are likely to make this shift and, once the complaints calm down, will be better for it in the long run.

— Jason Clampet

Turnkey Analytics to Track Your Competitors

 / Reuters

A United Airlines passenger jet taxis to a runway at San Francisco International Airport in San Francisco. / Reuters


United Continental Holdings Inc. is following the lead of Delta Air Lines Inc. in basing frequent flier miles on fares instead of distance flown.

Starting March 1, Chicago-based United will grant members of its MileagePlus program five to 11 award miles for every dollar spent on fares and surcharges. Currently, travelers earn one award mile for each mile flown, with bonuses for passengers flying business or first class.

“It enables us to better ensure that those customers who are flying the most and spending the most get the greatest benefits from the company, which we expect will drive further loyalty,” Rahsaan Johnson, a spokesman for United, said.

The move announced today may spur Fort Worth, Texas-based American Airlines Group Inc. to follow suit, because United and Delta are the next-largest competitors behind the world’s biggest carrier. Airlines rely on loyalty programs to build repeat business, especially among the corporate fliers who travel most often and typically pay the highest prices.

Delta broke with tradition among the biggest U.S. airlines in February by announcing that it would move to a fare-based rewards program, effective Jan. 1. Low-cost carriers such as Southwest Airlines Co. already use such a system, and analysts have been expecting United to make the same move.

United passengers who spend the most money probably will benefit from the changes, while those who look for bargains could fare worse. Under the existing distance-based program, a coach passenger flying round-trip from Newark, New Jersey, to San Francisco July 2 to July 9 would earn 5,130 awards miles.


Mileage Redemption

Under the new system, a passenger paying $574 for that same trip, based on a sample fare on United’s website, would earn 2,870 miles. Someone paying $1,284 for a flexible-fare ticket on that flight would earn 6,420 miles.

United isn’t changing its mileage redemption chart, which outlines how many miles a frequent flier must accrue. The changes won’t affect how MileagePlus members earn premium status, which gives them such perks as seating upgrades and priority check-in, Johnson said.

Next year, United plans to introduce new ways for members to redeem their miles, including single-flight purchases of seats with extra legroom and checked-baggage privileges.

To contact the reporter on this story: Michael Sasso in Atlanta at msasso9@bloomberg.net. To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net. 

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