Delta airlines shocked the airline industry in January by announcing that it would cut its domestic ticket prices—drastically reducing some unrestricted fares by as much as half. As this issue went to press, most of the major airlines—United, US Airways, Continental, and Northwest—were following Delta's lead, lowering fares in markets where they compete with Delta, though only American Airlines reduced fares in the majority of its markets. Perhaps more important, though, Delta declared it would be making major fare-structure changes, including capping the price of one-way fares (even for last-minute walk-ups) at $499 for economy and $599 for first class; eliminating the Saturday-night-stay requirement on all round-trip tickets; and reducing the cost of changing a ticket from $100 to $50. Such an extreme shake-up appeared to be Delta's attempt to remain competitive with low-fare carriers, which have always offered customers a simpler approach to buying tickets.
But prior to this restructuring, Delta had been quietly changing other aspects of how it does business. In December it introduced significant alterations to its SkyMiles program for 2005, making it far easier for non-elite flyers to gain Platinum status, and decreasing the bonus to elite members who buy business and first-class tickets. This news came as an unpleasant surprise to many Platinum Medallion members, who worked hard all year to keep their status but comprise only 2 to 3 percent of the airlines' passengers. Eddie Green, a SkyMiles Medallion member who has flown more than a million miles on Delta and who has even taken "mileage runs" to keep up his status, now wonders why he even bothered.
The result of these changes, as Green sees them, will be long lines at the elite check-in counter, competition for upgrades, and member lounges clogged with passengers who didn't earn their miles the hard way. He's right. Coupled with dramatically lower fares that will attract new, status-hungry passengers, this democratized mile-earning program is a threat to elites. But the vast majority of fliers find these new rules an unexpected boon. Matthew Bennett, publisher of the on-line newsletter FirstClassFlyer.com, estimates that participation in Delta's Platinum Medallion program could double this year.
And while the long-term impact of fare restructuring won't be known for some time, the recent modifications that Delta and other airlines have made to their frequent-flier programs are already affecting consumers and telling a story about the reshaping of the U.S. airline industry. Even if you have no aspirations to become an elite flier, read on. These frequent-flier-program changes pertain to awards and upgrades, too.
THE LOWDOWN Bad news for some, good news for most
DELTA Miles flown on Delta don't always equal "qualification miles," or the number of miles you need to become an elite member—it depends on what type of ticket you buy (business, full-fare coach, discounted, deeply discounted, etc.). Now Delta travelers will get full credit toward Medallion Qualification Miles (MQM's) for all discounted fares. On the other hand, business and first-class fares, which previously earned double mileage, will net you only 150 percent of miles flown; full-fare coach and high-priced economy fares will be worth just as much (see chart below).
To get Platinum status, Medallion members will need 75,000 MQM's per year, down from 100,000. Gold and Silver status stay the same, at 50,000 and 25,000 MQM's, respectively. This puts SkyMiles on par with its SkyTeam partners Continental and Northwest.
CONTINENTAL Though Continental hasn't introduced any new changes, it has always offered full credit for elite status to those who book discounted tickets on-line. (Those who book discounted tickets via phone or in person get only 50 percent credit.)
UNITED This year, United Mileage Plus members can give away Premier status to friends if they earned 125,000 elite qualifying miles in 2004. And now those who want United status can just buy it. In what appears to be an aggressive move to raise cash, the airline is now selling prepaid travel cards. For $5,000, travelers automatically get Premier status and $5,000 credit to spend on travel this year. Premier Executive status costs $10,000; $20,000 will propel a passenger right into 1K membership, United's highest level. (Each gives you the equivalent amount in travel credit through February 2006.)
US AIRWAYS It's also easier to achieve elite status on US Airways. Now, first-class and business fares earn double the miles flown toward Dividend Mile status (it used to be 150 percent), and full economy fares earn 1 1/2 times the miles flown, up from a straight one-to-one conversion. Discount coach continues to be credited mile for mile.
THE LOWDOWN Easier for most
Changes in the airlines' elite requirements (up or down) will have little effect on travelers who are simply interested in accumulating miles for awards. Passengers buying discounted tickets have always earned full mileage for award travel. But redeeming award points has historically been an opaque process; now some airlines are making it easier, though they're not necessarily increasing the number of award seats.
AMERICAN In October, American added a chart to its Web site that shows which dates in the next five months will be available for award mile redemption on its most popular routes.
CONTINENTAL Continental has also added a calendar to its Web site showing availability for two months around a chosen departure date. In addition, it has eliminated all restrictions on travel dates for standard awards.
UNITED The airline now gives a 50 percent mileage bonus for award travel to those in first class and a 25 percent bonus to those in business class.