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The New Meaning of Miles

In December 2002, Delta Air Lines management sent its SkyMiles Medallion members a letter detailing the company's revised qualifications for earning elite status. Beginning in January 2003, the letter said, the program would "...better align loyalty benefits and rewards with the fares customers pay." The bottom line: Delta would now reward customers paying full fares with extra points toward elite status and penalize, it seemed, Medallion members buying discounted tickets by giving them fewer points.

Medallion members felt betrayed. In a full-page ad in USA Today's Georgia edition, Save SkyMiles—an organization comprising 5,700 Medallion members and representing more than 4 billion Delta miles—publicly bade farewell to Atlanta-based Delta. "The SkyMiles program, once the best in the industry, is now more an insult than a benefit," it said. By fall, Continental had followed Delta's lead, awarding extra credit toward elite status to those who bought full-fare tickets, and decreasing the earning power of a discounted ticket. Suddenly being "elite" meant paying more, not flying more, said those who stood to lose their status.

The critics agreed that, given such changes, along with new rules for redeeming awards and upgrades, the mile was being "devalued" like a volatile currency. But have travelers really been stiffed by the very programs that were created to reward their loyalty?Is it time to cut up your mileage cards and send them—as some SkyMiles members have—back to the airline?The short answer is no. In fact, some bright spots have been obscured by this juggernaut of bad feelings.

Cutbacks: What's Going on Here? In the go-go years of the late 1990's, nearly 20 years after American Airlines introduced the first airline loyalty program, earning and using frequent-flier miles became a cornerstone of the traveler's experience. Double- and triple-mile deals waited around every corner, and, for some, collecting miles became a favorite pastime. The status quo changed, however, following September 11, 2001, when the airlines began to reel from losses because of passenger shortfalls and new competition from lower-fare, single-class carriers.

Indeed, as the majors stripped away food service and other amenities, generous frequent-flier programs became their only real point of difference with the discounters. Although the upstarts have loyalty programs, too, theirs tend to revolve only around earning free trips, while the majors' programs emphasize a perk that has become ever more important to travelers, especially those who travel frequently for business, and internationally: elite status that leads to more sympathetic treatment and the coveted upgrade.

In an effort to get travelers back in the sky in late 2001, the airlines lowered their elite-status requirements and extended memberships to desirable customers. The strategy worked, but maybe too well. Airlines emerged with a glut of elite-level passengers in 2002, and many flying frequently on deeply discounted tickets achieved elite-level status before less-frequent travelers whose total spending on tickets was far more. Some of these customers, Delta SkyMiles program director Robert Borden admits, shouldn't have achieved elite level in the first place. "We had higher-revenue customers who didn't fly as often but should have been at the Platinum level, as well as Platinums whose revenue contribution was much lower." The airlines that had extended the biggest promotions were finding that having so many elite members, who were now competing for upgrades and other awards and had no natural attrition rate, had become a liability.

Thus, the recent crackdown on elite program membership—and the ensuing outcry from consumers. Randy Petersen, publisher of InsideFlyer magazine, prefers to look at the changes as an opportunity: "After at least a decade of sameness, savvy customers can assess the changes in the programs over the past year and make some choices," he notes.

Elite Status: Bad News—and Good What has certainly changed is that it will now be more difficult to earn elite status on some airlines. Continental OnePass members flying in higher-fare classes will have 150 percent of the miles they fly counted toward elite status and will earn two qualifying segments for each segment flown. Those flying on the lowest fares, on the other hand, will have just 50 percent of actual miles flown credited and will receive zero segments. The good news: Shortly after announcing the new rules, Continental extended its deadlines and will allow travelers who buy lower-priced tickets to earn full elite-status credit on travel through the end of this year.

Delta fliers will now earn elite status using something called Medallion Qualification Miles—a multiple of the miles flown and fare class purchased, replacing base miles and flight segments. Passengers will receive MQM's of twice the number of miles they fly when they buy First, BusinessElite, and Business class tickets at full fare. They will get 1.5 MQM's per mile flown in each of the three highest economy-fare classes (Y, B, and M), while discounted seats will earn only the number of miles flown.

Gaining elite status on Alaska Airlines will now require 20,000 qualifying miles, up from 15,000, but this is still less than the 25,000 miles required by most carriers.

On some airlines, however, there has actually never been a better time to be a discount seat-buyer with elite-status aspirations. Northwest WorldPerks members, for instance, will continue to have 100 percent of miles flown on discount fares credited toward elite status this year. Likewise, if you fly the carrier's alliance partner Delta, you'll also get 100 percent of miles flown, up from 50 percent. (But take note: WorldPerks members get only 50 percent of miles flown applied to elite status when they buy discounted tickets on alliance partner Continental.)

United and American have become more generous than they used to be. United now gives a 50 percent bonus toward elite status to those traveling in first class and 25 percent to those in business; American gives 50 percent extra to passengers in first, business, and full-fare economy. On both carriers, discounted seats still earn full credit.

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