Saturday, September 13, 2014

United And Delta Are Killing The Mileage Run. New Rules For Frequent Flier Programs Emphasize how Much You Spend, Not How Far You Go.

In February, a friend told me he couldn't meet for dinner in Washington because he was flying to Amsterdam for the weekend. Emphasis on the word “flying.” His itinerary had him spending most of the weekend traveling, but he’d stay in Amsterdam for only 14 hours, after connecting through Paris and Istanbul to get there; his return trip involved a layover in Minneapolis.
It’s a practice known as a mileage run: Buy a low-price airline ticket, in this instance $537, and fly not because you want to go anywhere, but to earn redeemable miles and progress toward elite status on your preferred airline. The core logic behind mileage runs is that airline points have a relatively fixed value, but the cost to accrue them can vary widely, so a low fare for a long trip can reap outsize rewards. Only when you’re taking a mileage run is connecting through Istanbul to get to Amsterdam better than flying there nonstop.
Mileage running arguably makes sense for some travelers, that is, the sort of people who don’t mind spending a weekend on airplanes going nowhere in particular. These people have a well-established subculture; the Mileage Run forum on FlyerTalk, an online travel discussion board, has generated more than 24,000 threads. But mileage running has never made much economic sense for the airlines. The purpose of a frequent flier program is to build loyalty and retain customers who generate a lot of profits. Mileage runners aim to buy tickets with the lowest cost per mile and extract as many points as possible from them; this is not high-margin behavior the airlines should want to encourage.
And increasingly, they aren't.
In the last year, United Airlines and Delta Air Lines have made two major changes to their reward programs that make mileage running a lot less useful. First, they imposed a minimum spending requirement to obtain elite status. Previously, you became a “silver” or “gold” or “diamond” flier by traveling a minimum number of miles or segments in a year. Now, to qualify you must also spend a minimum amount on airfare; for example the status tier for traveling 25,000 miles also requires $2,500 in airfare spent, or 10 cents per mile. (The Amsterdam-Istanbul itinerary I described above cost just 4.6 cents per mile.)
Then, the airlines blew up the definition of “frequent flier mile” so it no longer has anything to do with distance. Starting in 2015, fliers on each airline will earn five “miles” for every dollar they spend on airfare, regardless of where they go. A $537 ticket from Washington to Amsterdam via Istanbul will earn the same number of reward “miles” as a $537 ticket from Washington to Chicago.
Frequent travelers will get additional bonus miles, as they do now, but the bonus will also be based on dollars spent, not miles traveled. In case these rules weren’t confusing enough, that’s just for redeemable miles; for achieving elite status, “miles” still means miles traveled.
The logic of these changes is to reward passengers for generating profits for the airline, not simply for traveling a lot of distance. Business travelers who buy a lot of high-price tickets at the last minute will be rewarded more; bargain hunters will get less. And these changes come after a decade of shifts that have already made it harder to get ahead by taking mileage runs.
Gary Leff, who runs the View From the Wing blog about air travel, notes three phenomena that have already cut against the mileage run over the last decade. Airfares have gone up and planes are more full, meaning it’s harder to find the sort of deeply discounted fares that make sense for mileage running. Airlines have increased the number of points required to get a reward ticket, which makes frequent flier miles less valuable. And they’re not giving out as many promotions in which travel earns extra bonus miles.
The last point is essential. Mr. Leff told me about a mileage run he took in 2003. United ran a promotion where its elite fliers could get five-times bonus miles, instead of the double miles they were ordinarily entitled to. So he flew round-trip to Singapore for $700 and pocketed around 100,000 MileagePlus miles, then enough to redeem for a round-trip business class ticket to Europe.



The new program rules are a disaster for this mileage run strategy: Even with a five-times promotion, a $700 round trip to Singapore would earn just 17,500 MileagePlus miles, not enough to redeem for a domestic coach round trip. But in some sense, it’s beside the point: Good luck finding either a five-times bonus promotion or a $700 round-trip airfare to Singapore in today’s environment.
“In many cases, they were already a much less attractive thing to do,” Mr. Leff said of mileage runs. “In many of the cases where they still made sense, they still make some sense.” That is, mileage runs will continue to be useful for travelers who are within a few miles of reaching the next elite status tier. The minimum spend requirement prevents travelers from building their entire path to status on cheap tickets, but one long, cheap flight can still put you over the hump to silver or gold as long as your previous trips were reasonably expensive.

Spend-based reward rules will put an end to United and Delta mileage runs based on mistake fares, in which airlines accidentally post way-too-cheap tickets. Last September, United erroneously sold various tickets for $5 each way, including from Kansas City to Washington; under the new rules, a mistake like that might get you a nice weekend away, but it will barely get you any reward points.
The new rules could become even more problematic for mileage runners over time. In 2013, United States domestic airfares averaged 15.3 cents per mile, well in excess of the 10 cents per mile United and Delta passengers must hit to satisfy the spending requirements. If fuel prices and airfares come down in the future, more travelers may find themselves traveling enough miles to achieve elite status but failing the spending requirements — and therefore not able to benefit from mileage running.
Travelers who want to keep their mileage run options open have a home, for now: American Airlines, which so far has not copied United and Delta’s changes. American has announced no plans to move away from awarding frequent flier miles in exchange for actual miles flown. Mr. Leff attributes this to American’s ongoing merger with US Airways: Mergers are complicated, and the fewer changes you make during them, the better. In time, the combined American-US Airways may follow suit, but for now it’s your best bet if you enjoy plane rides to nowhere.

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