Where You Can Take Advantage of Delta’s and United’s New Status Rewards Programs

Published on June 20, 2014 by

Summary

  • On average, United flyers will benefit on 60% of routes under the new program which launches in March 2015
  • After Delta’s SkyMiles policy changes are made in January 2015, 56% of routes will earn more miles
  • Both policies favor short routes that have a higher dollar per mile cost, but both are ultimately worse for consumers on the airlines’ top markets
  • The popular EWR (Newark) - PVD (Providence, RI) route on United has the largest increase at the Member level,  earning 2,000 miles under the new system and only 320 under the old

Existing Miles programs

In the past four months, two major US airlines, United and Delta, have announced a shift from miles-based rewards programs to fare-based rewards programs. They will be the first traditional airlines to do so, joining low-cost carriers JetBlue, Southwest and Virgin America as the only US-based airlines with a fare-based rewards system.

The shift in programs will help the average consumer, as United currently has the 4th highest dollar per mile ($0.19, Table 1), while Delta has the second highest ($0.21) making it more expensive, on average, for fliers to earn rewards. Spirit and Frontier have the lowest dollar per mile, at 8.1 cents and 8.8 cents, respectively. This means that, overall, a Spirit customer can fly over 1,200 miles for just $100, while United and Delta customers would only be able to fly 526 miles and 476 miles, respectively.

The announcement of United’s new program came just three months after Delta announced they would be switching to a fare-based rewards program in January 2015.

 

Airline Dollar per Mile Rewards System
Spirit Airlines $0.08 Miles
Frontier Airlines $0.09 Miles
Hawaiian Airlines $0.09 Miles
Virgin America $0.09 Points
JetBlue Airways $0.10 Points
Alaska Airlines $0.14 Miles
United Airlines $0.19 Miles
American Airlines $0.20 Miles
Delta Air Lines $0.21 Miles
US Airways $0.21 Miles


Table 1: Average dollar per mile for largest US airlines (Note: As of today, only Virgin American and JetBlue have fare-based rewards programs)

 

United Shifts to Fare-based Rewards

On June 10th, United Airlines announced that they would be switching from a miles-based reward system to a fare-based reward system effective March 1st, 2015.  Under the current program, flyers earn miles for each flight taken based on the number of miles flown, their status with United’s MileagePlus program and their seat class. For economy seats, the return ranges from 100% (Table 2, “Member” level), to 200% (“One K” level). For example, if a Member-level flyer flew from JFK-LAX on United (a 4,950-mile round-trip route), they would earn 4,950 miles, while a “One K” level flyer would earn 9,900 miles for the same trip. As of March 1st, 2015, this will change to a multiplier on the pre-taxes ticket price, ranging from 5 miles granted for every dollar spent on a ticket (“Member”) to 11 miles granted for every dollar spent on a ticket (“One K”).

 

Status Miles Earned oer Miles Flown (Old) Miles Earned per Dollar Spent (New)
Member 1 5
Silver 1.25 7
Gold 1.5 8
Platinum 1.75 9
One K 2 11

Table 2: United’s MileagePlus program,where new policy will take effect March 1st

 

Comparing the accumulated miles benefits of the two United programs, Hopper found that the new system will benefit flyers on 60% of routes; ranging from 57% of routes for Member level to 63% of routes for Silver level. However, overall, on the routes where consumers benefit from the new miles program, the miled collected will only increase by 2%.  More importantly, the most popular United routes will see a negative impact, where miles collected will decrease by 11% (Table 3).

For routes where the new system is better, it outperformed the old system by an average 80%, while the routes prefered under the old system only realized a 56% lift. Overall, Silver level flyers will see the biggest benefit, as 63% of their routes are preferential under the new policy and those routes will earn them 84% more miles than the miles-based system.

Status Markets Better Under New Program New Miles Earned / Old Miles Earned (Mkts. Improved under new program) Old Miles Earned / New Miles Earned (Mkts. Improved under old program) Avg. Change in Earned Miles (Member, All Markets) Avg. Change in Earned Miles (Member, Pop. Markets)
Member 57% 75% 62% -4% -16%
Silver 63% 84% 51% 7% -6%
Gold 60% 80% 56% 2% -11%
Platinum 59% 77% 60% -1% -14%
One K 62% 82% 53% 5% -8%

Table 3: Percentage of routes with a better return under the new system, incremental improvement for return for better system

 

The new system favors low-mile, high-cost flights: 9 of the top 10 routes with the largest increase in returns are under 85 miles. Of popular flights, EWR (Newark) - PVD (Providence, RI) has the largest increases at the Member level,  earning 2,000 miles under the new system and only 320 under the old. PSP (Palm Springs) - LAS (Las Vegas) and  DEN (Denver) - GJT (Grand Junction) also see increases of over 300%.

 

Origin Destination Distance (mi.) Price Miles Earned (New System) Miles Earned (Old System) Change
EWR PVD 320 $400 2,000 320 525%
PVD EWR 320 $400 2,000 320 525%
PSP LAS 347 $354 1,770 347 410%
DEN GJT 423 $427 2,135 423 404%
GJT DEN 423 $427 2,135 423 404%

Table 4: Popular markets with the highest increase in earned miles for Members

 

Conversely, United flyers will learn fewer miles on popular routes such as IAH (D.C.) - BOS (Boston), SFO (San Francisco) - FLL (Fort Lauderdale), and LAX (Los Angeles) - BOS (Boston), earning less than a third of what they would have previously.

 

Origin Destination Distance (mi.) Price Miles Earned (New System) Miles Earned (Old System) Change
IAH BOS 3,191 $197 983 3,191 -69%
BOS IAH 3,191 $197 983 3,191 -69%
SFO FLL 5,158 $346 1,730 5,158 -66%
FLL SFO 5,158 $346 1,730 5,158 -66%
LAX BOS 5,211 $354 1,769 5,211 -66%

Table 5: Popular markets with the biggest decrease in earned miles for Members

 

Delta Updates SkyMiles Rewards

The United changes come three months after Delta announced in late February that they would be switching to a miles-based rewards program. Similar to United, the new structure ranges from 5 miles granted for every dollar spent on a ticket (Member level) to 11 miles granted for every dollar spent on a ticket (Diamond level).  This is in comparison to the current program which rewards anywhere from 1 to 2.5 miles for every mile flown.

 

Status >Miles Earned/Miles Flown (Old: 500 min. return) Miles Earned / Dollar (New) (mi.)
Member 1 5
Silver 1.25 7
Gold 2 8
Platinum 2 9
Diamond 2.25 11

Table 5: Delta’s SkyMiles program, who’s new policy will take effect January 1st

The new Delta program will be beneficial on 56% of routes, with only 43% of routes seeing a benefit for Gold-level passengers and 62% routes being beneficial for Silver-level fliers. On routes where passengers will see an improved return on miles granted. fliers will earn an extra 75% in miles while the preferred routes under the old system earned an extra 64%. However, overall consumers are losing, as the new system has an average increase of miles granted of only 1%, and top markets actually see a decrease of 22% in miles granted (Table 6). Once again, the rewards program is heavily targeting high cost per mile flights.

 

Status Markets Better Under New Program New Miles Earned / Old Miles Earned (Mkts. Improved under new program) Old Miles Earned / New Miles Earned (Mkts. Improved under old program) Avg. Change in Earned Miles (Member, All Markets) Avg. Change in Earned Miles (Member, Pop. Markets)
Member 58% 76% 59% 2% -18%
Silver 64% 86% 49% 14% -8%
Gold 47% 65% 81% -18% -35%
Platinum 53% 73% 70% -8% -26%
Diamond 58% 78% 62% 0% -20%

Table 6: Percentage of routes with a better return under the new system, incremental improvement for return for better system

 

Data and Methodology

The flight data presented in this analysis comes from Hopper’s combined feed of Global Distribution Service (GDS) data sources which includes about 10 million queries and 1 billion trips per day.  Demand is represented as the number of queries not actual ticket purchases, and is calibrated across all GDS sources for each market.  Good deal prices are represented by the 10th percentile prices.  For example if the 10th percentile price is $800 dollars it means that only 10% of trips are priced at or below this price.

7 Comments

  1. Tony A.

    Finally someone made a real intelligent analysis about FFPs. Thank you.

  2. Oleditor

    This is helpful, but of courses raises more question, like:
    1) Are the miles previously earned but not used preserved, or will they expire or otherwise be invalidated?
    2) Are they making it harder to use accumulated miles for actual flights?
    Thanks for your help.

  3. Patrick Surry

    As of now the new programs only affect the way miles are earned, not how they can be spent, so:

    1. Miles are preserved
    2. Doesn't change how miles can be used

  4. Greg

    Route volume isn't a helpful metric.

    Passenger volume is. A lot more people flying New York to LA than Newark to Providence.

  5. [...] Where You Can Take Advantage of Delta’s and United’s New Status Rewards Programs [...]

  6. David

    United should change the MileagePlus as MoneyPlus program that would bring a better image for its brand. People flying long distance are not easy on United as compared to its partners such as Lufthansa and Turkish Airlines which have much better services on long distance flights than that of United as they are star alliance members. Even after the merger between United and Continental, the service quality has noticeably lowered to those routes serviced by the former United alone from the higher ones on those routes serviced by former Continental. The change from the distance-model that rewards fliers (customers) for Mileage Program to the revenue-driven model that intends to boost revenue is destined to have a significantly negative impact on United. Because whoever has decided on the change has forgot that the best value in business is co-created WITH customers, not just FROM customers as the new proposed program would intend. The similar analogous business blunder was the ATM $5 fee charge proposed by the CEO of Bank of America a few years ago, and he also declared that "we have right to make a profit." In the end, he had to withdraw the $5 fee surcharge because many customers wanted to close their accounts with BoA. I know many United loyal customers including me (Premier Gold member for more 10 years) will do the exact same by phrasing ourselves out after the new program is actually effected. Good luck. United. We don't want to leave, but you intend to drive us out.

  7. renhelm

    I have been Platinum with NWA and later with Delta (since 1999) and at times Gold with Continental at the same time. After the merger between NWA and Delta I stayed with Delta. In the following years I had to deal with grumpy, unhappy Delta employees so considered switching to Star Alliance again, but the Continental and United merger meant that service went down hill just as it did with Delta/NWA. At that time I decided to fly all my international flights on SkyTeam partners like Air France, Air Europa, Aeroflot, Korean but Delta figured out that people avoid Delta's old and crappy planes. Grumpy Delta employees, outdated equipment and terrible services even in Business Class forced me to avoid Delta. Within the US I started flying Alaska Airlines when possible. Instead of Delta improving their service, equipment and attitude they cut mile earning with partner airlines. Then Delta decides to go to war with their partner Alaska Airlines and announce devaluation of Delta's mileage earning and United moves along with that idea.

    At the same time foreign airlines improve equipment, fly into more US airports and still offer free meals on short flights and offer free checked bags even on short trips. There is a reason why Emirates is now the forth largest airline and Quatar, Etihad and many Asian carriers are preferred by many over US based equipment. Within the US, Alaska Airlines and Southwest have a big market share for different reasons, but if the free bag policy goes away at SW and Alaska's mileage based Frequent Flyer system is changed like it was on Delta, then we the customers would be at square one again.

    Delta does not respond to complaints and suggestions anymore. I am assuming there are so many and as long as planes are full they don't care. I will do more telecommuting, driving shorter distances instead of flying and avoid Delta and United in 2015 and take foreign airlines to go oversees. I'll earn miles with Credit Cards and with Airlines that value my loyalty. Let's see what 2016 brings.

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