United Airlines announces major change to MileagePlus program

Starting March 1, 2015, United Airlines will begin crediting its passengers’ MileagePlus accounts based on the dollars spent rather than the distance flown.

The change, announced in an e-mail sent from its Chicago headquarters to United’s (NYSE:UAL) MileagePlus members June 12, follows a similar change announced in February by Delta Air Lines (NYSE:DAL).

“The award miles you earn on most United and United Express® tickets will be based on your ticket price (that is, base fare plus carrier-imposed surcharges),” the airline said in its e-mail. “And when you have MileagePlus Premier® status, you'll earn even more miles.”

General members will receive five points per dollar spent. Premier Silver, Gold, Platinum and 1K members will be credited seven, eight, nine, and 11 miles per dollar, respectively. Qualifying for those levels, however, will remain unchanged for the immediate future.

“These developments won't change the way you qualify for MileagePlus Premier status in 2015,” the airline said, adding that full details about the 2015 MileagePlus program and a 2015 award mile calculator are available at mileageplusupdates.com.

Such a move had been long expected by industry observers.

“I think that’s the trend: rewarding customers based on what their spend is on the airline rather than using fare classes as a proxy for spend,” Tom Alberts, airline partnership manager for Virgin Australia’s Velocity loyalty program, told TheTravelPro earlier this year. “I think that’s the model that airlines eventually will go to across the board.”

The Velocity program is revenue-based for domestic flights. As previously reported, the program swept the Freddie Awards for the Middle East and Asia/Oceania region.

The Freddie Awards ask passengers to vote for their favorite airline and hotel loyalty programs. Such a strong showing in those awards is an indication that the revenue-based approach has been well accepted by Virgin Australia’s customers, Alberts said.

Several U.S. airlines – including JetBlue (NYSE:JBLU), Southwest (NYSE:LUV), and Virgin America – already use a revenue-based model, though Seattle-based Alaska Airlines' (NYSE:ALK) Mileage Plan loyalty program remains mileage-based.

The switches announced by United and previously by Delta leave American Airlines (NYSE:AAL) the only major U.S. carrier to have a distance-based system in place, though industry observers expect American to follow suit in the near future.

For its part, American was non-committal.

"We are always watching the competitive environment and we’ll make sure AAdvantage is positioned as an industry-leading loyalty program," an American spokesperson told me in an e-mail. However, the airline's immediate priority following the merger with US Air is to integrate the two airlines' loyalty programs to provide customers "a more seamless travel experience and greater opportunities to earn and redeem miles on our expanded network."  

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