Delta, United engage in mileage shenanigans with American Express, Visa

Delta, United engage in mileage shenanigans with American Express, Visa

Summary: New revenue requirements in airline frequent flyer programs are bad news for business travellers.

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TOPICS: Travel Tech
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Editor's note: Copy updated at 12:30AM EST to reflect United/Chase credit card relationship.

As many of you know, I do a fair amount of air travel for my day job in the technology industry. One of the few advantages of being a frequent flyer is gaining the coveted "medallion" status on your preferred airline, which includes priority check-in and bag dropoff, free checked bags and priority boarding, as well as seat upgrades.

amexplane-620

Gaining status on an airline used to be fairly straightforward affair. You accumulated miles, or "points" based on either how many actual miles or how many total "segments" (stops) you flew in a given calendar year, whichever came first, to reach a specific medallion level.

In my case, I was able to make Gold on Delta for CY 2014 due to actual miles flown. The previous year, when I worked at IBM and did mostly regional travel, I reached Gold on total segments.

This has now changed for 2014. Two major airlines, Delta and United, are adding another qualifier: Revenue. What this means is that in addition to your miles or segments, you must spend a certain amount of money in tickets to reach that equivalent medallion status. Other large airlines are expected to follow suit.

To maintain my Gold in 2015, I will need to spend $5,000 on tickets in CY 2014.

United_Revenue_Requirement
United Premium Qualifying Dollars for MileagePlus (Click for external link)

There is a certain reasoning behind this that I can sort of appreciate, and it has to deal with the dreaded mileage run. I've written about mileage running in years past, and it has become something of a hobby for certain types of flyers who buy dirt cheap tickets on promotion, fly to that destination for one day, and fly back in order to maintain status levels. I think the idea is particularly crazy, but nevertheless, people still did this.

The revenue requirement will certainly cut down on the mileage runners, and it should reduce the amount of people with artificially inflated medallions, in theory. It's certainly in Delta and United's interest to downgrade or eliminate medallion members due to the large mergers that both of these airlines have undergone in recent years and vastly increasing their customer bases as a result.

But it also hurts the corporate business traveller who is increasingly being told to control his or her travel costs by booking flights further in advance and also cutting down on travel in general. By buying less expensive tickets, it puts their medallions at risk.

There has been quite a bit of discussion about the new revenue requirements on FlyerTalk, a prominent bulletin board for members of frequent flyer programs.

deltamedallion
Delta Medallion Qualification Dollars (Click for external link)

I could live with these new rules if there wasn't one ... um, little additional thing that brings a certain "gaming" element to this system that is now entering the realm of shenanigans that government regulators should as probably be investigating.

As it stands I think "mileage running" is completely acceptable by comparison.

It turns out that on both Delta and United, you can completely waive all of your revenue requirements if you sign up for any of their special credit cards and spend $25,000 per year on them. Delta has a relationship with AMEX, whereas United has a special Chase Visa card for this purpose.

In my case, on Delta, if I qualify for and use their "Reserve" AMEX card, I get an additional 15,000 MQMs for every $30,000 I spend. No pressure, right?

I happen to be a personal American Express Platinum Card customer. I like my Platinum card. It has a unique benefits program, which, for its rather hefty $500-per-year fee, gets me into a variety of airline clubs, and the points that are accrued from spending can be used on a variety of airlines and merchants.

There are a number of tangible benefits with the Platinum that aren't available on other American Express products, unless you happen to be a Centurion customer, in which case you probably don't give a damn about medallion statuses anyway. You probably fly on a Gulfstream VI and use gold-leaf-lined toilet paper, and have miniature, lap-sized giraffes as house pets.

Be that as it may, the Platinum is my primary card; I don't use cash for anything if I can avoid it, so spending $25,000 per year on it between me and my wife is not an issue.

My problem is that I don't need a $500-per-year Amex Platinum Card as well as a $450-per-year Delta Reserve SkyMiles Amex card. And had this new revenue requirement been in effect for CY 2013, I would not have made my Gold status, because I would have been about $1,000 short on ticket purchases.

So, given my own unique travelling pattern and expected ticket revenue spend, I have no choice but to ditch my personal Platinum and move to Delta's Reserve AMEX Card (or the Delta SkyMiles Platinum) instead.

This annoys me for a whole number of reasons. First, while Delta's Reserve Amex card has similar benefits to the AMEX Platinum card, they aren't exactly the same. Second, the points accumulated on this card are not as flexible with merchants as the Platinum.

I can get into Delta's SkyClubs and those of their SkyTeam partners, but not other airline clubs such as American's. I also can't use the points other than Delta or a SkyTeam partner if I want to book tickets for personal travel, say, for vacation use.

And if I want to convert my Platinum card awards points to Delta points? There are transfer fees involved. It actually makes more sense to downgrade my Platinum to a Green card, and maintain it just to keep my rewards points as flexible as possible until they are all spent.

All in all, I think this new revenue requirement and Credit Card shenanigans by Delta and United are awful for their most valued customers.

Do the new changes anger you? Talk back and let me know.

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Topic: Travel Tech

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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25 comments
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  • "Hurts the corporate business traveller"

    Gee, and all this time I thought the purpose of business travel was, um, business. Thanks for clarifying that it's really all about accumulating medallions and rebate points. He who dies with the most medallions and points, eh what?
    Vesicant
    • Clueless?

      Consultants and Business Travelers make a great deal of trade offs. One of which is life on the road.

      If the perk of being able to ensure that you can board a plane early and get your luggage on the plane to avoid lost/mishandled or delayed luggage so you can continue your business travel is a perk that business travelers should not desire, then the non-business travelers should start paying the freight on airline routes and be forced to check their often over-sized and ridiculous amounts of luggage so business travelers can get theirs on!

      I do not necessarily see this as corporate evil, nor do I agree that his dilemma is really about the travel status, because if it was, the card change, if he even made one, would be irrelevant, but your comment is vacant.

      May you always find yourself traveling without luggage, next to screaming children and sick passengers!
      QAonCall
      • No, that's all ego

        What does early boarding have to do with anything? The plane gets there at the same time. If business travelers are really losing THAT much luggage, they should change to carry ons -- which they have, of course. I never see a business traveler without at least one bag over the limit, and all bags ridiculously huge. How are they getting those things past checkin? Your third paragraph makes no sense, so moving on... Business travelers are no better or worse than anyone else. Why should they get better treatment? And the reason they pay more is because of last minute booking because they just have to get there to give that PowerPoint presentation, doncha know. And I'd rather sit next to a screaming sick child than some self-important post-yuppie marketdroid. I can recover from whatever a sick kid gives me.
        Vesicant
        • No, that's all ignorance

          It's amazing how people like to lump all frequent flyers into the category of "you think you're better than the rest of us non-business travelers". The vast majority of frequent flyers, myself included, would rather not spend time on airplanes and in airports because it sucks. Airlines know it sucks and that's why their perks are designed to make the experience slightly less sucky. Accepting these perks has nothing to do ego, it's human nature. If they were available to you, you'd be using them too. It's also human nature to complain when we think we're being treated unfairly. The only reason Delta added the spending requirement was to increase the number of people getting their credit card. I think that's greedy crap, but it's crafty on their part and that's capitalism. If I don't like it I can use another airline.

          The fact is, if a flight attendent came up to you and said you could sit in first class to get away from the screaming kid in front of you and the guy hacking next to you without covering his mouth, you'd be there before your seatbelt hit the floor. If you don't think so, you're either a liar or an idiot. You might sit next to a post-yuppie marketdroid a--hole, but chances are you'll be next to a normal person thankful they got an upgrade to first class who can't wait to get home to their family.
          brian9925@...
  • Rewards programs are a conflict of interest

    Receiving a personal benefit for business travel paid by your employer is a conflict of interest. Around here that's a violation of our code of ethics and grounds for dismissal. After that, discussing whether or not they're bribing you in a new way or not seems irrelevant.
    fordrambler
    • It is tough

      Rules are very strict in third reich.
      paul2011
    • Totally disagree.

      Makes me glad I don't work for your company.
      In this day and age of BYOD, employers are expecting their employees to pay for their own work tools, work evenings and weekends and now your company won't permit employees to benefit from frequent flyer programs on the grounds that it's a conflict of interest? I cannot possibly see how. The miles are a form of compensation for having to take real time out of our lives to further the aims of the company. Sure, it's travel, but this gets old fast. I had a job that took me on over 140 flights per year. That upsets work/life balance and I changed jobs because I wanted to stay married. At a minimum, the frequent flyer points I accumulated did allow my wife and I to take a vacation together.

      I therefore could not disagree with you more.
      WillemBagchus
    • At least someone is using the miles

      If the business had/has a way to recoup some of the benefit then I could see how the individual taking the miles would be an issue, but if the miles benefits (which when you start talking Gold Medallion Levels are quite valuable) why is it the moral high ground to just let the airline pocket the money and nobody wins?
      swoarrior
  • Oh boo friggin hoo. All your corporate air travel

    miles should be returned to the corporation for future business travel in an employee travel pool. That you're anything above that gives you zero grounds for complaint.
    Johnny Vegas
    • Walk a mile.

      People who are required to travel as part of their jobs usually do so on their own time outside their regular scheduled work hours. They also spend hours doing the extra things travel requires on their own time. They end up in hotels or motels on the phone trying to do the things remotely that other people take for granted like helping their child with her homework, answering important questions that child has or just keeping their yards, house and life in order.
      Corporations are not government. They earn the money they spend. How they decide to reward employees is their business. Maybe you have spent a few years in a job that required frequent travel and are speaking from experience but if you haven't worked in a job that required frequent travel maybe you should hold your socialistic condemnation.
      chaos213
      • Think a minute

        I was actually agreeing with you until your last sentence, which made me stop and think about it. First of all, calling it socialistic is exactly wrong. It is capitalistic. Why? Well, I have a small business and we accept all major credit cards. The cards that let their users accrue "rewards" can do it because they charge the receiving business more. In AmEx's case, not only do they charge more, it also takes over twice as long for the money to get into my bank account (interest, anybody?). So, the business using the cards, or spending the money, is paying more for our services because we need to recoup our costs. Second, they are paying for a benefit - the rewards miles - and giving away that benefit to the person who "owns" the card. Third, the person who owns the card is being encouraged to fly on a particular airline, regardless of whether it costs the company more than an alternative flight. And lastly, all of these situations add up to the company NOT working to the benefit of the shareholders by looking after their spending.
        Socialistic? Not a chance!
        aldux
    • Interesting piece. Loyalty programs are becoming stingy.

      As someone who has also traveled very frequently, I completely understand. Interestingly, the loyalty programs across the board are becoming more stingy. What some don't consider is that the loyalty points are a form of currency. Sites like points.com trade these and ask for cash on top of the trades. It's like an evil foreign exchange shop with exorbitant rates.
      As any frequent flier knows, you don't just blow your points on any old flight, either. Those 15k, 20k or 25k flights can cover local puddle jumpers as well as trips across the continent. Before you blow points, you check the price of a ticket and oftentimes it's cheaper to just buy the ticket and earn some additional points.
      When UA offers "point accelerators", they're essentially selling you points at a deep discount. On the other hand, when you get an offer for 1500 points to buy headphones that are 4 times the price you'd normally pay, it's no deal at all.

      When Hilton HHonors reset their prices and point values in 2012, it was like having a nice bank account that's just been devalued by inflation. Half a million points would get you a week in Hawaii or even Bora Bora. Now, you're lucky to get a couple of nights.

      Treat miles like cash. That's what the loyalty programs do. Some are better than others. Some of my colleagues are Marriott point hounds, I'm a Hilton man. In the airline world, frequent fliers pay attention to SkyTeam, AAdvantage or Star Alliance when booking flights.

      These new rules, Jason, now make me think seriously of ditching the entire notion of flight routing for miles and just shopping for the best deal going at the time of travel. Like you, I am annoyed because I have several credit cards for the same purposes as yours are to you.

      Someone in some boardroom figured they'll cash in on the miles (because to them it is cash). Even Air Canada's Aeroplan went through the addition of tiers. If they add revenue requirements, I wonder how real frequent fliers will respond.

      Something tells me people will be cashing in their miles for travel and will no longer bother accumulating miles. This hurts business travelers, which hurts business and hurts jobs for everyone else. It also hurts the business that gain business by offering miles as an incentive. That florist, for instance, I did business with last Friday would not have gotten an order had they not participated in the United Miles program.

      This decision enriches a couple of executives and will ultimately hurt business overall.
      WillemBagchus
  • Change airlines

    Perhaps you should find a new carrier? Both carriers you mention are legacy airlines that are floundering trying to attract new customers, and largely rely on existing clientele and business travelers. Virgin, Southwest, Alaska, and Jetblue just to name a few of outstanding airlines that have far fewer restrictions.

    Oh and for the folks complaining about keeping points on business travel, it's often a work perk, and not a breach of ethics. I travel 70% of my time during a work week. It's a decision I made to support my family. The perk of keeping my points, give my family the chance to enjoy the fruits of my labor, and keeps me the employee less stressed when traveling on business trips once I reach a certain level of status with the travel operator. If you don't agree, sucks to be you. Change jobs is about all I can say. It's a perk I enjoy, and have for the last 7 yrs in 3 different companies.
    unredeemed
    • Changing airlines is not always realistic

      While those are fine airlines, the limiting factor with many of those is location location location. For instance, the distance I live from Midway makes it unrealistic for me to fly Southwest. JetBlue, Virgin and Alaska do not fly to nearly the number of destinations I need to go. Where I am, AA and UA are the only viable options for my 75k miles per year, and it makes sense to focus on a single program, where possible.
      gobluetwo
  • U got to be kidding with this

    boo hoo... wine... to bad, so sad...
    bobe_z
  • Good shopper

    Wow, you spent only $4000 to go 50000 miles? I didn't think that was possible for normal business travel. Kudos to you.
    pdth
  • Boo hoo

    .
    tboneJoey
  • Did everyone miss the big picture?

    The milage programs are a ponzi scheme! The rewards are merely a lure to fill seats. As more flyers approach and reach the arbitrary goal for rewards, the requirements for goals are increased specifically to eliminate reward liability until eventually the rewards are achieved by a very few or the program is halted.

    What is needed are severe civil and criminal penalties for altering the programs.
    GregoryLHart@...
  • Sorry, Jason, got to agree with most of the critics...

    When you are getting something for free, you really can't complain too much when the givers make it harder to receive. Obviously the givers of whatever try to give as little as possible, as these (miles, awards, cashback, whatever) are EXPENSES for the companies, and most businesses try to minimize expenses, and maximize revenue. Airlines now charge for the second bag, better seats, and so on. That's basic economics, is it not?
    randysmith@...
  • Note To Managers

    Do not hire this consultant who cares more about his future vacations LOL
    hfsma