Mileage Pro The Insider's Guide to Frequent Flyer Programs

IF FREE TRAVEL IS THE heart of frequent flyer programs, elite status is the soul of these programs. After all, loyalty programs are about increasing revenues and profits, but not all customers contribute equally to a company’s bottom line.

This fact is embodied in a key principle of loyalty marketing, Pareto’s Principle, named for the 18th century Italian economist, Vilfredo Pareto, who observed that 80 percent of a country’s wealth was controlled by 20 percent of its population. In business, that idea, often known as the 80-20 rule, suggests that a select few consumers are responsible for a disproportionately large share of a company’s profits.

In the travel industry that group is comprised of business travelers. They travel often, and they generally purchase the highest priced airline tickets, bought at the last minute, and free of the restrictions that leisure travelers endure in order to get the lowest possible prices.

So, while the programs are designed to provide a payoff for occasional customers, the real target of loyalty marketing is business travelers.

That is where elite status comes in. It is a special package of recognition and benefits reserved for a program’s most profitable members—a sort of “super program” within a program.

The goal behind awarding those shiny silver, gold and platinum colored cards—and the special rewards and recognition that come with them—is to maximize the number of business travelers patronizing a particular airline or hotel chain, and to maximize the spending of each and every one of those high yield customers.

Obviously, there is no rule that limits elite status to only those traveling exclusively on business. Anyone who meets the entry requirements—for most airlines that is 25,000 elite qualifying miles (EQMs) flown during a year—can reap the rewards. And those rewards make gaining elite status a worthwhile priority.

The Benefits of Elite
Of course, there is an element of pride associated with being recognized among an airline’s most frequent flyers. But there are more tangible rewards; upgrades first among them.

Upgrades
By definition, elite program members are constant frequent flyers. Most are business travelers, logging significant time on the road on assignments for companies that pay their salaries. Nothing can so effectively mitigate the discomfort and aggravation of relentless travel as a big, wide seat in the front of the plane. Thus, airlines have featured upgrades as the central benefit for attaining elite status.

There are three important variables when considering elite upgrades: Whether the upgrades are complimentary or earned; whether the upgrades are from most published fares or only from prohibitively expensive full coach fares; and how far in advance the upgrades can be confirmed.

Standard policy among larger full service airlines is to offer elite members, on a space available basis, unlimited complimentary upgrades from coach to business or first class on flights within North America.

Among the major carriers, Continental, Delta, Northwest and US Airways offer their elite members complimentary upgrades from most discounted coach fares. Members of American and United’s programs can only use their complimentary upgrades when flying on full-fare coach tickets.

When booking upgrades, the general rule is that higher level elites can confirm upgrades sooner than lower level elites. This gives them better odds of securing an upgraded seat. So, while a top elite member might be able to lock in an upgrade five days, or even a week, in advance of a flight’s departure date, lower tier elites must wait until 24 hours before the flight to establish an upgrade.

Elite Bonus Miles
Elite members earn bonus miles for flights on the airline in which they established elite status and selected partner airlines (typically airlines participating in the same global alliance). Read chapter 11 for more information on the global alliances.
The bonus amount depends on the elite level, with higher levels receiving a larger bonus. Most often, the top two elite levels earn a 100 percent bonus while the lowest level members earn a 25 percent bonus.

The elite bonus is computed as a percentage of the base miles, which are the miles actually flown, or, for shorter flights, the minimum miles (usually 500) awarded per flight. The elite bonus calculation does not include class-of-service bonuses (awarded for first and business class flights) or promotional bonuses. While the bonus is referred to as an “elite bonus,” the extra miles do not count toward elite status.

Award Travel Blackouts Waived
When it comes time to redeem your miles for a free trip, many programs eliminate blackout dates and/or increase award seat availability for elite members.

Preferred Check-In
Elite members are normally entitled to check in at the airlines’ first or business class counters even when traveling on a coach ticket.

Priority Boarding and Preferred Seating
Priority boarding allows elite members to be among the first onboard, a bonus since that is when there is still space available in the overhead bins for carry-on bags. This proves to be a very welcome perk when traveling in coach on a full flight. Some airlines also set aside better seats on the aircraft for elite members such as with United’s roomier Economy Plus rows specifically reserved for elites and full-fare ticket holders.

Priority Security Lanes
One of the most recent perks given to elite members: access to special lines to quickly clear airport security checkpoints.

Airport Lounge Benefits
Elite members enjoy discounted rates on annual airport lounge memberships. Delta, for instance, sells Crown Room Club memberships—normally $475 per year—to Silver Medallion members for $350 and to Gold members for $275. Platinum members pay nothing.

Dedicated Customer Service
Most programs make available to their elite members—or at least to their highest level elites—a direct customer service phone line that handles VIP calls exclusively. Elites can expect to get through to an agent faster and receive a higher level of service than the norm. When your flight is cancelled and you need to rebook an alternative flight, this preferential treatment can be a lifesaver.

Credit Card Benefits
A significant benefit to those who make frequent use of their airline credit cards is the maximum number of miles earned
for credit card purchases being raised or eliminated altogether. Example: Non-elites are limited to earning a maximum of 60,000 miles per year for charges on the United Mileage Plus Signature Visa. Mileage Plus Premier, Premier Executive and Premier Executive 1K members are exempt from these mileage limits.

How Many Miles?
Through the years, airlines have made periodic attempts to measure loyalty in dollar terms through the cost of tickets. However, the tracking was problematic and the idea never gained traction.

The current standard measures of loyalty are elite qualifying miles, sometimes in combination with booked cabin classes (such as business or first), and secondly, flight segments (one-way flights).

A typical airline program with three elite levels would award elite status based on the following criteria:

The above qualification scheme is, of course, a generalization. Specifics differ among the programs.

American Airlines, for example, has a points system in addition to elite qualifying miles and segments. This gives greater weight to more expensive fare types, allowing travelers who routinely buy expensive unrestricted tickets to reach elite status faster.

Continental, Delta, Northwest and United award a 50 percent elite qualifying mileage bonus and double points for more expensive tickets (unrestricted coach, business and first class fares).

In most programs, elite qualifying miles are those miles actually flown on the host airline (the airline operating the frequent flyer program in question) and on the host airline’s partner airlines.

In the programs of the largest airlines, members can also earn elite qualifying miles on partner carriers that participate in a given airline’s global alliance. These global alliance partners are considered “preferred” carriers.

American’s preferred partners are the oneworld airlines; Delta’s are the SkyTeam carriers (including Continental and Northwest); and United’s are the Star Alliance airlines. Smaller carriers, which do not participate in global alliances, tend to designate as preferred partners those airlines with which they have codeshare agreements or other joint marketing programs.

The Qualification and Membership Periods
Elite status is awarded for miles earned during a calendar year, and in most cases remains in effect from the date it is earned until the end of February of the second year following the qualification year.
Status earned for travel between January 1 and December 31, 2005, would remain in effect until February 28, 2007.

Other Sources of Elite Qualifying Miles
While flight miles on the host airline (the airline in which you have elite status) remain the principal source for elite miles, it is worth mentioning that miles from other sources are increasingly being counted toward elite status. This development reflects the recognition by airlines that loyalty program members can make significant contributions to airlines’ bottom lines even through non-flight activities. Miles earned through non-flight activities generate substantial revenues for the airlines that host the programs. Current and would-be elites should be on the lookout for opportunities to earn elite qualifying miles through credit card use, by booking on the airlines’ Web sites, and via other non-traditional sources.

Elite Matching and Challenges
There is another tactic for attaining elite status that is little known outside the ranks of very frequent flyers: Just ask for it.
For years, airlines have engaged in elite matching—on a request basis by offering elite members of competitive programs comparable status in their program. The process is straightforward. The traveler seeking elite status contacts the customer service center of the targeted airline’s program and asks if they will match elite status earned with a different airline. If so, the member will be asked to fax a recent statement showing that he or she is indeed qualified as elite in the other carrier’s program. Assuming the documentation supports the request, status is granted.

Not all airlines match other carriers’ elite status. Those that do match do so selectively, focusing on their primary competitors. Airlines that partner together in a global alliance typically will not “elite match” each other. The unwritten rule: Do not poach your partner’s customers.

Elite matching should not be taken lightly. Carriers generally will not honor a second matching request from the same member.

Million Milers
In addition to earning elevated status for a limited time by reaching certain thresholds during a 12-month period, American, Delta and United recognize customers who have earned a million miles or more over the course of their memberships.
In American’s program, members receive lifetime Gold elite status after accruing one million miles and Platinum after two million no matter how those miles are earned.

By contrast, in Delta’s program, only elite qualifying miles count toward earning Million Miler status, which awards permanent Silver, Gold and Platinum Medallion status after reaching one, two and four million miles, respectively.
United bestows lifetime Premier Executive status on Mileage Plus members who fly one million miles on United, United Express or Ted. Note: You can earn United elite qualifying miles on United Express and Ted.

Hotel Programs’ Elite
We have focused on elite status in airline programs because that topic tends to be the primary focus of hard-core frequent travelers. But, while it might not be their first priority, most credentialed frequent flyers also make it a point to maintain elite status in one or more hotel programs.

Hotels’ best customers are the very same frequent travelers targeted by the airlines’ elite programs. And since hotel programs were modeled after the airline programs, it should come as no surprise that hotel programs also have elite tiers and that their featured elite benefits are room upgrades and bonus points.

Hotel programs award entry-level elite status for as few as 10 nights stayed during the qualification period, which is generally a calendar year. Top level status is earned after 50 to 75 nights.

In programs with two tiers, complimentary room upgrades are offered to all elites (Starwood Preferred Guest, Gold Crown Club International), or just to members of the top tier (Hyatt Gold Passport, Priority Club Rewards).

In programs with three tiers (Hilton HHonors, Marriott Rewards), upgrades are offered to members in the top two
elite tiers.

Depending on the program and the tier, elite members earn points bonuses of between 10 and 50 percent.
Other elite benefits vary among programs and may include late checkout, guaranteed room availability, a dedicated customer service phone line and check cashing privileges.

Is There Gold in Your Future?
Elite status is not for everyone so be realistic about your need to reach elite and your ability to reach this goal. Earning 25,000 elite qualifying miles in a year is by no means impossible, especially with the current trend toward awarding EQMs for non-flight activity. But if elite status is not a viable option, do not sweat it. There is no pressing need to carry a Gold card if your annual travel is limited to a couple of short-haul flights to visit friends and family.

On the other hand, if elite status seems just out of reach, it may simply be a matter of fine tuning your efforts to get there.

This is the appropriate place to reiterate the following advice: Make it a priority to consolidate your mileage earning into a single program. Earnings spread among multiple programs can undermine a member’s efforts to reach elite status as well as his or her pursuit of awards. In fact, because there is a 12-month window to reach elite, the pressure is even greater to consolidate.

It is a good idea to begin each year by reviewing a list of program partners that award elite qualifying miles. Then, whenever possible, confine your travel to those partners. For example, if you are aiming for elite status in United’s Mileage Plus program and you have a trip planned to Amsterdam, fly on United and Lufthansa via Frankfurt rather than nonstop on KLM. The United/Lufthansa combination will earn elite qualifying miles in Mileage Plus whereas the KLM flight will not.

Take stock of your situation as the year winds down. If you are within striking distance of reaching elite, perhaps that trip planned for early next year can be rescheduled for this year. Or consider making a “mileage run”—a trip taken for the sole purpose of earning miles. Since the goal is to earn the miles for the lowest possible per mile price, likely candidates would be off-season, advance purchase roundtrips to Europe or Asia—an extremely cost effective way to reach elite status or to upgrade from a lower to a higher elite tier. Note: Most low cost tickets to Europe or Asia earn elite qualifying miles.

If you fly enough to qualify for elite status in an airline program, it is likely that you will also stand a good chance of reaching elite status in a hotel program. Just as we have advocated participating in a hotel program as a logical complement to an airline program, so we also recommend augmenting airline elite perks with the elite benefits associated with hotel programs.

REMEMBER THIS:

• The principal benefit of elite status is upgrades.
• In most programs, entry-level elite status is reached after earning 25,000 elite qualifying miles (EQMs) during a calendar year.
• If you fly enough to come within striking distance of earning elite status, make it a priority to qualify. If not, do not sweat it. You probably do not fly enough to need upgrades.
• There are two ways to attain elite status: the old-fashioned way by earning elite qualifying miles or segments, and through the back door by petitioning to have your status upgraded.