Source: Chicago Tribune
Author: Charles Lockwood

Is "elite" losing its allure?

For the past two decades, achieving "elite" status in one of the U.S. carriers' frequent-flier programs was the equivalent of grabbing the gold ring on the travel merry-go-round. Passengers who flew more than a minimum number of paid flight miles (typically 25,000) in a given year were given welcome "elite" perks: special check-in lines at the airport, access to the most comfortable Coach seats (like bulkheads and exit rows) that were not pre-assigned to other passengers, bonuses on their flight mileage and—most coveted of all—low-cost upgrades to First Class on domestic flights, often days before the flight.

Now, says Matt Bennett, publisher of FirstClassFlyer.com, elite members "are definitely frustrated. They don't feel that the airlines are repaying their loyalty adequately. The upgrade success rate, for example, has plummeted."

The result, Bennett says, is that "many members are looking for alternatives. In Chicago, where American and United dominate O'Hare, some disgruntled American elite fliers are switching to United, while some United elite members are flying American."

Some travelers are even giving up on elite programs altogether.

Why the unhappiness?

Blame it on evolution.

The airlines created the elite tiers hoping to capture the most frequent (and profitable) passengers—and it worked. Once passengers achieved elite status, they were incredibly loyal to "their" carrier. They were reluctant to fly another airline that wouldn't help them accumulate enough miles to retain that favored standing (and get all the goodies) for the following year. They often took out-of-the-way routings or paid more so they could fly their airline and accumulate Elite Qualifying Miles (EQMs).

Achieving elite standing once was difficult. Generally, passengers had to earn the EQMs through actual flights on their carrier. To achieve American's AAdvantage Gold or United's Mileage Plus Premier standing, the lowest of the three elite tiers in those airlines' programs, meant 25,000 actual paid flight miles in a given year, the equivalent of 15 one-way flights from Chicago to Los Angeles. AAdvantage Platinum and Mileage Plus Premier Executive, the middle level of those programs, required at least 50,000 paid flight miles. AAdvantage Executive Platinum and Mileage Plus' 1-K, the top level, meant at least 100,000 paid flight miles.

The higher a member's elite standing, the more generous the rewards. Before-the-flight upgrades, for example, were given first to top tier members, then to mid-tier members. Any leftovers went to low-tier members.

Then, several years ago, U.S. carriers, including American and United, made some logical rule changes in their frequent-flier programs that allowed travelers to earn Elite Qualification Miles more easily by, for example, awarding full EQM credits for paid flights on partner airlines in newly launched alliances like American's One World and United's Star Alliance.

The airlines also tried "giving greater status and rewards to those fliers who paid the most money over a given year, rather than to ones who learned how to game the system to get the most flight miles [on the cheapest Coach tickets]," says Howard N. Winston, a partner at Montrose Capital Management in Chicago, who has achieved elite status on Delta, US Airways and United. Some airlines, for example, started awarding bonus EQM miles for full-fare Coach.

This policy and other extra EQM-earning opportunities meant more competition—which resulted in growing numbers of low-level elite members (who loyally flew 25,000 to 49,999 miles on their carrier) being denied upgrades on popular domestic routes that had already been snapped up by middle- and top-level members. (One reason United created its extra-legroom Economy Plus section was to give a perk to Premier passengers who were being shut out from many upgrades.)

Then things got worse.

The financially pressed legacy carriers (American, Continental, Delta, Northwest, United and US Airways), which are giving out regular miles with drunken abandon, now are awarding more and more EQMs for non-flight activity.

At United's Mileage Plus, passengers can earn 5,000 EQMs by getting the new Chase Mileage Plus Visa card, another 5,000 EQMs for purchases of United tickets on the card and another 5,000 EQMs if they spend more than $35,000 a year on the card. This year, United even renewed the status of some fliers who fell short of requalifying, sometimes by 5,000 miles or more.

Other carriers eased their elite-qualification criteria too. If AAdvantage Gold or Platinum fliers didn't fly enough miles to retain their status last year, they could buy their previous year's standing. Delta simply reduced the required EQMs for its top-tier Platinum level from 100,000 to 75,000.

Elite status has becomes less valuable for other reasons too:

Many post-9/11 changes in the airline industry—such as the growing reliance on regional jets, the reduction in the number of First Class seats on many domestic jets and the legacy carriers' introduction of so-called discount all-Coach carriers (United's Ted, Delta's Song)—resulted in fewer First Class seats for elite members to fight over. Nearly half of flights at O'Hare, for instance, are now on regional jets; United is adding First-Class seats to a few of theirs, but normally a regional jet is all-Coach.

Even when elites can upgrade into First, they often are disappointed by deteriorating service (fewer attendants) and amenities (dirty cabins, no meals on shorter flights). "Once they get into First Class on domestic flights," says Peggy Kaz, a travel consultant at Beale Travel, "my clients say that they're not getting much of anything."

Airlines are now selling restricted First-Class tickets for domestic flights at more reasonable prices. If you're a business or last-minute traveler booking a flight a few days away, why spend $438 on a round-trip Coach seat to Atlanta and risk not getting an upgrade when you can snag guaranteed seats in First for $598? International Business and First-Class seats now are also sometimes sold at steep discounts—$2,000 round-trip Chicago/Europe in Business!—but elite status on most airlines never offered any advantage on upgrades for these.

The legacy carriers are cutting back on their programs' elite-level services. At some programs, where you once could call a special number to speak—promptly—to a live agent, members now must call the regular 800 number, and then wait and wait.

Frequent-flier programs—and their elite benefits—have become annoyingly complex. Some fares are eligible for upgrades, some not. Who gets upgraded into unsold First Class seats often depends on virtually unintelligible formulas based on the passenger's elite standing, their ticket price, date of ticket purchase and/or when they put their name on a waiting list.

United has even introduced a fourth (and new top) tier—"Global"—which adds another layer of complexity and puts another group ahead of existing elite members. "Global-tier membership is by invitation only," a MileagePlus agent told one member recently, "and it's for passengers who bring the most revenue to United." Can other carriers be far behind?

Finally, the last ingredient for the "is elite status really worth it?" stew is the increasing difficulty of actually getting free tickets and international upgrades for all that accumulated regular, non-EQM mileage. Only so many free tickets and upgrades are allocated to each flight—a practice known as "capacity controls." With paying passengers reaching record levels, free seats are harder to get. Chicago passengers face another challenge: O'Hare has 4 percent fewer seats this July than a year ago.

"I wanted to use my mileage awards to take four family members and myself to Europe," says Phil Baker, a technology consultant, who flies 120,000 miles a year, often in and out of O'Hare. "We couldn't get our first flight choice from the mileage program, our second choice, our third choice or our fourth choice, and so on. Eventually, we got some of our tickets with the 'anytime'-type awards that avoid the capacity control constraints but cost twice as many miles as regular awards. The whole experience left a sour note."

Elite programs still offer many advantages—special check-in lines, access to desirable Coach seats, bonus mileage and sometimes expedited security lines—that many frequent travelers take for granted and are reluctant to give up. For a majority of road warriors, they're probably still good deals even without the easy upgrades and special favors (like no change fees) of five years ago.

But for some frequent fliers, it makes more sense than ever to shop around on schedule and price—including heavily discounted Business/First Class tickets for those who want comfort—rather than patronize one airline that no longer adequately rewards them.