United Airlines Enhances Frequent Flyer Program to Reward Credit Card Expenditure
United Airlines has announced adjustments to its frequent flyer program, aiming to simplify the process of earning elite status through co-branded Chase credit cards. This move follows a trend among airlines to modify their programs to cater to high-spending customers. Notably, United will maintain the existing requirements for elite frequent flyer status next year, making it the first carrier to do so since the onset of the Covid-19 pandemic.
Revamped Rewards Structure
Starting in 2024, United Airlines will introduce a revised rewards structure for co-branded cardholders. Customers will earn 25 qualifying points for every $500 spent on these cards, a significant change from the current rate of 500 points for every $12,000 spent. To further incentivize credit card spending, United will also eliminate caps on the amount of credit card expenditure that can contribute towards elite status.
Elite Status and Perks
To attain silver status, the lowest elite level, travelers will need to accumulate 5,000 qualifying points and complete four flights, or achieve a combination of flights and points. Elite frequent flyers enjoy various benefits, including free upgrades when available, priority boarding, and other perks. However, the surge in elite members in recent years, fueled by increased spending during the Covid-19 pandemic and the extension of tier status by airlines, has presented challenges in maintaining exclusivity and managing customer expectations.
Industry Response and Lessons Learned
Delta Air Lines previously announced that elite status would be solely based on spending, rather than a combination of flights and expenditure. However, after customer complaints, the airline recently reversed some of its planned changes to the SkyMiles program and lounge access limits. This highlights the delicate balance airlines must strike between exclusivity and attainability, as well as the importance of listening to customer feedback.
In conclusion, United Airlines' adjustments to its frequent flyer program reflect the evolving landscape of airline loyalty programs. By rewarding credit card spending and maintaining existing elite status requirements, the airline aims to cater to big spenders while ensuring a reasonable and attainable path to elite status. The response from Delta Air Lines serves as a reminder of the need to carefully consider customer feedback when implementing changes to loyalty programs.
Implications of United Airlines' Frequent Flyer Program Changes for New Businesses
United Airlines' recent revamp of its frequent flyer program offers valuable insights for new businesses. The airline's decision to reward credit card expenditure and maintain existing elite status requirements reflects an understanding of its customer base and a willingness to adapt its loyalty program to cater to high-spending customers.
Lessons from the Revamped Rewards Structure
The revised rewards structure, set to be introduced in 2024, offers a significant shift from the current system. The new structure rewards customers with 25 qualifying points for every $500 spent on co-branded cards, a substantial increase from the current rate. This move to incentivize credit card spending could serve as a model for new businesses looking to develop their own loyalty programs.
Managing Exclusivity and Customer Expectations
The surge in elite members in recent years, driven by increased spending during the Covid-19 pandemic, presents challenges in maintaining exclusivity and managing customer expectations. New businesses must strike a delicate balance between exclusivity and attainability in their loyalty programs, ensuring they cater to their most loyal customers without alienating potential new ones.
Industry Response and the Importance of Customer Feedback
The response from Delta Air Lines to customer complaints about changes to its SkyMiles program highlights the importance of listening to customer feedback. New businesses must be willing to adapt and respond to customer feedback when implementing changes to their programs.
In essence, United Airlines' adjustments to its frequent flyer program offer valuable lessons for new businesses. The importance of understanding the customer base, incentivizing spending, managing exclusivity, and responding to customer feedback are key takeaways that can guide new businesses in developing successful loyalty programs.