‘Miles Junkies’ at Risk as Airlines Tie Flier Awards to Spending

First-class upgrades, free booze and access to airport lounges may be harder for some passengers to earn if they don’t begin buying more expensive airline tickets.

United Continental Holdings Inc. (UAL), the world’s largest airline, today joined Delta Air Lines Inc. (DAL) in setting spending criteria for its MileagePlus frequent flier program’s elite levels, which grant passengers extra perks such as upgrades and shorter check-in lines.

Starting in January, United passengers must spend $10,000 and travel 100,000 miles or 120 segments in order to gain the top status of Premier 1K, Chicago-based United said in an e-mail to customers. Previously, passengers could attain that status by hunting down the cheapest tickets or by taking a few long-distance flights that racked up miles faster.

“There are going to be winners and losers here,” Tim Winship, the publisher of FrequentFlier.com, said today in an interview. “The losers certainly are those people that have traditionally earned elite status by making mileage runs -- long cheap flights that people take solely for earning elite status or elevating from a lower tier to a higher tier. And indeed these changes are designed precisely to winnow out those folks from the ranks of United’s elite ranks.”

Photographer: Jean Chung/Bloomberg

Food and wine are served inside the Korean Air Lines Co. first class lounge at Incheon International Airport in Incheon, South Korea. Close

Food and wine are served inside the Korean Air Lines Co. first class lounge at Incheon... Read More

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Photographer: Jean Chung/Bloomberg

Food and wine are served inside the Korean Air Lines Co. first class lounge at Incheon International Airport in Incheon, South Korea.

Delta, the world’s second-largest airline, made a similar switch to its loyalty program in January. United’s move could see all major airlines eventually migrate in that direction, said Jay Sorensen, who runs IdeaWorks, a Shorewood, Wisconsin-based airline consulting firm.

“At some point we’re going to see miles go the way of the buggy whip and they will no longer be part of frequent flier programs,” Sorensen said. “This is going to upset people who are miles junkies tremendously, because they really have tapped into this awkward method of measuring the value of a customer.”

United shares rose 0.7 percent to $32.30 at 2:41 p.m. in New York. Through yesterday, the company’s stock had increased 37 percent, trailing a 41 percent increase in the Bloomberg U.S. Airlines index.

-- Editors: James Callan, John Lear

To contact the reporter on this story: Jenny Surane in New York at jsurane1@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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