Have Elite Fliers Been Downgraded?


planeA steady rain was soaking the windows of La Guardia Airport when Nancy Thode, an elite frequent flier with Delta Air Lines, approached a gate agent with a pressing question: Had her request for an upgrade cleared?

Glancing at her computer, brow furrowed, the agent was not encouraging: “You are No. 13.”

But with a nearby video monitor showing that more than half of the 26 first-class seats were already claimed, Ms. Thode knew her chances were slim. “If somebody comes – diamond, platinum or gold,” the gate agent pointed out, “they’re going to get it.”

Minutes later, Rick Triana, a business traveler, strode up, the word “diamond” emblazoned in capital letters on the tag attached to his Victorinox wheelie-bag. Despite seeing his name at the top of the upgrade list, he confirmed his spot with an agent anyway, lingering around afterward to make sure he wouldn’t be bumped. “You never know,” he said.

As the boarding time neared for the Atlanta-bound flight, the upgrade list began to shrink. Mr. Triana was upgraded to first class. So was a gold-level flier (though his wife was not). Ms. Thode, a social worker from Stamford, Conn., dispatched a friend she was traveling with to check on her status. Bad news. “I get knocked off for the diamonds,” she sighed. “Silver just doesn’t make it.”

Elite status in an airline loyalty program used to be something of an exclusive club, rewarding those who flew the most – typically between 25,000 and 125,000 miles a year, depending on the carrier – with perks and sought-after upgrades into business or first class. These days, though, the advantages of being an elite flier are harder to gauge. The private lounges are more crowded, the priority check-in lines longer. And on some flights there are so many elites that it’s become almost a joke: “Never go to check-in at the elite line; it’s way too long,” said Randy Petersen, the founder of frequent flier Web sites like FlyerTalk.com and MilePoint.com.

What’s happened? A few things. As the airline industry has merged and shrunk over the years in order to survive, fewer seats on many routes mean scarcer upgrades for top-tier fliers. Meanwhile, the number of travelers with some sort of elite status has grown. Elite fliers are so concentrated on some flights, like San Francisco to New York or Chicago, Mr. Petersen said, that “when they call early boarding, for 196 people on a plane, only 18 people will stay seated.”

But it’s not only that there are more elites these days; it’s also that non-elites can now buy those once-reserved perks à la carte.

Don’t want to wait in line at security? Pay for the express line. How about airline lounge access? That’ll be $50 for a day pass, or the right credit card will get you in for free. Even upgrades are for sale, if seats are available.

While all this may be good news for travelers who fly just once or twice a year, elite frequent fliers say that the moves have been eating away at the cachet and precious privileges that come with elite status.

“It’s certainly degraded the experience,” said Tom Majewski, an investment banker from Darien, Conn., who flies about 100,000 miles a year and is an elite flier with both Delta and American Airlines. For a flight to Fort Lauderdale, Fla., in November, he showed up with his family at the Delta Sky Club at La Guardia, which like other Delta lounges is accessible to frequent fliers at a discounted membership rate tied to their status, as well as to anyone with a platinum or Delta Reserve credit card from American Express.

“There was not a seat to be had,” he said. “It was jam-packed.” So the family loaded up on free snack mix and sat out by the gate, where there were still open seats. His big beef, however, is not how crowded the lounges are, but the difficulty in getting upgrades, especially on international flights and popular business routes like New York to Los Angeles. “Slowly but surely they’re scaling back the best frequent-traveler benefits,” he said.

Airlines maintain that even though they’ve begun to offer frequent-flier perks for sale, elites are their priority. While credit-card holders and those who pay for priority boarding can be seated ahead of the masses, that group is called to board after top-tier fliers. As for purchased upgrades, they’re generally offered only after they’ve been made available free to elite members.

“We carefully balance benefits for our credit-card programs so that we match them with popular items like first bag free and priority-boarding availability while not taking value away from our Medallion customers,” said Paul Skrbec, a Delta spokesman.

YET it is the airlines that, in ever more profitable deals with credit-card companies, have been diluting elite privileges in the first place.

It was 1981 when American Airlines kicked off the loyalty program craze by introducing the first miles-based frequent-flier program. Other airlines followed. Back then, the programs were designed to reward a small cadre of road warriors. Today they provide airlines with piles of cash from selling miles as part of a multibillion-dollar business that features big banks, retailers and global airline partnerships.

North American airlines generated an estimated $15 billion in ancillary revenue last year, according to Amadeus, the global reservations processor, and the IdeaWorks Company, a consulting firm. “Half of that is from frequent-flier programs,” said Jay Sorensen, the president of IdeaWorks.

But up until a few years ago, while consumers could earn miles by, say, using a certain credit card, those miles could not be used to earn elite status. Only qualifying miles – those traditionally earned by flying – could make someone elite.

What is different now is that qualifying miles, too, are on the table in this giant global exchange, thus enabling people to buy into elite status without ever boarding a plane. On some airlines, like US Airways, consumers can buy status outright. And qualifying miles, like regular miles, are now being used as credit-card lures as well. The $450-a-year Delta Reserve card from American Express, for example, offers 10,000 qualifying miles with your first purchase. For spending $30,000 in a calendar year, you get 15,000 more qualifying miles, and when you hit $60,000 in annual spending, you get another 15,000. Those bonuses alone are enough to earn you Silver status.

While airlines are generally reluctant to discuss the number of people who have qualified for elite status, Mr. Petersen, who has been tracking loyalty programs since 1986, estimated that about 10 years ago, it used to be 2 or 3 percent of active program members. “Today,” he said, “it’s more like 6 percent.”

All of this affects the value of actually being elite. “The silver guys, the lowest elite level, has become somewhat the throwaway level in the upgrade pool,” Mr. Petersen said. “Far less than 50 percent of the lowest tiers are able to get the benefits out of the upgrade part of elite status.”

Most frequent fliers, including Mr. Petersen, agree that, despite the erosion of many benefits over the years, elite status still comes with a few perks worth striving for – including faster security lines; free checked bags, allowing elite passengers to avoid the overhead-bin scrum; rebooking priority when a flight is oversold; and often better access to award seats. And there is no doubt that traveling as an elite is better than the alternative. Though lounges may be more crowded, there are still free snacks and private bathrooms. And lower-ranking elites still have a decent chance of scoring an upgrade on flights that are not so popular with business travelers.

Recognizing that expanding elite programs needed something new to strive for, some airlines have established new top categories, widening the gap between elites at the head of the line and those behind them. Delta added a fourth tier – diamond – in 2009 to reward travelers who had long since passed the 75,000-mile benchmark for top-level elite status. Diamond became the new top status bestowed on customers who earn a minimum of 125,000 miles a year. When United merged with Continental, it also moved from three elite tiers to four.

At the same time, some benefits at the lower levels have been scrubbed. In March, Delta reduced the number of free checked bags for the lowest tier of its elite fliers from two to one. And United has discontinued its perk of letting PremierSilver frequent fliers – the lowest level, at 25,000 miles a year – reserve Economy Plus seats with extra legroom when buying a ticket. Now, those elites must wait to reserve an Economy Plus seat at check-in – that is, if a higher-ranking frequent flier or customer who paid extra for Economy Plus hasn’t nabbed the last one. (United said the change was made to ensure that higher-level elites, who tend to book closer to departure, have first dibs on Economy Plus seats.)

But the erosion of elite benefits over the years also extends to certain intangibles like longer hold times and indifferent customer service attitudes toward top-tier fliers. “Ten years ago a top-tier loyalty program member would have received consistently excellent service from airline representatives,” including certain unwritten favors, like the elimination of change fees, or opening up award inventory on a given flight, said Ryan Lile, a travel consultant based in Portland, Ore., who specializes in award bookings and maximizing frequent-flier benefits. “They would really make an effort to impress the customer and not nickel-and-dime you.” Today, he said, a top-tier flier “would be laughed at” for making such requests.

SO who is it that the airlines are rewarding these days? Those who pay up. Airlines are increasingly giving their best rewards not to just passengers who fly the most but also those who pay the highest fares. If an elite customer buys a full-fare coach seat, for example, that person will typically trump another elite in the same tier who has not when it comes to an upgrade.

Some airlines have built this thinking into their award programs. In 2010, Southwest moved from a system that awarded participants credit for flights to one that awards points based on the amount of money spent. And airlines have long offered invitation-only programs like United’s Global Services and American’s ConciergeKey, which lavish perks on those who spend the most on flights.

“Whether or not you are the best customer is not as important as it used to be,” said Rick Seaney, the chief executive of Farecompare.com, a travel Web site. Frequent-flier programs are actually more egalitarian. You get the perks, regardless, “if you have enough money.”

{NY Times/Matzav.com Newscenter}



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