Do US airlines not want premium passengers?

Call me a conspiracy theorist, but I’m convinced that US airlines simply don’t want passengers to pay for international first and business class. Not only do they offer lackluster service, both in the air and on the ground, but US airlines are also among the most expensive airlines in most international markets. Their prices are unrealistic and their offerings are poor. That being said, they seem to be happy filling international premium cabins mostly with passengers that upgrade.

But I do have one serious question: why don’t US airlines offer higher mileage accrual for premium passengers? Most US airlines offer their premium passengers no more than 150% of actual flown miles, both elite and redeemable, for flying in premium cabins. At the same time, airlines like British Midland offer 300% of the base miles for paid first class passengers.

I simply don’t get it. Give passengers a small incentive to actually pay for first class. Think about it – first class from San Francisco to Sydney is about $25,000 on United, and you’d only earn 50% more miles than someone on a $500 ticket. Even if someone only flies once a year with United, they’re much more profitable (and valuable) than a passenger that actually logs 100,000 “butt in seat” miles on “normal” fares. I simply don’t understand why the US airlines are so stingy in that regard, while being so generous in other areas (like upgrades, earning miles on low fare classes, awards, etc.).

And yes, this is all coming from someone that typically flies on low fares and upgrades….

Filed Under: Misc.
  1. Lucky:

    Be careful what you wish for. If the US airlines figure that out, then they’ll also figure out they’re giving away too many miles to frequent fliers who aren’t their best customers. In other words, it seems smarter to structure based on a combination of cost per mile paid and frequency. For mileage runner types – like yourself (no offense) – who are simply trying to work the system and pay the lowest cost per mile, pay only a fraction of a mile. For those who pay closer to Y fares, give them more miles.

    I like the SQ model for rewards, which – I believe – is based on total revenue collected from a passenger. Of course, the genie is out of the bottle, and it would be hard to pull it off unless all airlines did this at once – and then you have collusion issues if they did.

    Insightful post!

  2. Ben, so you’re arguing for a revenue-based mileage program? (where is the “shocked” emoticon?)

  3. what eric said: in the other way, what if united started giving out 50% to STLK fares? (that would still be a lot more generous than what many european airlines do)

  4. You all raise excellent points. First of all, I’d like to clarify that my personal preferences as a consumer are often different than what I think is in a company’s best interest. Nonetheless I try to be objective and look at things from both the side of the consumer as well as the side of the corporation, and this is one of those cases.

    No, I wouldn’t like to see US airlines make the frequent flyer programs worse. There’s so much competition in the US that I simply don’t see it happening (as mentioned above). Nonetheless, I think it would be easy for the airlines to offer an extra 100% bonus for those on $20,000 tickets. They have very little to lose and a lot to gain, even if they left the system as is otherwise.

    That being said, I could definitely see how it would make sense to reduce mileage for lower fare buckets, but as mentioned above all the airlines would have to do at once for that to work, which they couldn’t do.

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