At the beginning of November it was announced that the Air France-KLM FlyingBlue program will be going revenue based as of April 1, 2018. This follows the trend set by US airlines, though made FlyingBlue the first global European loyalty program to go revenue based.
I don’t really get what European airlines are trying to accomplish by having revenue based programs, given that they already award only 25% miles for many discounted economy fares. For example, here are the current Lufthansa Miles & More earnings rates, which vary from 25% to 300%:
In the US many programs went revenue based since the norm was to award 100% miles for all economy tickets, while in the case of Europe, airlines already awarded just 25% miles for cheap economy tickets, which has the same effect as introducing a revenue based frequent flyer program.
Well, it looks like FlyingBlue isn’t the only program going revenue based. It has just been announced that Lufthansa’s Miles & More program will be going revenue based as of March 12, 2018. The program is potentially even less rewarding than the new FlyingBlue program.
Details of the new revenue based Miles & More program
Miles & More members will earn four miles per Euro spent on base fares and carrier imposed surcharges when traveling on Lufthansa Group airlines (Lufthansa, Swiss, Austrian, Eurowings, and Brussels).
Under the new Miles & More program, Frequent Traveler, Senator, and HON Circle members will earn a total of six miles per Euro spent on flights operated by Lufthansa, Swiss, Austrian, United, Air Canada, LOT Polish, Croatia, Adria, and Air Dolomiti. So that translates to a 50% mileage bonus. Meanwhile for travel on Eurowings, Brussels, and other Miles & More partner airlines, members will earn a total of five miles per Euro spent.
On the surface it seems unusual to give the same elite mileage bonus to your lowest and highest tier elite members, but this is something Miles & More even does under the current program (meanwhile at FlyingBlue, Platinum members earn significantly more miles than Silver members).
This new earnings structure applies whenever you make a booking through a Lufthansa Group airline, while if you book through another airline you’d earn miles based on the distance flown, since they don’t necessarily have access to fare information on those tickets. Interestingly they’re maintaining the current mileage earning rates for people booking through other channels, so you should still be able to earn miles under the current system if you’d like to.
As of now these are the only changes that Lufthansa has announced. When FlyingBlue changes were made they tried to market the new program as being a positive, as giving member more flexibility, etc. However, in reality Miles & More is just changing the earnings side of things, but hasn’t yet announced any changes in redemption rates, elite benefits, etc.
I imagine that revenue based redemptions are next, along with a devaluation to elite benefits.
Bottom line
While I hate seeing programs go revenue based, the truth is that this shouldn’t have that much of an impact for most travelers, given that Miles & More was already a pretty stingy program. In other words, if you’re on a cheap economy it’s unlikely that there will be a huge difference between earning 25% miles and earning four miles per Euro spent.
To give one example, a 400EUR economy ticket from Frankfurt to New York roundtrip covers a distance of 7,714 miles. Under the old system you’d earn 1,928 miles, while under the new system you’d earn 1,600 miles. This isn’t nearly as drastic of a difference as when US airlines went from offering 100% mileage on discounted economy tickets to offering just five miles per dollar spent.
So while I don’t love this trend in general, objectively I don’t think that many people are going to be earning substantially fewer miles than before. That’s also why I don’t really get what their motivation is here…
What do you make of the new revenue based Miles & More program?
(Tip of the hat to YHBU)
Since this has been posted, as a HON, I have pretty much flown 650k status miles in C and F (an estimated 20% in paid full fare). I'll probably reach 600k status miles this year alone. Now, in past years I would have been credited 650k award miles in my account. My award miles for this period amounted to 380k, of which quite a few legs were still credited according to the old scheme! That's...
Since this has been posted, as a HON, I have pretty much flown 650k status miles in C and F (an estimated 20% in paid full fare). I'll probably reach 600k status miles this year alone. Now, in past years I would have been credited 650k award miles in my account. My award miles for this period amounted to 380k, of which quite a few legs were still credited according to the old scheme! That's a hefty 40% reduction. Now taking the estimation of 0.33 cents worth / award mile, the LH Group has saved roughly 900€ on awards forgone. On the other hand, the missing 270k award miles during this period would have allowed me quite a few upgrades or award flights. I expect a short-term reduction of LH Group's liabilities by roughly 30%, which would meet the shareholder expectations on award miles provisions. Check the annual group report.
As a 8-year senator I've had it! Already now earning gold takes 100,000 miles (SAS/Air Canada require about half of it) and the benefits have vanished: no upgrades even if Business Class is empty - unless they over book economy and you are lucky, no extras on board - they barely greet you anymore. Even mileage upgrades are difficult to become and the last year's strikes did not voluntarily compensate anything. Lufthansa better make it...
As a 8-year senator I've had it! Already now earning gold takes 100,000 miles (SAS/Air Canada require about half of it) and the benefits have vanished: no upgrades even if Business Class is empty - unless they over book economy and you are lucky, no extras on board - they barely greet you anymore. Even mileage upgrades are difficult to become and the last year's strikes did not voluntarily compensate anything. Lufthansa better make it up for this or they can say goodbye to a long-year loyal member - and many more. I think they are doing such good profits in the last years that they can just f*** the customers.
Think about the passangers and offer them some treats... They and only they bring the cash into the company.
A return flight Stockholm to Los Angeles in economy class rewards you with 3184 miles (25% of the distance). I bought a return ticket Stockholm to Los Angeles for 3294 SEK (ca. 330 EUR) so I will be rewarded with almost 10 miles per EUR (3184 miles divided by 330 EUR).
This is very generously so it is logical that Lufthansa moves to revenue based earnings.
haha! you did not read the fine print! One gets 4 (or 6) times the €'s spent only on fares and airline surcharges, NOT on taxes. My last ticket short-range was 197€, of which only about 60 were NOT taxes. I got 288 miles (w/Gold bonus) nor I would get 360, HOWEVER, my last long-range ticket (premium econ.) was about 1000 € (700 without taxes). Under the new system I would get 4200 miles, with...
haha! you did not read the fine print! One gets 4 (or 6) times the €'s spent only on fares and airline surcharges, NOT on taxes. My last ticket short-range was 197€, of which only about 60 were NOT taxes. I got 288 miles (w/Gold bonus) nor I would get 360, HOWEVER, my last long-range ticket (premium econ.) was about 1000 € (700 without taxes). Under the new system I would get 4200 miles, with the old one I got 15000. Crappy system, ecouraging only top-class or commuter travelers....
what does it have to do with miles when they calculate the price? lel
If I may add: I'm spending a lot of time with M&M chasing for missing or wrong mileage credit, most of the time discussing with the associate over the phone or in writing.
Worst is with *A "partners" for which you need to provide plenty of evidence and still it takes more than one month.
Considering that currently 1 mile is in best case worth 0,35 Eurocents, i.e. max 2% of the amount...
If I may add: I'm spending a lot of time with M&M chasing for missing or wrong mileage credit, most of the time discussing with the associate over the phone or in writing.
Worst is with *A "partners" for which you need to provide plenty of evidence and still it takes more than one month.
Considering that currently 1 mile is in best case worth 0,35 Eurocents, i.e. max 2% of the amount spent to buy the ticket, and that it's really really hard to book flight awards if you are not HON, I really could not imagine they needed to further curtail the earnings...
As a European, is there another program from the Star Alliance group (other than Miles&More) that might make more sense? For example Singapore Airlines' Krisflyer or Aegean Miles+Bonus?
I've looked at a year when I earned Senator status. There is no way I could match that year again and I flew in business short haul in Europe and in either business or first class long haul from the UK.
Thy are going to have fewer premium passengers on their books at this rate, especially those of us paying out of our own pockets as we become downgraded, which is obviously their policy.
@bruce:
"For flights booked from 12 March 2018..." - so the new rueles don't apply to any ticket _booked_ until 11 March 2018.
LH has the worst loyalty scheme of any *A airline - worst qualifying, worst mileage earnings, worst recognition of *A bennies (no +1 bag on HBO fares), worst mileage expiry policy (36-month hard limit), worst ability to earn miles by secondary means.
This is no coincidence: they have a de facto regional monopoly across Central Europe and have even managed to snuff out the threat of competition from LCCs. This means that people in DE...
LH has the worst loyalty scheme of any *A airline - worst qualifying, worst mileage earnings, worst recognition of *A bennies (no +1 bag on HBO fares), worst mileage expiry policy (36-month hard limit), worst ability to earn miles by secondary means.
This is no coincidence: they have a de facto regional monopoly across Central Europe and have even managed to snuff out the threat of competition from LCCs. This means that people in DE and surrounding countries pay well over the odds for intra-EU fares on mediocre airlines. People in Germany have also noticed how fares have ticked up relentlessly since AB left the fray (LH will likely get all it wants from AB's carcass despite face-saving gestures on the part of the EU competition authorities).
Imagine if instead of the US3, AA had a monopoly of the West Coast flights, UA had the East Coast sewn up, and DL had a lock on everything in between. Each of those would then be something like what you now have with LH in an area covering DE, CH, AT, BE, CZ, SK (and effectively PL since LO is a rule taker in LH's scheme).
So expecting LH to be anything but the worst for everything is probably pipe dreams. As long as they retain their cosy regional monopoly they can carry on giving a giant FU to everyone else. Consumers be damned.
But hey, it's a "5 star" airline so I guess we should be grateful for that.
I wonder what they'll do for tickets purchased before the announcement that are for travel after this is supposed to kick in. We've got business class tickets for next July that have a large cancellation fee.
Ben, just out of curiosity have you heard anything from your contacts at AA on whether the switch to a revenue based program had any material affect on the number of AAdvantage members re-qualifying for Platinum-Pro-Executive status for 2018? I'm curious as to whether people followed through with their threat to reconsider their loyalty to AA as a result of this change.
The German text is more precise re the surcharges - this is only for airline levied charges, i.e. fuel, not for taxes and government charges, i.e. Airport fees...
I would be pissed as a HON or senator. How can an airline get away with giving away the equivalent of 5 miles per US dollars spent. All of US give 11 for top elites your taking about giving less than half of that seems insane to me. Your really gonna cheap out on giving some more miles to your most profitable customers? HON members are doing 600k+ HON miles all in first and business...
I would be pissed as a HON or senator. How can an airline get away with giving away the equivalent of 5 miles per US dollars spent. All of US give 11 for top elites your taking about giving less than half of that seems insane to me. Your really gonna cheap out on giving some more miles to your most profitable customers? HON members are doing 600k+ HON miles all in first and business class that’s between 100-200k miles a year all in paid first business easily 50k+ a year each hon member is giving lufantsa. There going to cheap out on people paying that much a year over some relatively cost less to them miles really?
There seems to be confusion on if this includes taxes or not. This is what I found in the LH release:
For flights booked from 12 March 2018, the basis of the calculation will be the fare, i.e. the ticket price plus any surcharges levied by the airline concerned.
How exactly are we to interpret the terms "surcharges levied by the airline concerned?"
Is this a play on wording to only give credit for LH based surcharges and NOT on the taxes?
Others have mentioned it, but the real hit comes to those who book discounted J/F fares. Take Flying Blue as an example. I booked a discount La Premiere fare. Under the old rules, I'd have collected about 31,000 miles with the 300% credit for "F" fares. Under the new scheme? About 12,500 by my calculation. It's a huge deal for premium class bargain hunters.
The real devaluation is for Premium Economy, which right now is a real sweet spot of Miles&More for award miles and qualifying miles - especially with those <1000€ r/t fares from EU to the US which book in N (100% miles). Next are discounted first and business class tickets for which you will also get a lot less award miles.
Winners will be for some intra EU fares. Especially those who are rather expensive and...
The real devaluation is for Premium Economy, which right now is a real sweet spot of Miles&More for award miles and qualifying miles - especially with those <1000€ r/t fares from EU to the US which book in N (100% miles). Next are discounted first and business class tickets for which you will also get a lot less award miles.
Winners will be for some intra EU fares. Especially those who are rather expensive and still book in cheap fare buckets (like 300€ r/t in K).
I'm guessing award redemptions are next and may change to something like Delta has right now, followed by how you get/retain your status.
This sucks for Business Class tickets booked in P Class fares if I am doing this correctly! Not that the current calculation for P tickets is great but this is truly horrible!
Just looked for a trip I need to take in January and the P Class fare in Business Class is $2502 including taxes. If I factor out taxes and use a 1.20 exchange rate I get a base fare of Euro 1153 on...
This sucks for Business Class tickets booked in P Class fares if I am doing this correctly! Not that the current calculation for P tickets is great but this is truly horrible!
Just looked for a trip I need to take in January and the P Class fare in Business Class is $2502 including taxes. If I factor out taxes and use a 1.20 exchange rate I get a base fare of Euro 1153 on the RT JFK-FRA.
Euro 1153 x 6 = 6919 miles for the RT as a elite.
Under the current calculation it's 1x the distance plus the elite bonus = 9627 miles.
So you are getting 2708 less miles or 28% less.
Gotta go do the math if I credit to UA as this is a joke!
@ Zach
The english version actually says the same thing:
"For flights booked from 12 March 2018, the basis of the calculation will be the fare, i.e. the ticket price plus any surcharges levied by the airline concerned. "
Actually a base face isn't mentioned anywhere in the statement.
If the ticket is issued on United Airlines ticket stock (016) this is a non-event. United doesn't impose GDS fees on their tickets either so their prices are less even with a code-share LH flight.
@Max
With taxes.
@Zach maybe I missed something. So the calculation only applies to the cheapest (base) fare? This is not how I read it in the german version of the statement:
"Bei Flügen gebucht ab dem 12. März 2018 bildet künftig der Flugpreis, also der Ticketpreis zuzüglich der von der jeweiligen Airline erhobenen Zuschläge, die Berechnungsgrundlage."
Ticket price + surcharges. No mention of a base fare in this version.
Either way, 500 miles + Executive bonus ist...
@Zach maybe I missed something. So the calculation only applies to the cheapest (base) fare? This is not how I read it in the german version of the statement:
"Bei Flügen gebucht ab dem 12. März 2018 bildet künftig der Flugpreis, also der Ticketpreis zuzüglich der von der jeweiligen Airline erhobenen Zuschläge, die Berechnungsgrundlage."
Ticket price + surcharges. No mention of a base fare in this version.
Either way, 500 miles + Executive bonus ist still alot more thatn 314...
I will have to calculate what my average per flight is - since depending on the booking class the miles vary considerably.
219 € with taxes or without?
I think this whole airmiles for buying/flying is getting rubbish. This is especially true for EU and rest of the world residents and compounded by the fact that credit card bonuses are paltry as well.
Benefits are rubbish on many non US credit and charge cards (compare US amex platinum to UK amex platinum and if you wanna laugh your guts out, Indian Amex Platinum: fees are the same. see the benefits. Beyond rubbish...
I think this whole airmiles for buying/flying is getting rubbish. This is especially true for EU and rest of the world residents and compounded by the fact that credit card bonuses are paltry as well.
Benefits are rubbish on many non US credit and charge cards (compare US amex platinum to UK amex platinum and if you wanna laugh your guts out, Indian Amex Platinum: fees are the same. see the benefits. Beyond rubbish compared to USA).
I think the best way is (if one can afford it) to book cheap biz fares (Qatar comes to mind) and just credit to the most sensible programme possible. Of course use miles and points CC wherever possible but forget airline loyalty. Doesn't bring you anything. Rather just look for cheap business class fares and make the whole airline loyalty a moot point.
All airlines will make being loyal to them worthless in about 2 to 3 yrs max.
Cash is king.
@Jan
Actually it doesn't look that good for you either, assuming it's roundtrip. The base fare on a 200-ish Euro ticket is only half that and you earn 500 miles base roundtrip.
As someone who flies a sh*t ton of intra-europe economy, this looks to be a good thing.
My recent flight (MUC-HAJ) netted me 250 miles + 64 miles executive bonus. The flight cost €219 - so now as a frequent traveller that would net me 1314 miles.
Sounds like a good deal to me.
The change is just for award miles, not for status miles... not much of a consolation, but still relevant.
Miles & More was never worth it to me due to the fuel surcharges, but it's great to see that they are at least letting members earn the same level of miles for Eurowings flights.
I think a lot more people will start crediting to Aegean, but I'm guessing all other Star Alliance airlines will eventually fall into place and also credit based on revenue.
@Lucky do you know if the award chart will change as well? Planning a LAX-ZRH R/T on Swiss for Xmas 2018 (buy Eco and upgrade with Miles&More miles)
You forgot to mention that this only applies to premium miles and not status miles (at least for now).
Calculate this again for discounted business or first fares... that's where the huge devaluation is.