Why Do Airlines Cap Mileage Earning Per Ticket?

Filed Under: Advice

Over the past few years we’ve seen Delta SkyMiles, United MileagePlus, and American AAdvantage, all adopt revenue based frequent flyer programs. With these changes, you generally accrue miles based on how much you spend on your ticket rather than how far you fly.

This takes some getting used to. As someone who is obsessed with miles, now when I board a flight I think about how much I spent for that ticket, rather than how far I’m flying. With this system, you can sometimes earn more miles for a ticket from Tampa to Miami than you’d earn for a ticket from Dallas to Beijing.

The 75,000 mile per ticket cap

With American, Delta, and United, you earn anywhere from 5-11x miles per dollar spent (depending on your status) on base fare, not including taxes and fees. For example, below is the chart showing miles earned with United MileagePlus.

But there is one quirk, which is that you’re capped at earning 75,000 miles per ticket.

For a vast majority of us, this is a limit we’ll never deal with, since most of us don’t book tickets so expensive that this would apply.

However, some business travelers do find themselves in situations where the limit is a factor.

A reader just emailed me who was booked on a very expensive international business class ticket, and he discovered this quirk the “hard” way (I mean, as bad as having mileage earning capped on a single ticket at 75,000 miles can be).

He asked why airlines have this policy.

Why do airlines cap mileage earning at 75,000 miles?

On the surface it seems odd to cap mileage earning at 75,000 miles:

  • Airlines are increasingly making it clear that they only care about how much we spend and not how much we fly, so shouldn’t they be rewarding those who are dropping five figures on a ticket?
  • Logically an airline’s margins are better on a ticket that costs $10,000 than one that costs $1,000, so can’t they pass on some rewards for that as well? After all, generally speaking with rewards programs your incremental return increases, rather than decreases, the more you spend.

So, what’s the logic from airlines? I’m afraid the answer is quite straightforward:

  • Airlines cap mileage earning at 75,000 miles simply because they can. Unfortunately “because they can” is the reason they use for so many things nowadays.
  • American, Delta, and United all love to match one another, so since they all have this policy it doesn’t create an incentive to choose one airline over another.

What’s the logic beyond “because they can,” though? Airlines are obviously trying to encourage profitable behavior, so my guess is that this 75,000 mile cap exists because they figure that offering more miles wouldn’t actually adjust behavior:

  • Most people booking really expensive tickets are doing so because they have a specific flight or schedule they need, and they’re making their decision based on that rather than mileage earning.
  • A lot of people dropping this much on a ticket have some sort of corporate contract with the airline they’re flying, so miles earned don’t make much of a difference.

So like most things in the airline industry, their logic isn’t totally sound. They want to encourage you to spend as much as possible, and they want to reward you for that. But not too much.

United awards up to 75,000 miles per ticket

The one logic gap

I sort of understand the logic of this policy, though the one thing that doesn’t make much sense to me is the fact that the 75,000 mile cap applies to total miles earned, and doesn’t factor in elite bonuses.

For example, with all these programs non-elite members earns 5x miles per dollar spent, while top tier elite members earns 11x miles per dollar spent. So non-elite members earn miles for the first $15,000 spent on a ticket, while top-tier elite members earn miles for the first ~$6,800 spent on a ticket.

To me it seems like it would be more logical to make the cap around “base miles” earned, and then allow elite bonuses on top of that. It doesn’t make much sense that the cap is so much lower for elite members than non-elite members.

Then again, I think the logic for that is also the same as the logic for everything else with loyalty programs in the airline industry — they cap it that way because they can, and because there’s not a competitor offering more.

I imagine their thinking is that an elite member is more likely to book that airline anyway when on an expensive ticket, so the incremental miles won’t make much of a difference.


American awards up to 75,000 miles per ticket

Bottom line

Airlines sure have made loyalty programs complicated, and at times there doesn’t seem to be much logic to them. They make a lot of negative changes simply because they can get away with it, though I often question if they’re actually better off having made these changes.

The 75,000 mile per ticket cap is an interesting one. You’d think they’d want to encourage people to pay as much for a ticket as possible, though I guess they figure when we’re talking about $7,000+ tickets, a little bit of extra incremental mileage earning won’t impact consumer behavior much.

What do you think the logic is for the mileage earning cap on tickets?

Comments
  1. One question I’ve always had is it per « ticket » or per « reservation? » For example, if I booked a roundtrip reservation as an AA EXP IAD-LHR for $10,000 (before taxes, but inclusive of carrier imposed fees), would they cap me at earning 75K miles for the entire reservation? Or assuming the fare was split evenly between the outbound and return flights, would I actually earn 110k miles for the entire reservation (55k miles each way)?

  2. This has happened to me twice this year, I was also unaware of the rule until after I had completed the flight. Next time I will try changing FF numbers to an alliance partner for the return, not sure it will work but there is nothing to lose by trying.

  3. This is a great example of a post where it would be helpful to be able to click on the comments number in the title and be immediately taken down to see any reader value-adds.

  4. Each “reservation” has ONE ticket number. The outbound and inbound flights are all on one ticket.

  5. This is pure greed. But one of the reasons behind the cap is (at least for Delta) that the old distance based system would hardly (if ever) give you out more than 75k. I believe it was DM 125% and J 150% add that would be 275%. Of the longer(est) flights with DL you can probably fly 25k miles RT. You still get less than 75k with all bonus. They cap the new system so Delta can still control how much miles they hand out.

    @Sam
    Per ticket, so it is better if you can do 2 oneway, just factor in the cost difference.

  6. How do they handle round-the-world tickets? Does American, for instance, cap earnings on a round-the-world ticket issued by Cathay Pacific since it earns miles based on what you’re flying, and not on spend if you credit the flights to AAdvantage? And what happens if you modify your itinerary, which you’re allowed to do, and the ticketing carrier changes? Does the mileage you’ve accumulated reset to zero for earnings purposes?

  7. When the few dominant players in a market all adopt the same consumer-unfriendly policy that is not tied to any real logic other than “because we can,” it sounds a lot like it is time for an anti-trust intervention.

  8. This disproportionately affects Concierge Key members more than anyone else because it’s buying a few of these tickets that gets them across the line, so it’s a bit of a consolation prize. Among the highest value customers (e.g. partners at banks and consulting firms), you’d be surprised how often this cap gets hit – often a few times a year

  9. If I saw that I would hit the cap I would split the earnings. For the return flight or subsequent legs I would change my FF # to another airline. Eg. I fly AA but would switch to AS or BA since miles are awarded per leg. I’ve done it before with DL and AS while flying AF.

  10. I was thinking about airlines abuse of their loyal customers this morning on my commute. This came to mind after listening to stories of Marriott and United abuse from Richard Kerr and Ed Pizza on the Award Travel 101 Podcast (episodes 13 and 14). Right now the economy is good and travel is booming but as we all know these things come in cycles. When the next travel economic downturn happens we will likely see airlines reap what they have sown I think. Maybe not on maximum earnings like this specifically but as a combined effort. Customers are becoming less loyal. Airlines and hotels think they have so much business that they can just do whatever they want and customers will still come. This is true right now but why alienate your most loyal clients.

  11. Actually I think this 75,000 cap rule has been around since time immemorial – this was during the golden era of pretty amazing % of miles flown, where you could get more than 75,000 miles. I feel like it has not been updated to reflect the new era of revenue based earn.

  12. As a United GS member, I think the cap makes no sense and is counter-productive for the airlines. If I am going to buy a very expensive ticket, I am actually incentivized not to fly on the airline where I have the highest status because I can earn just as many miles on an airline where I’m only gold, for example. And while I would have flown the airline on which I have the highest status if I was rewarded with miles commensurate with that status, I probably choose a different airline because (i) I’m pissed at the cap, (ii) I earn just as many miles on the other airline because of the cap on the first airline and (iii) it helps me earn the next status level on a second airline. Your primary airline should not want this at all. Given that the cap virtually only affects their most valued fliers at the highest level who earn 9x or 11x spend, I have been very confused why airlines keep it and provide any disincentive to fly them.

  13. Fascinating post, Ben! At least DL provides rollover MQMs as an incremental incentive to stay loyal (though it may not matter if you’re spending enough to be a 360/GS/CK).

  14. If you look at this from a more macro view, what is occurring is a slow unwind of these points & miles programs by airlines and also hotels. That is to be expected when they can sell the space/room and it’s what they should be doing for their shareholders. They should not make it easy to use these points and devaluing them makes sense when their upside for selling the space is more beneficial.

    I am not of the opinion that they worry too much about customer loyalty as they know you only have limited choices and as you noted in your post if you are a corporate traveler you are going to be forced into airlines and vendors where the company has contractual agreements. When the economy slows, they can offer sales and other bread crumbs and people will flock, regardless of their previous experience.

    The hotels and airlines are better to spend their time negotiating these contracts rather than worrying about the infrequent business traveler or holiday traveler.

    As @DaninMCI noted Mr. Pizarello’s encounter with UA is unfortuante, but predictable in the current environment. These programs are never going to be that transparent or easy to deal with. And while he is a 1K, they have lots of 1K’s. That said I feel bad for he and his family.

  15. Take the cap off – but make the tickets earn miles for whoever is actually paying – not the flyer who didnt actually spend a dime 🙂

  16. I’ve been hit with the cap 3 times this year on UA. Some thoughts:
    – Most top tier elites will still have a strong incentive to book these tickets because they want to qualify for invite-only status (GS in my case) on their preferred airline, unless their YTD spend is already really high
    – It’s not possible to workaround by changing your FF# on the return leg (at least on UA)
    – On the other hand, my company and most others I’m familiar with have preferred rates with all 3 major US carriers so there’s not a structural factor preventing you from choosing a different airline

  17. The existence of this cap begs the question of why provide personal redeemable miles at all on a ticket paid for by a corporate account? In any normal context this would be considered an illegal/unethical kickback.

    Obviously breaking the ticket into two one-ways can help get around the cap — prices in this range usually offer no discount for round trips.

  18. Look no farther for proof that there’s been far too much consolidation in the US airline industry. In a healthy competitive environment, competitors differentiate their offerings and don’t try to incentivize customers from spending too much money with their company.

  19. Lucky:

    There is another reason. I know some of the UA 1K members deliberately change their tickets and every time when they change it, their PQD increases and it is not very hard for them to reach 75,000 limit, but their out-of-pocket money is only a few hundred dollars. Airlines simply cannot suffer this kind of loss.

  20. This cap is really more common than you might think – especially for those of us that travel under corporate contracts internationally. Also anyone who regularly has itineraries that include the NYC-LON city pair has probably run into it. I once ran into it on a relatively “simple” JFK-LHR-MUC/HAM-LHR-JFK itinerary.

    From personal experience I can also say that this includes RTW fares (at least within One World). Most recently happened to me in April on a RTW that included JL, CX, QR, BA and AA. Hit the cap on BA MUC-LCY and no earned miles for LHR-JFK. Honestly the bigger issue with the RTWs is the EQD earn on some One World partners is terrible (% of mileage). Well over $10k ticket, only $6,700 EQDs earned on the last one.

  21. I disagree with your “logic gap”.
    It ignores a fundamental issue

    Elites are already getting significantly incentivized since they earn bonus miles on ALL of their purchases compared to someone without status. (eg 5x points for plebes vs 11x for diamond at Delta… same at United)

    This is what allows elites to hit 750000 points on a “measly” $6800 fare whereas the masses must spend $15,000 to get the same level of points.

    There is no reason to incentivize these elites any more than this

    Example

    A United premier 1k gets 11 points per dollar spent on United
    But due to the cap, he can only get 75000 points if he buys a 10,000 ticket.
    This is 7.5 points per dollar
    The cap “hurt” him

    However, that same person would only get 5x at Delta, or 50,000 points.

    So sure, the cap “hurts him” but he still makes more at United compared to Delta due to the elite bonus
    The only people where this does not hold true are for elites who are both United Premier 1k and delta Diamond

    How many of those are there?
    Very few. And they don’t care about points because they already have millions of them

    In sum, there is no need to incentivize these elites beyond 11 points per dollar

  22. Matt – And what exactly is an “anti-trust investigation” going to find? That they’re reducing benefits in line with their competitors – something they are perfectly entitled to do?

    This is exactly how any competent business should be operating. If giving your customers more isn’t going to result in getting more back, why would they do it? I assume it’s not a philosophy you live by in your business dealings either?

  23. Christian – They aren’t incentivising you to spend less with them – that’s an absurd exaggeration.

    It would be nice if there was more competition, but the implication that fares/benefits can forever be improved is wrong. You can have a competitive marketplace without one company providing significant amounts more than others. That clearly isn’t sustainable long term.

  24. Unfortunately, even an AA $10k biz ticket from DFW to LHR likely gets significantly more expensive (up to $~7-8k each way), if you try to break it up into two one ways to get around the 75k cap. Love captive hubs!

  25. Does Alaska enforce a cap like this? I could see a long BA First flight (e.g. North America to India) bumping up against this limit, given Alaska’s multiplier + elite bonuses for BA first.

  26. I’ve gotten the short end by Delta twice now – once as a PM, once as a DM. What seemed the most odd to me was that as my status went up, the value of my spending went down, just as you pointed out. I now regularly look for separate tickets when I have an expensive int’l business trip to maximize my earnings. On the bright side, there’s gaps that go both ways. When using GUC’s on KLM, they change the fare class and thus, the earnings associated. I just earned over 50k miles on a very cheap economy ticket to Africa using GUCs on KLM.

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