I was able to change your departure from JFK to LaGuardia; is there anything else I can do for you?” Delta’s Diamond Medallion agent had just saved me an hour needed for a client meeting.
The ability to make same-day changes between local airports is one of the great unpublished perks for road warriors holding Delta’s highest elite status. United Premier 1K flyers can even make same-day changes on international flights, while American Airlines Executive Platinum flyers love their flexible system-wide upgrades.
Enter the fierce competition over elite flyers.
Delighting the high-value passenger
Airlines are ushering in an era of sophisticated customer segmentation, increasingly focusing on the “super-elites” who drive their profits. Delta has stated publicly that 5 percent of its customers account for 26 percent of its revenue. To please those high-value customers requires an “experience over and above published benefits, particularly in service recovery, where those customers should have the best of all options,” says Delta spokesperson Paul Skrbec. Delta has a fleet of Porsches in Atlanta, Los Angeles, Minneapolis–St. Paul and New York JFK that provide plane-to-plane connections across the tarmac for select elites who have been flagged for assistance. United has responded with a growing Mercedes-Benz fleet at its key airports.
That level of service is increasingly common: American’s Concierge Key, United’s Global Services programs and Delta’s trial program Delta 360 all offer enhanced customer experiences to select customers and corporate contracts based on non-public criteria. Henry Harteveldt, travel industry analyst with Hudson Crossing, notes that airlines are focusing on the most profitable super-elites, who are “not necessarily the most frequent of flyers [but] may be commuting cross-country in first class or buying $10,000 tickets to Asia.” He estimates that a customer needs to spend at least $50,000 annually with an airline for possible inclusion in these programs.
Airline analyst and previous United Global Services member Seth Miller notes, “For Global Services, more agents are involved at nearly every step of the trip. Flight delays can mean a dedicated agent at the gate to troubleshoot, from rebooking to arranging accommodation. The cost is well justified by the revenue it drives.”
Indeed, Harteveldt claims these services are relatively low cost for airlines, while creating high perceived value. “Airlines are not creating special lounges for these super-elites or serving special meals on board,” he says. “But for those customers spending hundreds of thousands a year, they might have the direct mobile number of the airline CEO and are the first to be re-accommodated during travel disruption.”
American Airlines’ Concierge Key (CK) program, popularized in the film Up in the Air, was instantly responsive to members during 2012’s Superstorm Sandy. “Nine times out of 10 you don’t need your status, but that 10th time, having Concierge Key is a godsend—it’s not about ‘the rules say,’ or ‘you don’t qualify for.’ It is about fixing a problem and getting you on your way,” says David Wilson, the Dallas-based sales director for Ericsson and an AAdvantage Concierge Key and 7 Million Miler.
Bloating of elite ranks
Below the super-elites you have top-tier elites like me, who fly a lot but do not generate outsize revenue.
I am a Delta Diamond Medallion and Million Miler. Echoing many travelers, I highly rate Delta’s travel experience, yet bemoan its award ticket pricing and booking tools. So in 2013 I also joined United’s Premier 1K ranks by completing a Status Match Challenge. I could do without United’s flight experience and customer service, but its partner awards are incredible—so popular that on February 1, 2014, a separate, higher-priced award chart for redemptions on United’s Star Alliance partners went into effect. Meanwhile, American Airlines and US Airways customers have spent 2014 hoping the merger of the airlines will be operationally smooth and that cherished benefits from their programs are not lost.
The elite ranks have swelled due to airline mergers and an increase in frequent flyers. Co-brand credit card perks such as priority boarding and free checked bags have also chiseled away at the perceived value of traditional frequent-flyer program benefits. Several years ago it was even possible to earn American Airlines lifetime elite status solely through using its co-branded credit cards, without ever taking a flight. US Airways for years sold its top-tier Chairman’s Preferred level for $3,999.
Airlines have also increasingly packaged these services into fee-based offers, such as JetBlue’s Even More Space with priority security and boarding, and a seat with extra legroom, around $120. These products range from the basic Delta Ascend package of priority boarding and Wi-Fi for $23, to the VIP for a day American Airlines Five-Star Service, starting at $250.
Maintaining the allure of elite status despite the move toward fee-based services is key, and complimentary upgrades are the top perk flyers want. Yet, it can be challenging to decipher upgrade systems. Airlines give only hints as to the all-important ordering of names on the upgrade list, and each variant has flyers strategizing for the goal of 100 percent upgrade success. Not only elite status, but fare type, million-miler status, credit cards held, even time of check-in can play a role. At United, a companion on a reservation is treated the same as the highest elite on the reservation, while at Delta everyone drops to the lowest on the reservation.
Hudson Crossing’s Henry Harteveldt estimates that a customer needs to spend at least $50,000 annually with an airline for possible inclusion in these programs.Illustration by Neil Webb
Newest perks for the elite
With the economy improving and fewer seats available for upgrade, airlines are adding touches to engage top-tier elites. American Airlines provides complimentary food and drink to its Executive Platinums in the main cabin. Delta has tried “new and different” additions for high-value customers, according to Delta’s Skrbec, such as the Sky Priority service program rollout across SkyTeam alliance partners, which gives “the best service to the best customers.” Delta innovated with its Crossover Rewards tie-up program with Starwood Hotels, offering reciprocal benefits, points earning and co-branding including Westin Heavenly In-Flight bedding. United and Marriott quickly responded with their own variant, RewardsPlus, which offers Marriott Rewards Gold status to United’s Premier Gold and higher flyers.
Budget carriers Southwest and JetBlue also have added appeal for road warriors. Southwest Rapid Rewards members who fly 100 flights or earn 110,000 qualifying points in a year can enjoy a yearlong companion pass. Don’t worry about falling out with your companion: You can change up to three times in a year. JetBlue has added the Mosaic level to its TrueBlue Rewards, offering waived change and cancellation fees in addition to elite benefits commonly offered by competitors.
How to reach top-tier elite status? Though a job with extensive business travel helps, airlines in general are making it harder to compete for elite status. Beyond traditional miles or flight segment criteria, Delta and United both introduced revenue requirements in 2014 to all levels of elite qualification for their U.S.–based members. Both programs exclude many partner flights, seeking to capture all of the customers’ flying spend. “Mileage runners” who previously earned elite status on the cheap are reeling.
The year 2015 will bring to Delta, and copycat United, mile-earning directly tied to spend on tickets rather than distance flown, with more generous earning as a flyer moves up the status ladder. This favors domestic road warriors on short, expensive flights. Once-smug long-haul travelers will often do much worse, except on premium cabin flights, while the biggest spenders will find their per-ticket earning capped. Both airlines will maintain elite qualification based on traditional criteria.
Indeed, all air travelers are facing a more direct tie between spending levels and elite benefits. Southwest, JetBlue and Virgin America already have revenue-based systems for both earning status and redeeming awards. American Airlines is the major wild card, not expected to make any major moves until completion of its merger with US Airways. The boldest move for American may be to change nothing at all.
Many elites will drop in the ranks despite continuing to rack up miles. Super-elites will receive red carpet service targeted to their value, though even those at the top of the pyramid are not shielded from the harsh realities of award program devaluations and fewer empty seats for upgrades, notes Hudson Crossing’s Harteveldt.
The allure of status nonetheless will continue to draw travelers. The higher the qualification bar, the more some will chase the prize for ever-exclusive benefits and bragging rights. I confess to loving the metal clink sound of my Delta 1M (Million Miler) luggage tag nearly as much as all those upgrades.
Stefan Krasnowski is the author of Rapid Travel Chai, a blog on BoardingArea.com.
This Executive Travel story appeared in the October 2014 issue of Fortune.