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Two Reasons Elite Status Matters More Than Ever

October 14, 2010 – The airlines’ sprawling mileage programs have seen better days. Due at least in part to the widespread perception that awards are in ever-shorter supply, travelers are increasingly shunning miles in favor of lower ticket prices.

But there’s one aspect of the beleaguered schemes that has bucked the downward trend, gaining value even as travel generally, and loyalty programs in particular, have been downgraded in the public’s esteem.

Elite status is the jewel in the very tarnished crown of loyalty marketing. If anything, its luster has been enhanced by the continuing travel slump and its aftereffects.

In fact, elite status has increased in value precisely because of two factors that go hand-in-hand with the travel slowdown: fuller flights and higher fees.

The Coach-Class Crush

Load factor is the industry measure of occupied seats expressed as a percentage of available seats. Airlines seek high load factors, and their stockholders applaud them. But the higher the load factor, the lower the comfort quotient for flyers.

The airlines’ response to slumping demand has been, naturally, to cut back on flights, offloading 7 percent of their capacity during 2009 alone. But the flight cuts have outpaced the decrease in flyers, resulting in historically high load factors.

US Airways just reported its highest-ever September load factor. Its mainline flights were 82.1 percent full for the month. And year-to-date, the airline flew 82.6 percent full.

American flew 80.1 percent full in September, up from 79.4 percent a year earlier. For the first nine months of 2010, the airline averaged 82.0 percent.

Delta’s load factor was 82.5 percent for the month, and 83.6 percent for the year-to-date.

And United’s load factor was 83.7 percent, both for the month and for the first nine months of 2010.

Before the current travel slump, such lofty load factors were achieved only during the peak summer travel period, three out of the year’s 12 months. But if the airlines can continue to exercise restraint in adding back new service — and they’ve made it clear they intend to do so — packed planes are the new normal.

So today and for the foreseeable future, with coach-class comfort at all-time lows, a spacious seat up front is the only antidote to cattle-car claustrophobia. And because upgrades are the featured benefit of elite status, status itself is more pursuit-worthy than ever.

Far From the Maddening Fee-for-All

A second byproduct of the travel slowdown has been the airlines’ imposition of a-la-carte pricing (see SmarterTravel’s fee chart), widely derided by travelers as nickel-and-dimeing.

Those nickels and dimes add up.

During 2008 and 2009, U.S. airlines snagged around $7.9 billion in revenues from baggage fees and reservations change and cancellation fees, even as they suffered operating losses of $4.4 billion. While the International Air Transport Association is projecting a $3.5 billion profit for North America carriers in 2010, no one expects the fees to be rolled back.

Elite status doesn’t guarantee completely fee-free flying, but it does protect elite program members from a wide range of fees, including several of the most common ones.

Among the largest programs — which tend to set the standard for the industry — American, Delta, and United all waive the fees for at least the first checked bag, saving elite flyers around $25 per flight. Over the course of a year of business travel, the savings can really add up.

Those carriers also waive the extra fees for higher-level elites who redeposit their miles, book award travel by phone, and change their tickets on the day of travel.

Elevating Your Status, Comfort, and Savings

Entry-level elite status in most programs is awarded after a member earns 25,000 elite-qualifying miles (EQMs) during the calendar year. Mid-tier status is generally earned after 50,000 EQMs, and top-tier status after 75,000 or 100,000 EQMs.

While any status trumps so-called general membership, higher elite tiers afford more generous benefits than lower tiers, in particular better access to upgrades. With fewer first-class seats to go around, reaching a higher tier takes on extra urgency.

That provides an answer to a classic frequent flyer dilemma—whether to target elite status in a second program after achieving it in a first program; or remain focused on achieving higher status in the first program. Although the former approach may have been appropriate in a different era, in today’s environment of scarce upgrade seats the latter strategy is likely to pay bigger dividends.

So, with time running out to reach an elite threshold before the end of this year, what’s the quickest way to upgrade your status?

During 2009, the airlines ratcheted up the intensity of elite-focused promotions to unprecedented levels, offering double EQMs during fully six months out of the year.

So far this year, the airlines have been more circumspect in dangling EQMs as incentives.

There were several route-specific promotions that featured EQMs during the summer months. American and Delta are slugging it out with double EQMs on Nashville, Pittsburgh, Raleigh, and St. Louis flights, through December 31. And, through December 10, members of Delta’s SkyMiles program can earn EQMs for one stay of at least two nights at a Hilton hotel.

Barring a flurry of outsized year-end elite promotions, the surest way to qualify for elite status is still the old-fashioned way, one mile at a time, one flight at a time. If ever there were a year when circumstances justified a mileage run—a long, cheap flight taken solely to earn EQMs—this is it.

Of course to earn the comfort and savings associated with elite status, you’ll have to endure the crowded planes and pay the niggling fees. Which may bring to mind the maxim scrawled on many a grimy gym wall: No pain, no gain.